Annual Report - Vodafone Qatar

Transcription

Making a world
of difference for
all people in Qatar
Vodafone Qatar Annual Report 2010
Contents
Disclaimer
7
The year in review
Chairman’s statement
CEO letter
Year in numbers
Exec team’s journey to Qatar
Board of Vodafone Qatar
Financial highlights
Financial commentary
8
11
12
14
18
20
22
23
The story of Vodafone Qatar
A new world
A wireless world
A customer’s world
An exciting world
An innovative world
A human world
A better world
A future world
32
35
42
44
57
62
64
68
72
Financial statements
74
Glossary
100
3
His Highness
Sheikh Hamad Bin Khalifa Al-Thani
Emir of the State of Qatar
His Highness
Sheikh Tamim Bin Hamad Al-Thani
Heir Apparent
5
Disclaimer
This constitutes the annual report of Vodafone Qatar Q.S.C.
(“Vodafone Qatar”) for the year ended 31 March 2010 and
is dated 28 June 2010. The content of the company’s website
(www.vodafone.com.qa) should not be considered to form
part of this annual report.
In the discussion of Vodafone Qatar’s reported financial
position, operating results and cash flow for the year ended
31 March 2010, the material is presented to provide readers
with additional financial information that is regularly
reviewed by management. However, this additional
information is not uniformly defined by all companies,
including those in Vodafone Qatar’s industry. Accordingly,
it may not be comparable with similarly-named measures
and disclosures by other companies.
The terms “Vodafone Qatar’’, ‘’we’’, ‘’us’’ refer to the company
Vodafone Qatar Q.S.C.
This annual report contains forward-looking statements
that are subject to risks and uncertainties, including
statements about Vodafone Qatar’s beliefs and expectations.
All statements other than statements of historical or
current facts included in the document are forward-looking
statements. Forward-looking statements express the current
expectations and projections of Vodafone Qatar relating
to the condition, plans, objectives, future performance
and business of Vodafone Qatar, as well as their expectations
in relation to external conditions and events relating
to Vodafone Qatar and its respective sector, operation
and future performance. You can identify forward-looking
statements by the fact that they do not relate strictly
to historical or current facts. The forward-looking statements
may include words such as “forecast”, “anticipate”,
“estimate”, “believe”, “project”, “plan”, “intend”, “prospective”
and other words and terms of similar meaning in connection
with any discussion of the timing or nature of future
operating or financial performance or other events.
Due to these factors, Vodafone Qatar cautions that you
should not place undue reliance on any forward-looking
statements. Further, any forward-looking statement
speaks only as of the date on which it is made. New risks
and uncertainties arise from time-to-time, and it is
impossible to predict these events or how they may affect
Vodafone Qatar. Except as required by Qatari law, the rules of
the QFMA, or the rules of the Qatar Exchange, Vodafone Qatar
has no duty to, and does not intend to, update or revise the
forward-looking statements included herein after the date
of the Annual Report.
Vodafone, the Vodafone logo, Vodafone Mobile Broadband,
Vodafone M-PESA, and Vodafone Money Transfer are trade
marks of the Vodafone Group. Other product and company
names mentioned herein may be the trade marks of their
respective owners.
Copyright © Vodafone Qatar Q.S.C.
7
9
Chairman’s statement
Dear Shareholders
It pleases me to greet you all on the occasion of Vodafone
Qatar’s first Annual Report.
After winning the bid in December 2007, the second mobile
license was granted in June 2008 to Vodafone Qatar. We held
an Initial Public Offering (IPO) in May 2009 which was fully
subscribed despite the global economic crisis. It showed
clearly the extent to which Qataris were confident about
the ability of Vodafone Qatar to be a highly successful player.
Over 82,000 Qatari individuals and companies bought shares
through the IPO which was held prior to our commercial
launch, and only shortly after the first phone call was made
on our network. Thanks to all our shareholders, particularly
those from the IPO who put their trust in the management
of Vodafone Qatar from the outset. The management team
are all from Vodafone operating companies around the world;
passionate to be part of the exciting new start-up in Qatar.
They bring with them a wealth of experience that is required
to build a successful business from the ground up.
Following the IPO we progressed rapidly, building our own
independent mobile network quickly and efficiently enabling
100% geographic coverage of Qatar by the end of 2009.
In July 2009 with the build of our network still to be fully
completed, we launched commercial services. For the
first time, the people of Qatar were able to choose their
mobile provider.
Although it’s still early days, we have won the hearts and
minds of our customers with exciting offers and promotions.
By the end of our financial year, our strategy of being
customer obsessed had earned us 464,962 customers.
This is 121% ahead of our plan and equates to 28% of the
population of Qatar; an impressive achievement in less
than nine months since launch.
Despite a year of strong financial results, the performance of
Vodafone Qatar’s share price has not yet had the expected lift
since the initial listing. The great start-up results achieved in
this first year and our solid customer base are very important
foundations for the long-term value of the organisation and
ultimately the value of the share price.
In addition, Vodafone Qatar has also been active in the area
of corporate social responsibility; forming the Vodafone
Qatar Charitable Fund primarily to support local charities,
and launching initiatives designed to help make Qatar a
“greener” country. We introduced biodegradable Prepay
scratch cards to Qatar, we recycle paper from offices and
retail stores and we encourage the people of Qatar to recycle
their old mobile handsets. We have been prolific in our
charitable initiatives, donating QAR 18m to Reach Out to Asia
(ROTA) and launching our World of Difference programme,
paying for the costs of four people to work on a Qatari charity
of their choice for one year. Vodafone Qatar is here to stay
and the company is committed to making a world of
difference for all people in Qatar.
Outlook
On 29 April 2010, ictQATAR issued the country’s second
fixed line license to Vodafone Qatar contingent on the
payment of the QAR 10m license fee and on shareholder
approvals to the change in the company’s Memorandum
and Articles of Association. I believe this is a great direction
for Vodafone Qatar to service all our customers’ total
telecommunication needs, allowing us to harness the
synergies through a single organisation. We will commence
our responsibilities to provide fixed line services to Qatar
by connecting The Pearl.
All thanks and appreciation to His Highness Sheikh
Hamad bin Khalifa Al-Thani, the Emir of the State of Qatar
and His Highness Sheikh Tamim bin Hamad Al-Thani,
the Heir Apparent, for introducing competition to Qatar’s
telecommunications sector and for their continuing
support of Vodafone Qatar.
Abdulrahman bin Saud al-Thani
Chairman
11
CEO letter
Dear Shareholders,
Just over one year ago we started on an exciting new journey
here in Qatar.
This is the first Vodafone start-up in nearly 10 years,
Vodafone’s first venture in the GCC and only the second in
an Arabic speaking country. This is the first start-up with both
Mobile and Fixed and the first of a new ownership model
where Vodafone is a minority shareholder with Board and
Management control.
To begin with there were just six of us who arrived in Qatar
two years ago, and we have grown to a staff of 299 people from
40 different nationalities. Our starting point was to ask the
people of Qatar what they wanted and what they expected
from Vodafone. It was the start of an amazing learning journey
about the fascinating country of Qatar.
Once we learnt what was expected of us, we designed our
“Business Plan on a Page” that I call the PBO (Purpose Based
Organisation). This simple model enables an organisation
to be clear about the critical Where, How, What and Why
questions that all organisations face. This approach is based
on my belief that what really matters in an organisation are
people and relationships based on trust and respect.
The critical elements of the model are the Purpose and Values
and one of my main learnings has been that the people of
Qatar have very strong values and a great sense of purpose.
We owe much of our success to your belief in us and your trust
that we will deliver change and real value to “make a world
of difference for all the people in Qatar” which is our Purpose.
We launched our Freedom product through our online store
in July before opening nine retail stores across Qatar in Doha,
Al Khor and Al Wakrah. We furthered our distribution reach
with local partners resulting in over 2,600 retail outlets where
the people of Qatar can buy Vodafone.
With the right staff on board and an extensive distribution
reach, by year-end we had reached 464,962 customers
representing 28% of the population of Qatar. The key drivers
enabling us to grow our customer base so quickly have been
the strength of the Vodafone brand, the end of the monopoly
market in Qatar and a series of exciting campaigns that
we have undertaken. The response to these offers has been
phenomenal, and our customer base has surpassed our
expectations by 121%, with the majority of customers joining
in the last six months.
Plans for the future
Total Revenue for the year is QAR 361.5m which is ahead
of expectation by 26%. This is a solid result for a new entrant
in what is now a competitive market. EBITDA loss for the year
is QAR (225)m which is in line with our original plan.
In our first Annual Report you will read more about the financial side
of what we have accomplished and also discover more about the
exciting journey that Vodafone Qatar has undertaken.
Our Net Loss of QAR (673.4)m for the financial year is also in
line with expectations and consistent with what we outlined
in the IPO prospectus due to a well managed and efficient cost
base. As with all telecommunication start-ups, we continue
to incur overall net losses whilst we build our customer base
and full services.
