5G technology and Qatar's ICT sector

Qatar’s ICT market is well established, and characterised by high levels of mobile and internet penetration rates. Internet services are both affordable and quick, with fibre-based connections available. The country’s two main telecommunications operators are also working to roll out 5G services in all heavily populated areas by the end of 2020. On the IT side, officials are working to strengthen the sector, with plans for the development of a new smart city, e-government services and start-ups currently in the works. “Qatar has invested heavily in digital infrastructure in recent years, and this is essential to help the country achieve its long-term objectives of knowledge-based economic growth and diversification,” Abdulla Al Rwaili, executive director and managing director of subsea cable network provider Gulf Bridge International, told OBG. “This investment will help Qatar position itself as a regional telecommunications hub and a centre for providers of big content.”

Sector Performance

In September 2018 Jassim Sait Ahmed Al Sulaiti, the minister of transport and communications, announced to local press that Qatar’s ICT sector was estimated to be worth $3.9bn in 2017 and is expected to grow by 3.2% per year to $4.4bn in 2021. The minister also noted that the sector contributed 2.7% of GDP in 2017.

The International Telecommunication Union (ITU), which falls under the umbrella of the UN, ranked Qatar 39th out of 179 countries in its Global ICT Development Index of 2017, three places lower than in 2016. The index awards points based on access to fixed and mobile telephone services, internet services, and schooling. By comparison, the UAE ranked 40th, Saudi Arabia 54th and Oman 62nd in 2017. Bahrain was the only Arab country to rank higher in the index. “Even despite the ongoing blockade there have not been any cuts to government spending on ICT and the digital transformation of the country’s economy,” Yousef Al Naama, CEO of Malomatia, a Doha-headquartered technology services and solutions provider, told OBG. “This signifies their dedication to modernising and strengthening the economy.”

Market Share

The two major players in Qatar’s telecommunications sector are Ooredoo and Vodafone Qatar. The larger of the two, Ooredoo, was first incorporated in 1987 as Qatar Public Telecommunications Corporation, and provided domestic and international fixed-line telecommunications services. In 1998 it became a Qatari shareholding company under the name Qatar Telecom (Qtel) and later changed its name to Ooredoo in 2013. Qatar government entities own 68% of Ooredoo’s equity, the Abu Dhabi Investment Authority 10% and 22% was issued as free-floating shares. Ooredoo is a major international telecommunications conglomerate with businesses in Iraq, Kuwait, Oman, Palestine, Indonesia, Laos, the Maldives, Myanmar, Singapore, Algeria and Tunisia serving 120m customers. Ooredoo Qatar made a profit before tax of QR1.7bn ($466.9m) in the first nine months of 2018, compared to QR1.3bn ($357m) in the first three quarters of 2017. The company also recorded revenues of QR5.8bn ($1.59bn) in the first nine months of 2018 and QR5.9bn ($1.62bn) for the same period in 2017. In September 2018 Ooredoo reported that it had 3.3m customer contracts in Qatar, which has a population of around 2.7m people.

The second telecommunications provider, Vodafone, was launched in 2009 and provides voice, messaging data and fixed communications via fibre services. It introduced fibre-based products to the market in 2012 and started its rollout of 5G services in August 2018. The company’s total revenues for 2018 were QR2.1bn ($576.7m), up 5.1% from the previous year and returning to year-on-year (y-o-y) growth for the first time in four years. According to the company, at the end of 2018 it served 1.4m customers.

The government owns 61.8% of Vodafone’s shares. The largest shareholder, which started as a joint venture between Vodafone and the Qatar Foundation, holds 45% of shares, but in early 2018 Vodafone sold its 51% stake in the joint venture to Qatar Foundation for QR1.4bn ($384.5m), including QR1.3bn ($357m) up front and QR100m ($27.5m) payable a year later. As of February 2019, Qatar Foundation holds 50% of the company’s capital. According to the company’s 2017 annual report, Ooredoo held a 69% market share in Qatar and had a revenue market share averaging around 80% across the year. Meanwhile, Vodafone claimed a 21.1% revenue market share in June 2017.

