Photographer: Chris Ratcliffe/Bloomberg
Vodafone to Exit Qatari Unit After Almost a Decade of LossesBy
Vodafone Qatar will continue to operate under same brand
Restructuring to write off losses; extending license to 2068
Vodafone Europe agreed to sell its stake in a Qatar joint venture for 301 million euros ($369.9 million), capping an almost decade-long string of losses amounting to more than $1 billion.
Qatar Foundation, a non-profit run by the gas-rich country’s royal family and Vodafone’s partner in the country, agreed to buy the exiting company’s stake and will own 50 percent of Vodafone Qatar when the transaction is completed. Vodafone Qatar losses have been building since the company started operations in 2009.
Vodafone will provide technical support for a period of at least five years, Ian Gray, the Qatari unit’s chief executive, said. Gray, who will retire after the March 19 shareholder meeting, will be replaced as CEO by Sheikh Hamad bin Abdullah Al Thani - the company’s current chief operating officer.
Vodafone Qatar plans to restructure its balance sheet to eliminate the 4.3 billion riyals ($1.18 billion) in accumulated losses, which it said was attributable to the "amortization costs" of its license to operate in Qatar. It reached an agreement with the government to extend its telecommunications license by 40 years to 2068.
Here are highlights from a press conference in Doha explaining the restructuring:
- The license extension will reduce annual amortization costs from 403 million riyals to 100 million, which will make the company profitable
- Balance sheet restructuring will cut its share capital by half to 4.3 billion riyals to eliminate the accumulated losses
- Reduction in share capital has "no cash impact," Gray said, and will pave the way for the company to pay dividends to shareholders in the future
- Company will focus on investing on its fixed line business, Internet of Things, and technology services to increase revenue as subscriber growth flattens, Sheikh Hamad said