Vodafone Qatar is committed to innovating new services to play our
part in helping Qatar deliver His Highness Sheikh Hamad bin Khalifa
Al-Thani, Emir of Qatar’s Vision 2030. During this coming year we will
launch many exciting innovative services in Qatar. We will continue to
bring innovation from around the Vodafone world as well as developing
solutions with local partners in Qatar that we can then take to the rest
of the Vodafone world.
Shukran to everyone who has made our venture in Qatar so successful.
Grahame Maher
Chief Executive Officer
13
Year in
numbers
15
Year in numbers
(continued)
17
Exec team’s
journey to
Qatar
Grahame Maher
Previous VF Experience: Vodafone Czech
Republic, Vodafone Sweden, Vodafone
New Zealand, Vodafone Australia
Grahame has previously been
CEO of Vodafone Czech Republic,
CEO of Vodafone Sweden, COO of
Vodafone Asia Pacific, CEO of Vodafone
Australia and CEO of Vodafone New
Zealand. Grahame joined Vodafone in
1996 as CEO of Vodacall, a subsidiary
MVNO in Australia. Prior to joining the
Vodafone group, Grahame owned and
ran several of his own business interests,
including an MVNO in Australia which
was a partner of Vodafone’s. Grahame
has been involved with Vodafone Group
for over 15 years. Grahame is a Member
of the Board of Directors of Vodafone
Qatar Q.S.C.
John Tombleson
Chief Financial Officer
Previous VF Experience:
Vodafone New Zealand
John joined Vodafone Qatar from
Vodafone New Zealand, where for
five years he held senior finance
roles, including CFO of the fixed
line business and Acting CFO of
the mobile business. Prior to joining
Vodafone, John was a management
consultant specialising
in company strategy
and performance
measurement. John
is a Member of the
Board of Directors of
Vodafone Qatar Q.S.C.
Jan Mottram
Chief People Officer
Vodafone Ireland,
Vodafone Group,
Prior to joining Vodafone
Qatar, Jan held the
position of Human
Resources Director in
and most recently
in Vodafone Ireland.
Jan has held executive
human resources
positions for over
20 years.
Michael Portz | Chief Marketing Officer
Previous VF Experience:Vodacom South Africa, Vodafone Group
Michael joined Vodafone Qatar from Vodacom South Africa
where he was Head of Customer Care. Prior to Vodacom,
Michael held senior positions in Vodafone Group in the
Technology and Marketing divisions. Before working at
Vodafone, Michael was a Consulting Manager with Accenture.
Matthew Harrison-Harvey
Director, Regulatory
and External Affairs
Previous VF Experience: Vodafone Group
Matthew is responsible for legal,
regulatory and corporate affairs.
Prior to joining Vodafone Qatar,
he held regulatory and public policy
roles in relation to Vodafone Group’s
investments in Europe, Africa, Asia and
the Middle East since 1999. Matthew
is Company Secretary and a Member
of the Board of Directors of Vodafone
Qatar Q.S.C.
Daniel Horan
Director, Consumer
Business Unit
Previous VF Experience: Vodafone
Australia, Vodafone Netherlands,
Vodafone UK, Vodafone Hungary
Dan joined Vodafone Qatar
from Hungary where he was
Head of Consumer Marketing.
Dan joined the Vodafone group in
2000 in Australia and since then
he has also worked for Vodafone
in the Netherlands and the
UK, holding senior positions
within the Sales and
Marketing divisions.
Jenny Howe
Chief Technology Officer
Vodafone Ireland, Vodafone Group
Jenny joined Vodafone Qatar
from Vodafone Ireland where
most recently she was Head
of Business Planning and
Governance. Prior to that she
held positions in Vodafone Group
Marketing as Head of the Centre of
Excellence which was responsible
for developing technological
innovations for customer trials,
and in Vodafone Ireland as Head of
Technology Strategy and Planning.
19
Board of Vodafone Qatar
Chairman
Sheikh Abdulrahman bin Saud al-Thani
A member of the Board since 26 June 2008, appointed
by the Qatari Institutional Founders – Qatar Foundation,
the Military Pension Fund, Military Staff Loans Fund,
and Health and Education Endowment in Qatar.
Sheikh Abdulrahman bin Saud al-Thani was appointed
Chairman of the Board on 24 August 2008. Sheikh
Abdulrahman bin Saud al-Thani is the Chief of the Amiri
Diwan, and was previously the Private Secretary to His
Highness the Emir and is a member of a wide variety of Boards
and Councils in Qatar, Amman, Lebanon and the United States.
Sheikh Hamad Nasser Al-Thani
Mr. Abdulla Nasser Al-Misnad
Mr. Rashid Fahad Al Naimi
A member of the Board since
26 June 2008 (appointed by
Vodafone and Qatar Foundation
LLC) and a member of the Board
of Managers of Vodafone and
Qatar Foundation LLC. Sheikh
Hamad is the Economic Advisor
in Prime Minister of council.
He holds a PhD in Industrial
Project Management as well as
a MBA in Financial Planning from
the University of Wales. Sheikh
Hamad holds a range of different
positions, including Chairman, on
the boards of several prominent
organisations in Qatar.
A member of the Board since May
2009 (appointed by the Public
Shareholders). Mr. Abdulla Nasser
Al-Misnad is the Chairman &
Managing Director of Al Misnad
Holding Company which has
been involved in private sector
businesses since the 1950s.
The Al Misnad Holding Company
owns and manages several
companies with diverse business
activities that play its full part in
promoting economic growth and
development of the State of Qatar.
In addition to Vodafone Qatar, Mr.
Abdulla Al-Misnad holds a range of
different Board positions including
Chairman and Vice Chairman of
some of Qatar’s most prominent
organisations.
LLC) and a member of the Board of
Managers of Vodafone and Qatar
Foundation LLC. Mr Al-Naimi is the
Vice President, Administration,
of Qatar Foundation. Furthermore,
he represents Qatar Foundation
across a number of boards,
committees and a joint advisory
board. In addition to his
membership on various boards,
Mr Al-Naimi is the residing
Chairman for several prominent
companies in Qatar.
Ms Aysha Mohammed Saad
Al-Nuaimi
May 2009 (appointed by the Public
Shareholders). Ms Al-Nuaimi is
currently Investment Department
Director of the General Retirement
and Social Insurance Authority
(GRSIA) and has previously
held senior finance positions at
QAFCO and Qatar National Bank.
Ms Al-Nuaimi holds an MBA from
the University of Qatar and a PhD
from the University of London
and University College London.
In addition to Vodafone Qatar,
Ms Al-Nuaimi represents GRSIA
on the Boards of many local and
GCC companies.
Mr. Nick Read
Mr. Grahame Maher
Mr. John Tombleson
Mr. Matthew Harrison-Harvey
9 October 2008 (appointed by
LLC). Nick is Vodafone Group’s
Regional CEO for Asia Pacific
and Middle East Region. Prior
to this role, he was CEO of
Vodafone UK. Prior to joining
Vodafone Group, he was
the CFO of Miller Freeman
Worldwide and the CFO for the
EMEA (Europe, Middle East
and Africa) Region of Federal
Express. Nick is also a board
member of Vodafone Essar,
Indus Towers, Vodafone Egypt,
China Mobile and Chairman of
Vodafone Hutchison Australia.
LLC), when Grahame was formally
appointed as CEO of Vodafone
Qatar. Grahame was previously
CEO and Chairman of Vodafone
Czech Republic, CEO of Vodafone
Sweden, COO of Vodafone Asia
Pacific, CEO of Vodafone Australia
and CEO of Vodafone New Zealand.
Grahame joined Vodafone in 1996
as CEO of Vodacall, a subsidiary
MVNO in Australia. Prior to joining
the Vodafone group, Grahame
owned and ran several of his
own business interests, including
an MVNO in Australia which was a
partner of Vodafone’s. Grahame has
been involved with Vodafone Group
for over 15 years and has previously
been a board member of Vodafone
Australia, Vodafone Sweden
and Vodafone Czech Republic.
24 August 2008 (appointed by
LLC) and Chief Financial Officer.
John joined Vodafone Qatar from
Vodafone New Zealand, where
for five years he held senior
finance roles, including CFO
of the fixed line business and
Acting CFO of the mobile
business. John was also a board
member of Vodafone Fiji. Prior
to joining Vodafone, John was
a management consultant
specialising in company strategy
and performance measurement.
26 June 2008 (appointed
by Vodafone and Qatar
Foundation LLC). He is also
the Company Secretary
of the Board. Matthew
is Vodafone Qatar’s Regulatory
and External Relations
Officer responsible for legal,
regulatory and corporate
affairs. Prior to joining
Vodafone Qatar, he held
regulatory and public policy
roles in relation to Vodafone
Group’s investments in Europe,
Africa, the Middle East, and
Asia since 1999.