Structure & Oversight

The Ministry of Transport and Communications (MoTC) is responsible for formulating policies for the telecommunications sector, in addition to issuing trading licences, enhancing the efficiency of ICT infrastructure, developing next-generation services and increasing public awareness of ICT tools. Other government departments have functions pertinent to the ICT sector, including the Communications Regulatory Authority (CRA). The CRA is the telecoms regulator, issuing and renewing licences to telecommunications companies. The CRA was founded in 2014 as an independent body to replace the Supreme Council of Information and Communications Technology. The agency manages postal services, spectrum, number and domain names, consumer protection, quality inspection, and dispute resolution between customers and providers. The authority launched its own app, Arsel, to enable customers give feedback to the CRA on telecommunications issues. In February 2018 the CRA announced due to legislative amendments, employees authorised as judicial control officers could “inspect, verify and control”, effectively giving them the right to access relevant companies’ premises and records. The same amendments also allowed for a financial punishments committee to be established by the CRA, which is responsible for issuing fines to licensed providers in the event of non-competitive practices, misinformation or other breaches of the laws.

Growth Strategies

Ooredoo and Vodafone Qatar have made significant adjustments to their business models in recent years as they adapted to declining revenues from voice services and the increasing dominance of data. In its 2017 group annual report Ooredoo noted data services accounted for 46% of revenues that year, a 16% increase from 2016, from QR13.1bn ($3.6bn) to QR15.3bn ($4.2bn). At the same time the company’s Qatar business witnessed a decline in the average revenue per user (ARPU), from QR133 ($36.53) in 2013 to QR112.80 ($30.98) in 2017. By comparison Vodafone Qatar’s most recent ARPU data for the third quarter of 2018 was QR103 ($28.29), an increase of QR12 ($3.30) y-o-y.

Ooredoo’s 2017 annual report called its businesses “digital enablers” and noted the group was working with a range of IT partners to deliver new and enhanced services. Ooredoo Qatar said the company saw its biggest growth opportunities in 5G services, business solutions and in the wider ICT space. Vodafone Qatar has prioritised the digital transformation of society as the first pillar of its future growth strategy and the two companies are locked in fierce competition to deliver the latest technological developments to Qatar. Both Ooredoo and Vodafone will provide fibre broadband to homes and offices in the country’s new smart city, Lusail City, a set of four islands home to 19 multipurpose commercial districts expected to house to 450,000 residents. In April 2018 Vodafone signed an agreement to deploy fixed and mobile services in the smart city, including a fibre triple-play network with speeds of up to 1 Gbps. In September of the same year Ooredoo announced it would make fibre broadband with speeds of up to 10 Gbps available to all homes in Lusail City.

Increased demand and connectivity in the country have necessitated the deployment of other new technology. “Qatar has very strong fibre-optic coverage, although satellite-based communications are extremely important as well, for example in emergency situations or to provide connectivity to more remote areas. In this sense, the launch of the Es’hail-2 and the opening of its new satellite control station, are important to providing a safe and independent satellite system,” Ali bin Ahmed Al Kuwari, CEO of Es’hailSat (Qatar Satellite Company), told OBG.

5G Licences

Qatar is investing in 5G technology and once established, it will allow peak internet connection speed to reach 1 Gbps, create higher communication capacity and allow for an increase in the number of mobile broadband users. The deployment of advanced technology runs alongside the Qatar National Vision 2030 (QNV 2030), the country’s development plan to diversify the economy and reduce dependency on hydrocarbons.

“The QNV 2030 is one of the pillars upon which the economy will be developed in the medium term,” Frank Fan, CEO of Huawei, told OBG. “The role of the ICT industry will be of significant importance, as it permeates through all economic sectors in the country. The government is focused on developing smart initiatives with a specific emphasis on cutting-edge technologies stemming from the implementation of 5G networks such as artificial intelligence, machine learning, social media and internet of things (IoT).”

