With yesterday's signing of a QR6.4bn deal to acquire a controlling stake in PT Indosat, Indonesia's second-largest telecom operator, Qtel has pretty much thrown down the gauntlet in front of Vodafone.
In fact, a Qtel statement on the signing says: "Vodafone will have their work cut out if they are to compete in Qatar with the region's best operator, Qtel. The real winners will likely be Qtel's customers as Qtel brings the best from all its markets in the region to customers in Qatar."
Meanwhile, Vodafone, which has kept its cards close to its chest, seemingly might have a tough battle ahead against the well-entrenched Qtel.
Analysts have said Vodafone will be able to compete on service and perhaps reduced tariffs alone. And if all goes to plan, Vodafone Qatar, which will start operations in the first quarter of next year, should have a 30 percent stake in the market, according to analysts.
Qtel recently launched a rights issue to raise $1.6bn from shareholders, part of the proceeds of which are expected to be used to fund the Indonesian transaction. Anyone owning Qtel share on May 28 has the right to acquire one additional share for every three owned at a discounted price of QR160 per share. Shareholders have until June 19 to subscribe.
Qtel expects its rights offering to be oversubscribed. Even before the PT Indosat deal was announced, various analysts reported that Qtel is undervalued by as much as 40 to 60 percent. On a recent DSM organised trip to the New York Stock Exchange (NYSE), many international investors expressed a strong interest in Qtel. International investors are allowed to invest on the DSM, but some are still not able to buy Qtel shares in large lots due to non-availability of sufficient shares.
A majority of analysts are recommending Qtel as a strong buy. In a recent report by Credit Suisse First Boston (CSFB), Qtel was rated as one of the top five stocks in any industry to invest in the Middle East.
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