21
Financial highlights
Q4 FY10
Customer numbers
Annual
Q4 FY09
FY10
Mar 10
Mar 09
Mar 10
Mar 09
QARm
QARm
QARm
QARm
Total Revenue
144.7
n/a
361.5
n/a
EBITDA
(28.7)
(80.1)
(225.4)
(124.6)
(155.7) 1,2
(80.8)
(674.7) 2
(125.3)
EBIT
1
Operating Free Cash Flow
(excl. license payment)
(256.0)
Capitalised Fixed Asset Additions
201.5
(416.9)
(551.6)
308.6
KPIs
523.8
(492.6)
389.3
Quarterly
18%
18%
600,000
16%
500,000
14%
464,962
14%
400,000
12%
353,580
10%
300,000
7%
200,000
8%
6%
150,799
4%
Jun 09
Sep 09
Dec 09
Mar 10
15,404
150,799
353,580
464,962
n/a
173
171
101
1.609m
1.623m
1.631m
1.677m
Annual Population Growth
11%
8%
5%
2%
Mobile Penetration
117%
141%
152%
156%
1%
9%
22%
28%
0.8%
7%
14%
18%
Total Customers
Total Quarterly ARPU
Population
Population Share
Customer Market Share
464,962 customers at year end representing:
>121% ahead of projections
>28% share of the population of Qatar
>18% share of the total mobile customers in Qatar
>14% share of the total mobile revenues in Qatar
FY09
100,000
0.8%
15,404
2%
–
0%
Q1 Jun-09
Total customers
Q2 Sep-09
Q3 Dec-09
Customer market share
Q4 Mar-10
Quarterly customer market share
Quarterly
Quarterly customer numbers
Financial Performance
Financial commentary
We have experienced phenomenal growth in customers
since our launch and with 464,962 customers at
31 March 2010 this means we have already attracted
28% of the population of Qatar to connect to Vodafone;
an achievement accomplished in less than a year.
Customer numbers at year-end exceed our own
projections by 121%.
Qatar’s mobile telecommunications market is well known
for its dual-SIM usage meaning that residents in Qatar
commonly own more than one SIM card, often using
separate phone numbers for personal or business use.
At 31 March 2010 the mobile penetration rate in Qatar stood
at 158%. Even considering the high propensity of customers
to own more than one SIM, Vodafone Qatar has captured
18% of the total SIM market in Qatar; this is what we refer
to as Customer Market Share.
Quarterly EBITDA and EBIT have been adjusted to align the Vodafone Group management
fees with when revenues were earned
1
EBIT includes mobile license cost of QAR 7.7bn amortised over 19.16 years starting from
1 May 2009 and Quarterly EBIT has been adjusted to distribute additional Amortisation
expense incurred in March 2010 following a change from 20 to 19.16 years
2
23
Average Revenue Per User (ARPU)
In any market where there is a monopoly, customers
anxiously await the arrival of a competitor to introduce
change and lower prices. The strength of the Vodafone
brand and the compelling offers and promotions that we
have brought to the market have enabled us to exceed
people’s expectations. However, even we were surprised
by the number of people who wanted to join us so early
in our network build.
The majority of our customer base was acquired in less than
seven months following the overwhelming response to our
prepay product, Red, which was launched on 9 September
2009. Over 100,000 customers joined in a three-week span
following the launch of this product.
The enthusiasm for Red continued in the third quarter
ending December 2009 where customer numbers more than
doubled from 150,799 to 353,580. Despite slowing in the
fourth quarter as expected, we still witnessed an impressive
32% quarterly growth from December 2009 to March 2010.
Aside from the strength of the Vodafone brand and the end
of the monopoly market in Qatar, a key driver in our customer
acquisition story has been our competitive international
calling promotions. This began with a campaign in the
summer of 2009 that enabled customers to make
international calls for the price of a local call. By allowing
customers to call anywhere in the world for just QAR 0.50
per minute, we enabled many of our customers to connect
regularly with their family overseas for the first time.
Customers were also enticed by a promotional offer providing
300MB of free Mobile Internet each month. This resulted in
a record 60% of our customer base using Mobile Internet.
Growth in customers continued in the last quarter of the
financial year upon the launch of a promotion to encourage
voice traffic on our network, whereby both existing and
new customers were rewarded with 2,010 free local
Vodafone-to-Vodafone minutes to be used during the
year 2010. This promotion was a key acquisition tool
in the last quarter.
Strong foundations for the future
We are delighted to have achieved 464,962 customers which
represents 28% of the population. We now have a substantial
customer base that will help drive future performance and
that forms a solid basis for generating future revenue growth.
We will continue to build upon our achievements in the
next financial year.
As mentioned earlier, the main drivers in customer
acquisition have been our international calling promotions
and Vodafone-to-Vodafone on-net minutes. This enabled
us to target our first priority segment: blue collar workers,
thereby helping to build a critical mass customer base.
Having achieved a great start, our opportunity this year
will be to target other market segments and blend our
customer mix as we complete the build of our network
in 2010.
200
180
171
160
140
Quarterly ARPU (QAR)
How we achieved our customer acquisition success
120
101
100
80
60
40
20
–
Dec-09
Mar-10
With the majority of our customers joining following the
launch of Red in September, the only applicable ARPU
for comparison are those recorded in the third and fourth
quarters. Revenue, and therefore ARPU has been particularly
sensitive to the promotions that we have made available in
the market; this has resulted in a volatile ARPU that varies
widely from month to month depending on the success
of individual campaigns. ARPU declined from QAR 171
in the December quarter to QAR 101 in the March quarter;
this decline in the last quarter of the financial year is
a result of the heavy price competition in the market led
by our competitor.
On the whole, ARPU has actually been very strong given
the propensity of users to retain dual SIMs. Whilst this is a
good stand-alone result, the composition of revenue comes
primarily from international calling in response to our
promotional rates. As international calling attracts higher
interconnect rates (the cost of calling networks in other
countries), this results in lower margins for Vodafone Qatar.
This means that while ARPU is relatively strong, it does
not always follow through to the bottom line profit.
Whilst ARPU is very important, we also need to look at
Average Net Revenue Per User (ANRPU) due to the high
proportion of international calling. ANRPU takes into account
the higher costs associated with international
calling as it is a Net Revenue figure. ANRPU for the
December quarter was QAR 72 compared to QAR 55 in
the March quarter; a decline of just -24%, significantly
less than the -40% decline in ARPU. Furthermore, monthly
ANRPU increased 28% in March continuing a trend that we
have seen over the past two months with pricing increasing
to more sustainable levels following a period of intense
aggressive pricing led by our competitor.
The strength of our promotions has resulted in a large
customer base that provides us with a very strong foundation
for the future. Our first challenge for the new financial year
is to improve individual customer profitability by having
products and services that encourage our customers
to commit to using just one Qatar SIM: their Vodafone
one. Our second challenge/opportunity concerns the
other customer segments that we will be able to target
with suitable quality and services this year. Both of these
actions are what will drive Revenues and therefore ARPU
and profitability.
25
Revenue
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)
>26% ahead of plan
The normal approach in our industry is to look at EBITDA
as the best indicator of performance because this excludes
non-cash expenses such as depreciation of our network
assets and the amortisation of our mobile license fee.
>Q AR 361.5m Total Revenue
Quarterly total revenue
Quarterly adjusted EBITDA*
>Q AR 85m raised from Star Numbers
–
178
180
160
145
140
QAR (Millions)
120
80
60
20
36
3
–
Q1 Jun-09
Q2 Sep-09
-10
-20
-30
Again, with the majority of our customers having joined
following the launch of Red in September, it remains sensible
to compare Revenue for the third and fourth quarters only.
As mentioned before, revenue is strongly linked to the
promotions in the market; the heavy price competition in
the market at the start of 2010 therefore impacted total
revenue for the fourth quarter which dropped -18.5%.
100
40
Total revenue for the financial year is QAR 361.5m,
an impressive 26% ahead of our forecasts. Revenue of
QAR 305.1m was generated for the financial year before
the inclusion of Star Number and handset revenue,
with a large proportion of total revenue being derived
from international calling. This is a solid result for
a new entrant in what is now a competitive market.
QAR (Millions)
200
Q3 Dec-09
Q4 Mar-10
The popularity of so-called Star Numbers in the Qatari
market cannot be underestimated, with an incredible
QAR 85m raised from number reservation fees this financial
year. Of this, QAR 18.2m of these revenues was donated
to the charity Reach Out To Asia (ROTA). Included in the
Total Revenue figure of QAR 361.5m is QAR 14.3m of
Star Number revenue which is recognised this financial year,
with the remaining Star Number revenue sitting as deferred
revenue on the Balance Sheet to be recognised in future
years; our policy is to recognise the revenue over four years.
-29
-40
-39
-50
The total EBITDA loss for the financial year ended 31 March
2010 was QAR (225)m, which is in line with expectations.