Testing Phase

The CRA announced in January 2018 that it had drawn up a preliminary frequency plan to enable the two operators to commence testing the technology. It assigned each operator bandwidth within the frequency bands 700 MHz, 3.5 GHz and 26 GHz, saying the aim of the testing period was to develop 5G networks that could better support technology such as machine-to-machine and IoT applications, with the CRA anticipating the commercial deployment of the technology in early 2019. In January 2019 the CRA updated the two providers’ licences to allow for the commercial deployment of 5G services. Both companies have committed to rolling out commercial 5G networks before the end of 2020 in all densely populated areas, primary roads and venues. In the run-up to the rollout of services, throughout 2018 both Ooredoo and Vodafone Qatar recorded a series of investments in 5G.

In December of that year Vodafone Qatar extended its 5G coverage to Souq Waqif in addition to the previously covered areas of Katara, Abu Hamour, Al Azizyah, Al Maamoura, Al Rayyan, Salwa Road and Umm Salal Muhammed. In July Ooredoo announced it had deployed 50 active 5G base stations since its first 5G site opened in May. Ooredoo and Vodafone Qatar are also working to incorporate eSIM cards – SIMs embedded in a mobile device, which eliminate the need for a physical card and allows smaller devices such as watches to connect to the networks. In October 2018 both companies announced customers would be provided with eSIMs.

“Our approach is not so much driven by excitement about the technology itself but what our consumers can do with it, so we are more obsessed with consumers than technology,” Diego Camberos, COO of Vodafone Qatar, told OBG.

IT

The government is working to harness new technology to encourage economic diversification and growth through the development of smart cities, e-government services and research in universities and other institutions. “Digital transformation has been an important topic for many countries globally, including Qatar. Billions of devices will be interconnected, which creates great business opportunities and is expected to help improve the lives of citizens. While exploring new service and revenue opportunities it is critical that cybersecurity is given the appropriate consideration. This is where international firms with long-standing experience in the digital environment can partner with local entities,” Shane Heraty, country manager of Cisco Qatar, told OBG.

Industry insiders agree that cybersecurity is a key issue. “With the growing cyberthreat, the need for secure telecom networks is increasing along with ancillary IT services such as cybersecurity,” Ahmed Salman Ali Al Sulaiti, CEO of the Qatar National Broadband Network, told OBG. “Residual resistance to market changes has dwindled. The market now knows exactly what it needs to protect its information, and we expect this to strengthen demand for private and special networks for secure data servers.”

Reem Al Mansouri, assistant undersecretary for digital society development affairs at the MoTC, told local media that the software market in Qatar is set to hit QR1.6bn ($439.4) by 2021, with the IT services sector reaching QR1bn ($274.6m) and the IT infrastructure marketing growing to over QR800m ($219.7m). “Qatar is taking important steps to shift towards a knowledge-based economy,” Ahmed Elmagarmid, executive director of the Qatar Computing Research Institute (QCRI), told OBG. “Internet penetration and computer knowledge is high, and research and development (R&D) initiatives will help promote the importance of technology for economic development.”

E-Government

The Qatar e-Government 2020 Strategy, launched in 2014, aims to enhance service performance, create efficiency and increase openness. It targets 100% of government services online by 2020 and an increase by 20% per year of the number of users participating in government forums. Hukoomi, an e-government portal, was launched to make information and services more accessible and in the first nine months of 2018 the website was accessed by 1.8m users. The number of users increased consistently, reflecting a growing number of residents using the portal, which contains over 1400 services and more than 650 online services.

Qatar has invested in nurturing R&D in IT through universities and academic institutions. The QCRI operates under the umbrella of Hamad bin Khalifa University (HBKU) and was established in 2010 by the Qatar Foundation. It is focused on tackling large-scale computing challenges that can potentially have an impact on economic growth, and its research includes social computing, data analytics, Arabic language technologies, distributed systems and cybersecurity. The QCRI also serves to inspire new generations of computer scientists. “We have staff from around the world drawing on a rich mix of academia and industrial experience and we see ourselves as building capacity in Qatar and attracting the youth to the ICT domain,” Majd Abbar, director of commercialisation and business development at the QCRI, told OBG.

