Qtel strategy pays off despite profits fall

Qatar Telecom generates higher revenues as it boosts investment spending, though increased profits remain further off.

Emaar Properties increased 1.1 per cent to Dh3.46. Satish Kumar / The National

Strategic expansions at Qatar Telecom (Qtel) are reaping higher revenues even though a boost to the company's bottom line is yet to materialise.

Qatar's biggest telecommunications company reported quarterly net profits of 640.7 million Qatari riyals in its latest earnings statement, a dip of 11.2 per cent compared with the same period a year earlier. The results beat analysts' estimates despite the dip.

Foreign-exchange losses were again Qtel's Achilles heel with the depreciation of the Indonesian rupiah and the Algerian dinar weighing on earnings. Profits have fallen during three out of the past four quarters. A change of strategy for Qtel this year has seen it seek out opportunities in new markets and expand its range of services including business-to-business services, e-finance and mobile health, which has led to increased capital expenditure. There is evidence the new plan is working. During the second quarter, revenues rose to 8.3 billion riyals, a 4.6 per cent increase over the same period a year earlier.

Qtel's operations in Iraq, Qatar and Algeria helped the company to a "solid" set of earnings, analysts from JPMorgan wrote in a research report. "Amid a relatively benign competitive environment, Qtel maintains its [revenue] and customer market share in the overall growing domestic market," the report said. Two factors to watch, JPMorgan added, were decisions by two governments over Qtel's operations in Middle East countries - Iraq and Kuwait, respectively.

In Kuwait, Qtel awaits the decision of the country's capital markets authority over its proposed purchase of the 47.5 per cent of Wataniya Telecom it does not already own. The targeted stake is said to be worth about US$1.9bn.

Meanwhile, in Iraq, Qtel is seeking government approval to raise its stake in Asiacell from 53.9 per cent to 60 per cent.

Yesterday, the company's Indonesian arm, Indosat, said it had concluded a $406m sale and leaseback agreement of 2,500 mobile phone towers with Tower Bersama Infrastructure.