We anticipate having our first EBITDA positive month
within the quarter ending June 2010. This is a noteworthy
achievement and will mean that we have achieved an EBITDA
positive month within 12 months of launch; this is a great
indicator of future success.
-60
-70
-80
-73
-90
-85
Q1 Jun-09
Q2 Sep-09
Q3 Dec-09
Q4 Mar-10
Quarterly EBITDA has been adjusted to align the Vodafone Group
management fees with when revenues were earned
*
27
Total Profit & Loss
Dividends
We are reporting a net loss of QAR (673.4)m for the year
ended 31 March 2010; this is in line with our expectations
for this financial year. In most companies this would
typically be compared to the net loss experienced in
the previous financial year, which for Vodafone Qatar
was QAR (132.9)m. However, our start-up situation
makes this comparison inappropriate.
Quarterly adjusted net loss*
–
Firstly, our commercial launch to the entire population
of Qatar took place in July 2009 part way through the current
financial year, with the majority of customers joining from
September 2009 onwards following the launch of our prepay
product, Red. In the previous financial year, Vodafone Qatar
had not launched its services to the public and was therefore
incurring only costs related to the establishment of the
company without the benefit of generating revenue.
-50
QAR (Millions)
-100
-150
-155
-159
-156
-200
-203
Secondly, the amortisation of the mobile license fee
(QAR 7.7 bn) began on the date the network was ready for
service in May 2009 when we launched a unique offer
for our shareholders to help us test our network and services
prior to the full commercial launch; 15,000 shareholders
chose to become Vodafone Qatar customers at this time.
The amortisation of the mobile license fee is a significant
amount and represents a considerable portion of our net loss
to date; amortisation was not present in last year’s financial
statements as this was before our network was ready for
service. The QAR 7.7bn mobile license fee is amortised from
May 2009 to the end of the license period which is June 2028;
this equates to a period of 19.16 years. The amortisation of
the mobile license fee is a non-cash item, simply allocating
the cost of the license equally over the life of the license.
The net loss that we have experienced this financial year was
entirely expected and consistent with what we outlined in
the IPO prospectus. We will continue to incur overall net
losses whilst we build our customer base. Our first yearly
net profit is expected to be for the year ended 31 March 2014.
Although we will continue to incur a cumulative net loss
while we build our customer business, this will not affect
Vodafone Qatar’s ability to pay dividends; this is because the
main driver of our net loss is the amortisation of the mobile
license fee which is a non-cash expense and is excluded from
calculating dividend payments. Shareholders will be entitled
to receive dividends subject to the Company having sufficient
distributable reserves and subject to the decision of the
shareholders at the General Assembly. As outlined in the IPO
prospectus, based on the original business plan, in particular
our projected cash flow and profit before amortisation,
we do not anticipate declaring a dividend before the financial
results for the year ended 31 March 2013.
The reported net loss figure includes QAR 8.3m of expenses
incurred in relation to starting up our Fixed Line business.
-250
Q1 Jun-09
Q2 Sep-09
Q3 Dec-09
Q4 Mar-10
Quarterly Net Loss has been adjusted to align the Vodafone Group management
fees with when revenues were earned
*
Net Loss includes the mobile license cost of QAR 7.7bn which is amortised over
19.16 years starting from 1 May 2009; Quarterly Net Loss has been adjusted
to distribute additional Amortisation expense incurred in March 2010 following
a change from 20 to 19.16 years
29
600
523.8
500
QAR (Millions)
400
389.3
300
A total QAR 523.8m was spent on capital expenditure
during the financial year; this brings the total spent since
the incorporation of the company to QAR 913m excluding
the mobile license fee. The capital expenditure was used
to build the independent indoor and outdoor 2G and
3G network, IT systems, retail stores and office fit-out.
To address the congestion issue on our network that arose
as a result of acquiring more customers than anticipated,
we brought forward some future capital expenditure
to this financial year, resulting in 24% more capital
expenditure than originally forecast.
The design of our network is predominantly 3G,
however our existing customer base are heavy users
of the 2G network leading us to make further unplanned
expenditure to increase capacity of the 2G network
so that we can ensure a great customer experience.
200
100
0
FY 09
IPO and the requirement
for additional funding
The Founding shareholders of Vodafone Qatar contributed
QAR 5,072.4m of share capital, of which QAR 4,629.6m went
towards paying the first instalment, or 60%, of the mobile
license fee, leaving the remaining QAR 442.8m as working
capital. In order to raise capital for the remaining 40%
of the mobile license fee, Vodafone Qatar was required
to undertake an IPO.
Vodafone Qatar’s IPO was completed in May 2009, raising
QAR 3,381.6m. Of this, QAR 3,086.4m went towards the
final payment of the mobile license fee, leaving a further
QAR 295m as working capital. This brought the total working
capital available to QAR 739m. As a start-up, we needed
to supplement this with additional funding to bridge the
gap before turning cash flow positive.
As a result of our management agreement with Vodafone
Group, we have been able to arrange access to funding
at preferential interest rates. During this financial year
we had a loan facility for US$110m which we have been
able to draw upon as required.
Performance Bonds
Net Debt (Borrowings less Term Deposits)
500
As part of the terms of the second mobile license,
Vodafone Qatar had strict requirements in place to ensure
speed of delivery with regards to network completion,
with a performance bond of QAR 120m acting as guarantee.
The milestones imposed by ictQATAR were:
433
371
400
>80% population coverage by 31 March 2009
> 95% population and all major roads by 1 May 2009
269
300
200
QAR (Millions)
Capital Expenditure
> Service launch in July 2009
156
>98% population and all paved roads by
1 September 2009
100
> 100% geographical coverage by 28 December 2009
-
-34
(100)
All milestones were achieved and we are awaiting the final
decision from ictQATAR to release the performance bonds
of QAR 120m.
-42
(200)
(300)
(400)
-294
Sep-08
Dec-08
Mar-09
FY 10
Jun-09
Sep-09
Dec-09
Mar-10
In addition to the milestones for network completion,
Vodafone Qatar was also required to hold QAR 90m
as a technology bond with the following conditions to be
completed within three years of the mobile license date:
>100% population coverage of 2G and 2.5G
>90% population coverage of 3G and 3.5G
The increase in net debt in the last quarter of the financial
year results from a milestone payment to Alcatel Lucent in
relation to the network build.
Both technology milestones have also been achieved
and we are waiting for the outcome of ictQATAR testing
to confirm this and release the technology bond.
31
33
A new world
In June 2008, the second mobile license in the State of Qatar was
awarded to a consortium between the Vodafone Group, the world’s
leading mobile telecommunications company and the Qatar Foundation
for Education, Science and Community Development, a private
institution of public utility founded by His Highness Sheikh Hamad
bin Khalifa Al-Thani, Emir of Qatar.
This was the first Vodafone start-up in close to 10 years and our
first partnership model where Vodafone is a minority shareholder
with full brand and management control. It was the first time
Vodafone had ever launched an operating company in the GCC,
and only the second in an Arabic-speaking country (after
Vodafone Egypt).
35
A new approach to ownership
Our shareholders are Vodafone Group (22.95%);
Qatar Foundation for Education, Science and Community
Development (27.05%); pension funds appointed by the
government (10%); with the remaining shares (40%) initially
offered only to Qatari individuals and institutions through
our Initial Public Offering (IPO).
Vodafone
Group Plc
51%
In April and May 2009 we held our IPO which was fully
subscribed raising QAR 3,381.6m during a global financial
crisis. It was the largest IPO in the world at that time.
Vodafone Qatar listed on the Qatar Stock Exchange
on 27 July 2009 with over 82,000 Qatari shareholders
representing 77.05% Qatari ownership. Whilst we operate
under the Vodafone brand, we truly are a Qatari company,
and continue to be majority owned by Qatar. At our financial
year-end and eight months after listing, our Qatari
ownership remains high at 73.6%.
Qatar
Foundation
49%
Qatari
Institutional Investors
5%
Qatar Foundation
3.3%Military Pension Fund
Vodafone and Qatar
Foundation LLC
3.4%Military Staff Loan Funds
3.3%Health and Education
Endowment
15%
45%
Free float
traded on
Qatar
Exchange
40%
Vodafone Qatar has a management agreement with
Vodafone Group which gives us full access to all of
Vodafone’s products, services, technologies, buying power,
brand, people and skills. This advantageous partnership
has meant that Vodafone Qatar has been able to bring the
best of Vodafone Group’s experience from around the world
to Qatar, bringing efficiencies and cost savings to both the
company and the country of Qatar. These benefits along
with the support of our partner Qatar Foundation means
Vodafone Qatar’s services will help to bring Qatar to the
forefront of technology and telecommunication services
in the region.
As well as bringing global products and services
to Qatar, we have also partnered with many local
organisations that distribute and support our services.