The research community has been central in efforts to develop ICT in Qatar, Yosouf Saleh, executive director of Qatar Science and Technology Park (QSTP), told OBG. “Applied research is indeed needed in a multitude of sectors,” he said. “Qatar as a country has done a significant job in this sense over the past few years, and now we need to focus on boosting efficiencies to optimise the resources that we already have. For this, we now seek greater participation from the local and international private sector, which in turn would cause a cascading effect through the larger business community in the country.”

Subscriptions

According to the ITU, the mobile penetration rate in Qatar was 147.1 per 100 people in 2017, level with 2016 rates. In 2017 there were more mobile SIM cards than people, with 129.2 active mobile broadband subscriptions per 100 inhabitants in the country. Many people use prepaid mobile subscriptions, although providers are working to encourage a switch to post-paid contracts. Vodafone saw a 6% decrease in the total number of subscriptions but a 9% increase in the number of post-paid customers in 2017. Ooredoo did not provide pre-paid versus post-paid figures in its financial reports.

The ITU estimates 94.3% of people in Qatar are using the internet, 89% of households have a computer and 95.8% of households have internet access. The headline data for fixed-line telephony and broadband shows far lower levels of penetration. In 2017 there were 19.3 fixed-line telephone subscriptions per 100 people and 10.8 fixed-wired broadband subscriptions per 100 people. Both Ooredoo and Vodafone are looking to fibre services to reinvigorate fixed-line services, with fixed-line services accounting for one-third of Vodafone’s enterprise revenues in 2017. According to Vodafone’s annual report, the company is scaling up fixed-line services and focusing on growth through triple- and quad-play offerings.

Start-ups

The country is working to further develop the start-up ecosystem in order to generate revenue for the economy and stimulate job growth. Central to this objective is the Smart Qatar Programme, which was launched in March 2017 and aims to increase the number of jobs in ICT by 10% by providing financial support to 50 new enterprises. Both public and private sector entities are working towards being able to successfully enter the burgeoning start-up scene. The QSTP is a free zone created by the QFRD in Education City that helps public entities, private firms and individuals to develop, commercialise and license their innovative business ideas. It houses a range of initiatives specific to ICT, including a three-month accelerator called XLR8 that runs twice a year, and Doha Dojo, a three-month investment, training and mentoring programme for start-ups. The Digital Incubation Centre was launched in 2011 under the MoTC and offers two incubation tracks, the first providing entrepreneurs with an idea with six months of support to see if it is viable and a second two-year track for more established startups providing office space and mentoring. A private sector initiative, “Make in Qatar”, launched in June 2018 aims to complement government efforts by managing a $5m seed fund and providing mentor services through a management board to qualified start-ups. Financial technology is a start-up segment with particular growth potential. Payroll firm QPAY is Qatar’s largest financial services network for SMEs and has served 100,000 customers and 10,000 small businesses. “Under the previous system, SMEs were required to take their employee salary records to the bank on a CD every month, but with QPAY we have an integrated system where the payments can be made. At the same time the Qatar Central Bank and the Ministry of Labour are also informed of the payment, making it easier for the authorities, employers and employees,” Yunus Saiyed, head of community engagement at QPAY, told OBG.

Outlook

Qatari individuals and businesses are both set to benefit significantly from the rollout of 5G services as enhanced connectivity and faster download times boost data services performance. The government will be looking to be able to leverage new technology and incorporate it into various smart systems and networks that are being rolled out across new urban developments. Moving forwards, the authorities will continue to provide an effective regulatory framework for the sector while fostering a climate in which both businesses and entrepreneurs can harness the potential of emerging technology and capitalise on the new opportunities it creates.