Some of our most notable relationships are
illustrated here.
Worldwide
Partner Vodafone Group
Providing Products and services
UK & Romania
Partner DataSelect
Providing Website design
Egypt
Partner Vodafone International Services
Providing Call Centre partnering
Partner Vodafone Egypt
Providing Infrastructure Operations
UK
Providing Global Supply Chain, Group Legal
Partner NYN
Providing Numbers application on website
Partner HP
Providing Application, Development &
Maintenance Partners – IT systems, billing, CRM
Partner Oracle
Providing IT systems applications
Qatar
Partner Gulf Bridge
International
Providing Fibre to Vodafone
Qatar’s landing station
Partner Denton Wilde Sapte,
Clyde & Co, El Meouchi
Providing Legal services
Partner Meeza
Providing Data centre
Ireland
Providing Marketing, use of VF brand
France
Vodafone Qatar Q.S.C
India
Partner Alcatel Lucent
Providing Network Build and Operations
PartnerIntelenet
Providing Call Centre partnering
Netherlands
Partner Vodafone Netherlands
Providing Roaming Replicator Agreement
New Zealand
USA
Partner Apple
Providing First and only official
distributor of iPhone in Qatar
Partner Vodafone New Zealand
Providing Finance systems
Partner Origami
Providing Advertising, Brand
37
Engaged first 1,000 customers in
helping to test Vodafone services
through a special offer in March 2009
Vodafone Qatar’s achievements at a glance:
Launched commercial “Freedom”
services on 7 July 2009
The company listed on the Qatar
Exchange on 27 July 2009
Launched commercial “Red”
services on 9 September 2009
The first Vodafone Qatar
employees arrived in March 2008
An IPO completed in May 2009 raised QAR 3,381.6m
In December 2007, Vodafone Group and
the Qatar Foundation Consortium were announced
as the winning bidder for the second mobile
license in Qatar
The mobile license was granted
29 June 2008
Donated over QAR 18m to charity through number
reservation fees of our most attractive Star Numbers
Offered Vodafone shareholders a special offer in May 2009
Awarded “New Entrant of the Year” at the
CommsMEA Awards in December 2009
Vodafone Qatar has built a mobile network
offering 2G and 3G services with
100% geographic coverage of Qatar
by 28 December 2009
39
Our “business plan on a page”
A legal perspective
We built our company on Values (“how” we do things),
a common purpose (“why” we do things), a shared vision
(“where” we want to go), and an agreed set of commitments
(“what” we will do to get there). We all share a culture
of personal responsibility that ensures we will hold firm
to this, our Purpose-Based Organisation (PBO).
Before we could start recruitment, sign a contract,
or build our first tower; we had to obtain Ministry of Business
and Trade approval to form our company and complete
ictQATAR’s mobile license pre-granting requirements.
Working with lawyers advising Vodafone Group and the
Qatar Foundation, this took six months and on 29 June 2008,
the company was formed and the mobile license was
granted. We could now start building our company and
preparing to launch services.
To define Vodafone Qatar’s purpose and values we addressed
our future customers, the people of Qatar, to discover
what they valued and what they expected from us as
a new entrant to the market. We used this information
to develop our purpose, “To make a world of difference
for all people in Qatar” which guides us at every stage
of our thinking and decision-making.
To make a world
of difference
for all people
in Qatar
To be the most
admired company
in Qatar
Speed
Simplicity
Trust
Vitality
Worldliness
Our legal and regulatory team is supported by Vodafone
Group and our external legal partners Denton Wilde Sapte,
Clyde and Co, and El Meouchi. Together they produced
more than 500 agreements to help the company get started
including wholesale agreements with Qtel, mobile radio
site agreements with landlords, agreements with our
technology and distribution partners, employee contracts,
leases for our offices and retail stores and our terms and
conditions for services to our customers – to name but a few!
The same team also found time to secure the required
government agency approvals to allow us to recruit people,
import equipment, open our stores and mobile store trucks,
use our logos on signage, and hold public events for the
people of Qatar.
Now that all the essential agreements are in place, we are
focusing on improving the services we offer and our legal
and regulatory team are negotiating new agreements
and partnerships to support this.
We will...
>Move from start-up
to operational
excellence
>Be customer obsessed
>Be the HOT team
>Innovate!
41
A wireless world
Our mobile network is our own and is independent from the competition.
As part of our partnership model, all of the 430 outdoor and indoor cell
sites that form our Radio Access Network were designed, constructed
and maintained as part of a “turnkey” solution provided by our partner
Alcatel Lucent. This agreement is part of Vodafone’s global purchasing
model and provides Vodafone Qatar with savings of 40% over five years…
and that’s just the beginning.
Our network offers full HSDPA/HSUPA capability, guaranteeing that
wherever there’s a Vodafone UMTS signal, you can be sure it’s 3.5G.
We’ve also brought forward planned spending of QAR 100m on capital
expenditure to this financial year to increase the capacity of our
2G network sites. This is to address the congestion issues we have
experienced as a result of excess demand in certain areas such as
Ras Laffan Industrial City and the Industrial Area Doha where we
have seen much faster customer growth than expected.
As our financial year drew to a close, we were building a new site
every day.
Sharing the burden
Indoor sharing
Cells on wheels
Building the future
Vodafone globally shares telecommunications infrastructure
as it reduces costs, is environmentally sensible, and ensures
that customers can experience great network coverage from
all operators.
We have also sought to share in-building telecommunications
infrastructure with Qtel. Following a regulatory decision
in May 2009 by ictQATAR we signed an indoor site-sharing
agreement with Qtel in September 2009. We have already
established independent in-building coverage in over
50 buildings in Qatar, including all shopping malls and most
major hotels. Negotiating access to the remaining buildings
is a time-consuming process. We are continuing to work
on sharing in-building infrastructure in existing and future
public buildings with Qtel; this will enable both operators
to provide great network coverage throughout Qatar.
To provide mobile services throughout Qatar, Vodafone Qatar
required a mobile network of more than 400 outdoor radio
sites to be completed by end of December 2009 to give
100% geographic coverage. To date we have secured
248 permanent mobile radio sites approved by the Urban
Planning and Development Authority and Municipalities.
This is the most mobile radio sites that have ever been rolled
out in a single year in Qatar’s history!
In January 2010, Vodafone Qatar and Alcatel Lucent
generated a great deal of media attention with the
announcement of an innovative new addition to our
mobile network.
Vodafone has sought to bring this approach to Qatar. Our
legal and regulatory team requested and concluded an
outdoor tower sharing agreement with Qtel in March 2009.
This enables us to put our mobile antennas on Qtel’s towers
if feasible, or build our own tower on Qtel’s land, or for Qtel
to put their mobile antennas on Vodafone Qatar’s own tower
should they choose to do so. Unfortunately we were not
successful in negotiations with Qtel to share existing towers
and cables, and as a result we now have two duplicate
existing networks. We continue to work with Qtel and
ictQATAR to ensure future network building will be shared.
We continue to work with landlords, the government, the
Urban Planning and Development Authority and municipalities
to secure more locations and approvals for the remaining
permanent mobile radio sites that we require. In the meantime,
in order to provide mobile services to our customers and meet
our mobile license obligations, we have obtained government
approval to deploy temporary mobile radio sites, or “cells on
wheels (COWs)”. As we secure more permanent mobile radio
sites, we are removing COWs from the landscape.
Since 15 June 2009, Vodafone Qatar has replaced 40%
of temporary towers with permanent constructions and plans
to have only 10% of towers that are temporary by August 2010
subject to completing planning and build procedures. Due to
ongoing construction in Qatar this 10% will be a feature for
some time.
In a secluded area in the south of Qatar near the border
with Saudi Arabia, and far from conventional energy grids,
a base station site had been quietly operating for several
weeks with its diesel generator turned off. The reason is
that this tower has also been fitted with a photovoltaic
cell and a wind turbine, a “hybrid alternative energy” power
arrangement which enables the tower to simultaneously
draw power from both sources, one of the first technologies
of its type in the world.
This innovative site has wide-ranging impact not only
for Qatar, but for the world – and the world took notice.
Alcatel Lucent won the Sustainable Energy Europe award
from the European Commission for this trial solution.
You can find out more about what Vodafone Qatar is doing
to help promote environmental sensibility and
sustainability by turning to page 68.
We placed signage on our first COWs in order to provide
information and to engage the people of Qatar in helping us
reduce their number by providing site proposals or land offers.
As the number of temporary sites dwindled, we replaced our
message with a simple “Shukran”, thanking them for helping
us achieve 100% coverage.
Where required by the Government or landowners, we even
camouflage our towers to make sure they won’t spoil the scenery,
sometimes using minarets to hide the antennas completely.
43
A customer’s world
Vodafone’s customers in Qatar are a rich and diverse group from all around
the world, each with their own needs and priorities. Our goal is to make sure
everyone, no matter where they’re from, gets the mobile products and
services that make a difference to their lives each and every day.
45
Enjoying your freedom
Seeing Red
Flexing your boundaries
A level playing field
The world of online
Vodafone Qatar launched its commercial services to the
public on 7 July 2009 with Freedom. All our customers
needed was a credit card or a bank account with QNB,
Doha Bank or Commercial Bank, and they would be able
to set up an account with Vodafone Qatar: no credit checks,
no activation fees, no contracts, no bills, no lines, no hassle.
Customers can change their plans or cancel their accounts
at any time; in effect we have given the customer complete
control of their spending.
No sooner had we brought our customers Freedom then
we painted the town Red.
It’s a simple idea with huge customer appeal, and yet relatively
uncommon in the telecommunication world. Vodafone Qatar
offers a single plan structure, available to all customers,
regardless of whether they pay using Freedom or Red.
Our legal and regulatory team continues to focus on securing
regulatory decisions to support the company. A key decision
by ictQATAR that would influence the way we compete in
the market was the designation of Qtel as a dominant
service provider. One of the key outcomes is that ictQATAR
will intervene if the competition is seen to engage in
anti-competitive practices or resolve disputes.
Freedom was initially available to customers only through
our online store, making Vodafone Qatar the first
telecommunications provider in the country to sell either
products or services online. Credit card purchases in Qatar
are generally limited and infrequent, and many assumed
that Vodafone Qatar’s online shop would be unsuccessful.
They were wrong.
As a result, we have secure regulated domestic
interconnection charges between Vodafone Qatar and Qtel
in March 2009. In June 2009 we also secured regulation
against exclusive distribution enabling Vodafone Qatar to
increase their distribution reach across Qatar. In May 2009,
we secured regulated access to in-building sharing and
Qtel’s international landing station.
Within a few weeks, Vodafone Qatar had become the
third largest online retailer in the country, surpassed
only by the nation’s airline – and only if the Ministry
of Interior’s website is counted as a retailer. Within a few
weeks, the amount of time spent by the average customer
at www.vodafone.com.qa exceeded that spent by
a reader at the Wall Street Journal’s online edition.
Freedom and its automated payments will remain a core
feature of the future with much more to come as we further
develop this innovative solution.
On 9 September 2009 we launched Red, a traditional prepaid
service which opened the field to a large number of workers
in Qatar who did not have the credit card or bank accounts
required to enjoy Freedom. In the meantime customers with
bank accounts who wanted our Red product would eventually
be able to purchase Red vouchers at over 160 ATMs
throughout the country.
The response to Red was astonishing. In the month
that followed, Vodafone Qatar added over 100,000
new customers.
Customers buy a Flexi plan from QAR 35 (Flexi 35) in gradually
progressing increments up to QAR 550 (Flexi 550). They can
then use this amount for whatever service they want, from
making local calls to calling internationally, to roaming,
to sending text messages and MMS, to surfing Mobile Internet
and more. Customers get the same rate of calling regardless
of whether they call at night or in the morning, irrespective
of whether they call within the Vodafone network or to
a competitor. It’s that simple.
What’s more, when our customers buy a Flexi plan, they
always get more value than they paid for: when customers
buy Flexi 35 on Freedom, they can use QAR 37. When they
buy Flexi 220 on Red, they can use QAR 250. On top of that,
each Vodafone Flexi plan comes with free Vodafone minutes,
which can be used at any time to make calls to other mobiles
on the Vodafone Qatar network.
We closed the financial year with the introduction of Flexi 20,
making it easier for our more cost-sensitive customers to
keep in touch with loved ones.
Our mobile license requires Vodafone Qatar to notify
ictQATAR of all our retail products and services. ictQATAR
will then review this and may request changes. Our legal,
regulatory, and marketing teams pro-actively engage with
ictQATAR taking the time to explain our products and
services and answer their questions. We focus on ensuring
that all our communications about our products and services
are easy to understand with no hidden fine print. To date,
all Vodafone Qatar’s products have been successfully notified
to ictQATAR without material changes.
Recharge cards without the recharge cards
Vodafone Qatar brought innovation online with a solution
that enables Vodafone customers to purchase prepaid
phone credit without so much as scratching a card, from
their computer or mobile phone anywhere in the world.
At the simple click of a button a user of Vodafone Qatar’s
eTop-Up service can add prepaid credit to the phone of
any Vodafone customer using Flexi on Red.
Through this work, Vodafone Qatar is supporting ictQATAR
to create a strong foundation for the long-term development
of a world class communications services in Qatar, supported
by a regulatory framework in accordance with leading
international standards.
47
A Landmark moment
On 13 July 2009 Vodafone Qatar opened its first
retail store at the Landmark Shopping Centre
in Doha. Within five months another eight retail
stores were opened all around Qatar.
49
Bringing Vodafone to the customers
Vodafone Qatar is the first company in Qatar to
introduce two “stores on wheels” that can be driven
to any location in the country. These mobile stores
offer the full range of Vodafone services, and are
frequently driven to the country’s labour camps
to reach thousands of workers who cannot easily
reach a Vodafone retail store or distributor.
Located in Doha’s Industrial Area, a sprawling
neighbourhood that is home to a large number
of workers’ camps and industrial facilities,
Vodafone Qatar’s direct sales team can service
thousands of customers each day. The crowds
of customers can be so thick that our team use
megaphones to communicate with them.
51
Selling indirectly
Over 60% of new Vodafone customers and over 90%
of all sales of Flexi plans come from a strong network
of local distribution and retail partners. With the widest
distribution reach in the country, Vodafone Qatar brings
its services to people everywhere through over 2,600
retail outlets spanning everything from small convenience
stores to international grocery chains like Al Meera and
Carrefour to specialty mobile phone shops and souqs
or local markets.
In conjunction with our local partners we are breaking
new ground as a telecommunications operator,
implementing Field Management systems that track
the stock of Flexi plans and SIM “Welcome” packs being
sold by third-party retailers as well as the speed at which
this stock is sold and replaced – a system typically found
only amongst grocery distributors.
53
Customers are at the
heart of everything we do
When you enter our offices, the first thing you will see is our
call centre. It’s not in a separate building, on a different floor,
or in a separate room, but right in the heart of our Doha office.
Even though we also have call centres in Egypt and India,
we keep our main call centre in Doha as a centre for higher-tier
customer support, and above all as a reminder to the rest of
the company to keep the customer close.
We always keep one call terminal available so that any employee
can take the opportunity to listen to actual customer phone
calls thereby gaining a better understanding of our customers’
needs, and what our Customer Care Champions experience
on a daily basis.
We work hard to integrate our front and back office staff through
our initiatives. Each week our Executive Team invites a Customer
Care or Retail Champion to the boardroom to report on what
they encounter every day. Every month our entire leadership
team hold a Customer Day, spending an afternoon with
customers in either our retail stores, in the call centre or at
one of our partner’s outlets – and setting the trend for all back
office employees at all levels of the organisation to do the same.
At Vodafone Qatar, being customer obsessed means
experiencing what the customer experiences.
Vodafone’s Customer Care now offers customers service
in four languages, more than anywhere else in the Vodafone
World: English, Arabic, Malayalam and Hindi. When we launched
services in Malayalam and Hindi we saw the number of calls
we received in English dwindle to 30%.
55
An exciting world
Social butterflies
We’ve got your number
Vodafone Qatar is highly active on Facebook (Vodafone
Qatar) and Twitter (@VodafoneQatar), as well as local blogs.
The “Vodafone Qatar” Facebook™ Group had over 8,200
members by year-end and is growing by 1,000 members per
month, and has even gained repute for providing customer
service, addressing customer requests, and serving as a forum
to gather feedback about what customers would like to
see from Vodafone, such as new products and service
improvements. Members of the Vodafone Facebook™ Group
are often the first to hear about Vodafone’s new offers and
promotions, as well as events, and their posts are usually
answered within the span of a few minutes. We believe
it is important for customers to be able to interact with
us in whatever way is most comfortable to them.
™
One of our most talked-about products with radical appeal for our customers
was attractive mobile phone numbers. Having created a sensation with
our auction of the first Star Numbers available in our number range,
we developed an innovative web application with our partner Conviva
to keep the momentum going – and to capture added success with a
new way of assigning numbers.
A visitor to Vodafone Qatar’s website can reserve a phone number free
of charge by spinning a dial until they come across a number they like.
And spin they did – on average an overwhelming 600,000 times each
month. For an additional reservation fee, however, a customer can reserve
an attractive phone number of particular importance to them – whether it
be the customer’s birthday, license plate number, or any other meaningful
combination of digits.
Number reservations are done in accordance with Vodafone Qatar’s
number policy which is provided on our website (http://www.vodafone.com.
qa/go/en/legalregulatory/numberpolicy) and at our stores.
In March 2009 we auctioned our 40 most attractive phone numbers,
or “Star Numbers”, earning QAR 12m, and then during the year we
made a special offer to customers with a 50% discount on number reservation
fees, the combined proceeds of which were devoted to support our two-year
partnership to provide QAR 18m to Reach Out to Asia (ROTA).
57
Bringing people closer together
Qatar is a unique environment in that of the 1.7 million
people living in this country, only an estimated 15% are
Qatari nationals. This means that up to 85% of the population
is composed of international workers from all income levels,
every last one of them with family and friends overseas.
In July 2009 we introduced the lowest international calling
promotional rates Qatar had ever seen. Our customers
were paying QAR 0.50 for calls to anywhere in the world, to
landline or mobile, at any time of day or night. From workers’
camps in Ras Laffan to low income housing in Doha’s
Industrial Area, people could finally afford to call friends
and family overseas more frequently and for longer than
ever before.
There followed a period of extensive customer growth and
a tidal wave of international calling. Our customers made
80 million minutes worth of calls in November 2009 alone,
an amount exceeding that of other Vodafone operating
companies five times our size.
59
Growing pains
International innovation and calling creativity
With such huge volumes of international calling combined
with a rapidly growing customer base after the launch of
Red, our customers unfortunately experienced a congested
network towards the end of Ramadan and during the
Eid al-Fitr holiday. Our legal and regulatory team secured
a decision by ictQATAR to grant us access to Qtel’s
international landing station; the site where undersea
cable links Qatar’s telecommunications with those of
other countries. This enabled us to increase our capacity
almost overnight.
With such a successful international calling promotion over
summer, it was clear that we had made a world of difference
to all people in Qatar. This left us with just one problem:
as the scheduled end of the promotion 14 November 2010
drew near, what could we do to follow on this success?
To support increased traffic volumes in the future and to
help increase Qatar’s international connectivity, in February
2010 we signed an agreement with Qatar-based Gulf Bridge
International (GBI) to land GBI’s submarine cable in Qatar.
Offering the latest in subsea cable technology, GBI’s cable
offers up to 5 terabits per second on certain cable sections
and ensures two different lines of communication to help
prevent the possibility of outages. Whilst we build our own
international landing station, we will continue to use Qtel’s
to gain access to international lines.
The answer lay in our strategy of being customer obsessed.
We analysed our customers’ calling patterns, and then sent
each of our customers a text message detailing a special
rate to the country they called most – the first solution of
its type in the world.
2010 kickstart to the year
We furthered the excitement in international calling by
introducing short promotions tied to special occasions
and popular events: customers could now enjoy special
discounted rates to Sri Lanka for Independence Day, to India
and Bangladesh during a highly publicised cricket match
between the two countries, to India during the Diwali festival
and to Egypt in honour of their victory at the Cup of Nations.
This last promotion was successfully designed, executed,
and communicated to our customers and the media within
the span of a few hours.
To this day the many nationalities represented in Qatar
can rest assured that not an occasion will go by without
Vodafone Qatar providing an opportunity to keep in touch
with loved ones overseas. This is yet another way in which
our customers have come to expect constant surprise
and delight.
In January 2010, Vodafone Qatar returned to the Dhow Port
of the Doha Corniche, the same site where we had held our
IPO Town Hall event nine months earlier, to announce a
promotion that would rock our already record-breaking
customer base.
The offer was simple: to celebrate 2010, we granted all
new and existing Vodafone customers 2010 free minutes
of calling within our network. The minutes, which amounted
to 33.5 hours of calling, would be available to our customers
for the rest of the year. No sooner had the announcement
been made and the questions answered than the sky erupted
with fireworks.
It was a fitting entry to a new year, and a fitting example
of how Vodafone Qatar has brought excitement, surprise
and delight to our customers with a series of daring
promotions since the launch of our services.
In November 2009 Vodafone celebrated the
Indian holiday Diwali, or the festival of lights, by
distributing boxes of candy at local Indian schools
and to passers by in areas throughout Doha that are
highly populated by Indian nationals.
61
An innovative world
With the cost and accessibility of using an internet café outside the reach of many
low-paid labourers, we introduced a promotional offer of up to 300 MB of free
Mobile Internet each month. Almost immediately the scene in Qatar changed
as people from all income levels were able to access the internet and surf the web.
Suddenly the mobile phone was serving its purpose of keeping people connected,
not with voice alone, but also with data.
Tools and toys
In order to follow the end of this promotion with an offer valuable to our customers
whilst being profitable to us, we have now “made the web free” on mobile.
Now, all our customers get 10MB of free Mobile Internet each month,
and in addition we allow unlimited free access to our customer s’ most popular
social networking sites including Facebook™, Maktoob, Orkut and Friendster –
yet another global innovation in services, right here in Qatar!
HTC Magic
Vodafone Qatar utilises Vodafone Group’s scale to deliver
top-of-the-line handsets to Qatar. Some of the devices
we’ve introduced – or are introducing – to the market
represent market novelties or global innovation; all of
them give our customers something to look forward to.
Vodafone launched one of the first mobile phones using
Google’s highly anticipated Android operating system.
Our version of the phone had been modified to include
an Arabic keyboard, prayer times and a Quran reader.
iPhone
In December 2009 Vodafone Qatar became the first and
only official distributor of the iPhone in Qatar, offering
the iPhone 3GS. When combined with Vodafone’s offer of
free mobile internet, 90% of iPhone users were accessing
mobile internet.
A record 60% of our customer base is using Mobile Internet!
Percentage of customers using Mobile Internet
A world of connections
BlackBerry®
In a move recalling the initial testing of Vodafone’s core
services, the highly anticipated BlackBerry® device was
launched 1 March 2010 to an exclusive group of 1,000 users,
whose experiences with the new service were recorded at
Vodafone’s Facebook™ group. Full services and Vodafone
devices will soon be launched for all customers.
MiFi
Vodafone will soon launch its Mobile Broadband devices,
small and colourful USB “thumb” devices which enable
customers to use their SIM cards – and Vodafone’s exciting
mobile internet offers – to connect their PC to the internet.
The ultra low cost handset
Providing roaming to mobile customers usually means
reaching individual agreements with every other
company you want to roam with, all over the world –
which can take years. Instead our legal and regulatory
team negotiated the use of the Vodafone Netherlands
roaming replicator service to enable Vodafone Qatar
to provide roaming services upon commercial launch to
203 countries for Freedom customers and to 92 countries
for Red customers.
We have since started individual negotiations with operators
in our customers’ top roaming and international calling
destinations. This will enable us to further introduce
innovation to the international and roaming services
we offer to our customers.
In April 2010 we brought the lowest cost handset in the world to
Qatar. The Vodafone 150 device retails for QAR 59, providing the
opportunity for those on the lowest incomes to stay connected.
100%
80%
60%
40%
20%
19%
37%
41%
Nov-09
Dec-09
60%
58%
62%
Jan-10
Feb-10
Mar-10
26%
0%
Sep-09
Oct-09
63
A human world
In October 2008 we began our quest to find the very special
people who would become the front-line retail and care people
serving our customers. We reviewed 21,494 resumes and CVs.
We travelled across North Africa, the GCC and the subcontinent
to interview 3,661 candidates in person and we challenged
868 candidates in our “assessment centres”, using role play
situations to examine their competencies in every facet
of that ideal customer experience.
And in the end, we hired 153 people from Qatar, Egypt,
India, the Philippines and elsewhere who would become
our Customer Champions.
Vodafone Qatar employs a total of 299 people on local
contracts from 40 different nationalities. Over 70 of our
staff have previously worked in other Vodafone companies
around the world, bringing with them a wealth of
telecommunications experience.
65
A centre for talent development
The development of our talent is one of our organisation’s
highest priorities, and this is reflected in a number of
different initiatives.
On an individual level we have the Performance Dialogue,
a twice-yearly process where each employee sets
4-5 measurable performance and development goals,
which align with our company strategies. With the active
participation of their managers, our employees then work
to achieve these goals over the following year. At the end
of this period, the employee ultimately holds a review
session with his/her manager to identify specifically whether
the goals were achieved, and on the basis of this dialogue,
the employee’s performance rating is agreed and the bonus
is calculated.
A key piece of this process is that each employee commits
to having a Development Plan, which becomes part of their
responsibility – and the responsibility of the employee’s
manager – to ensure that each employee is pursuing
opportunities to increase knowledge and experience both
inside and outside of the company.
At an organisation level, we have our Development Roadmap,
an ambitious and active plan of workshops designed to guide
every employee through an interconnected series of training
workshops throughout the year. In 2009 we focussed on
creating a purpose-based organisation; in 2010 we focussed
on Personal Leadership and People Leadership, with topics
including Leading and Succeeding in Emerging Markets,
Inclusive Leadership and Coaching and Teambuilding
within the framework of a purpose-based organisation.
And lastly, at an organic level, our organisation is actively
designed to build a Culture of Coaching, in which our people
are actively coached and mentored by peers and managers
alike. There’s no better example of this than our CEO
Grahame Maher, who spends a large share of his time actively
coaching both employees within the company as well
as students and others outside the business.
A solid recruitment framework
We strive to find people with great Talent, good Experience,
and whose Values fit those of our company; we place most
importance on an individual’s values and talent. Ultimately
we believe smart people with the right attitude who are keen
to learn and develop are much better in the long term even
if they don’t have the right experience.
An exciting workplace
Encouraging local talent
Vodafone’s offices are colourful and vibrant, with
colour-coded meeting rooms and our very own café.
Qatar’s Vision 2030 is focused on human, social, economic
and environmental development and employing Qataris is
a key requirement of the human development component.
Vodafone Qatar takes this commitment very seriously and will be
focusing over the next few years on Qatarisation and Localisation.
Our initial approach to resourcing was to bring talent in from
around the Vodafone world – people who were very experienced
in all the elements that had to come together to build and launch
the business. We have now broadened this and are committed to
recruiting Qataris and people for whom Qatar is a long-term home in
order to transfer those skills and knowledge to the local community.
This will ensure that our staff is representative of our customer base
as well as giving the business great long-term stability.
We have no cubicles, no assigned seats, no corner offices,
and no executive floor. We practice “free-desking”,
where each employee – from the assistants to the executives
– carries their own notebook computer and docks in
at whatever desk is available. On a given day you might
find yourself sitting next to the CEO, or using your wireless
connection from the café.
Using an engagement index as a local market measure,
Vodafone’s People Survey measures employee engagement
consistently across all Vodafone operating companies,
as well as against high-performing companies across the
globe. A score of 75% on the engagement index is typically
considered good; on its first People Survey in 2009, Vodafone
Qatar scored a world-class 81%. When compared with other
high-performing companies in each of the subsequent
questions, Vodafone Qatar was ranked consistently higher
– in some questions by as much as 17 percentage points.
Our Retail and Customer Care Champions not only work
closely together, they live closely together. Located in some
of Doha’s most active neighbourhoods, these apartment
buildings offer spacious accommodation, common rooms
and visiting rooms, and even spare apartments that can be
booked to accommodate visiting family members. In 2009
one apartment also provided a teacher of disadvantaged
special needs children through the HOPE charity with
a home for the entire duration of his stay in Qatar.
When we recruit for an available role, we first give priority to
assess Qatari national candidates, then we look at long-term locals,
then people from other Vodafone companies and finally candidates
from elsewhere. We are looking for talented Qataris who crave
engagement and experience and who want to join a very progressive
organisation, who want to have exposure to international standards
of working and who want to immerse themselves in a unique culture
based on a common shared purpose, vision and strategies.
This year we launched our first graduate programme and are
looking for graduates to join the team. In Year One, they will have
the opportunity to work on three projects in different parts of the
company; for the second year they will be placed in a role as a
trainee where they can continue to learn and grow. They will also
be participating in a variety of development programmes and will
be in touch with graduates in other Vodafone companies around
the globe. This is in addition to our highly successful summer
and winter internships which will be ongoing.
What’s the biggest difference you’ve found
working at Vodafone over other places?
“A sense of purpose that
gives you a reason to get
up in the morning.”
Nouf Al-Sulaiti
“Teaching. All the Vodafone
employees are open to
share all the knowledge
they have.”
Global heroes
Our Vodafone Way Recognition Programme is a Global
Programme which operates across the Vodafone Group.
It is designed to identify and reward the “Global Heroes” within
our organisation whose performance best reflects our company’s
values. On a quarterly basis, the programme recognises the
top few people or teams in each Operating Company who
are consistently high-performing and representative of
The Vodafone Way. Our most recent winners, Public Relations
Officer Jihad Abdullah and Customer Champion Ollie Pangan,
were rewarded for their tireless efforts and devoted service.
At the end of each year, the Vodafone Group Executive
Committee selects around 25 of the Global Heroes (and their
partners) from across the world to attend a Global Vodafone
Way event in London.
Bassam Al-Ibrahim
“Vodafone is an open, tolerant
and vibrant workplace where
the team and Executives are
always interested in listening
to what you have to say”.
Khalifa Saleh Haroon
In this way, we feel that we can best serve the country that
is our home: by contributing to its future.
67
A better world
Making the world a better place with everything we do
What do we mean by a Better World?
The world is a big place, but each of us has an important role
to play in shaping what kind of world we live in.
Our corporate social responsibility, which we call our
Better World programme encompasses four key areas of
focus. Although we refer to these four areas independently,
they are all equally important, they often overlap, and they
all work together to form our Better World.
Vodafone Qatar’s market position as an innovator and leader
brings with it a responsibility to conduct our business in an
exemplary manner. We are committed to using our strength
as a business leader to help build stronger communities,
while accepting the challenge as individuals for each and
every one of us to lead by example.
Our goal for Corporate Social Responsibility at Vodafone Qatar
is to make the world a better place with everything we do.
Ensuring a Green World
We believe in supporting innovative products and services
that enable us and our customers to nurture and protect
the environment. By recycling as much as possible,
we can prevent wastage and ease pressure on landfills.
Using alternative forms of electricity to power our network
will help Qatar to save energy.
Hybrid antennas
At the beginning of 2010 we deployed the first hybrid
powered Base Station in Qatar (see page 43). It uses a
combination of solar and wind energy to provide enough
power to be self-sufficient. The Base Station in Qatar has
been an early case study for the technology programme
Vodafone Group intends to roll out worldwide.
Mobile phone recycling
Hundreds of thousands of unwanted mobile phones are
discarded every year. When dumped in landfills, the metals
and chemicals from these handsets leak out and pollute
the land, air and water. But there is a better way.
Vodafone has launched Qatar’s first mobile phone recycling
programme. Unwanted handsets that still work are sent
to the developing world, while those that no longer work
are dismantled and recycled in a responsible way.
Green office and stores
At one point our offices were using 21,000 disposable cups
a month. As a sustainable solution we have made the move
to reusable cups and drinking bottles with the goal of reducing
consumption of paper and plastic cups by 80%.
Plus, we have begun collecting and recycling used brochures,
posters, boxes and other collateral from our stores and offices.
69
Encouraging a Responsible World
Creating a Connected World
Contributing to a Giving World
Ramadan
A Better World in the future
Honesty and integrity are very important to us at Vodafone.
This means taking care of our customers, protecting their
privacy and their rights. It means looking after our
employees, and conducting our business in a transparent
way. In doing so, we expect honesty and integrity from all
of our people, families and business partners.
This area is especially important to us as it includes all the
ways we can use our unique expertise and technology as
a communications provider. It’s in our power to help our
customers connect easily with those they care for or depend
on. With our international calling promotions and free Mobile
Internet, we’re making it easy to contact family and friends
in Qatar and overseas.
Our company is full of talented, energetic, skilled people.
We can make a big difference to our community by donating
our skills and time to others, particularly in order to help
them develop skills they can use for the rest of their lives.
Where that’s not possible, simply donating money to
organisations doing great work in Qatar or abroad also
contributes in a meaningful way.
Every day during the holy month of Ramadan, Vodafone
Qatar staffed a tent to provide the Iftar meal to 150 of the
needy. We also distributed Iftar boxes daily to passers-by,
helping them to break their fast.
By being proactive about our responsibility in the wider
community, we know we’re doing everything in our power
to make a world of difference for all people in Qatar.
The Vodafone Qatar Charitable Fund is the charitable wing
of the Vodafone Qatar business. It’s aligned with other
Vodafone Foundations around the world, which have given
their support to many charities over the years. The fund
here in Qatar is particularly focused on providing support
to local charities.
Our partnership with ROTA
Reach Out To Asia (ROTA) is a non-governmental organisation
conceived by Qatar’s Heir Apparent, His Highness Sheikh
Tamim bin Hamad Al-Thani and chaired by Her Excellency
Sheikha Al Mayassa bint Hamad bin Khalifa Al-Thani. ROTA
runs programmes locally and internationally that focus on
building cultural bridges through awareness and fundraising.
Our people and partners and the things they do are what
make up our reputation. That’s why it’s so important for
all of us to act responsibly. We have the power to make
the world a better place with everything we do. We never
underestimate the effect positive actions can have,
however small that first ripple may be.
Vodafone was the main sponsor of the 2009 ROTA Gala
Dinner, where the Vodafone Qatar Charitable Fund pledged
QAR 18m to ROTA over two years.
Vodafone Women’s book
To raise money for A Writer’s World fund at Bloomsbury Qatar
Foundation Publishing, female employees and spouses
of Vodafone have contributed stories and thoughts on
their lives in Qatar to a book, Vodafone Women in Qatar:
The Inside Story.
World of Difference Programme
The flagship programme of the Vodafone Qatar Charitable
Fund gives four passionate people the opportunity to work for
a local charity or cause of their choice with their costs paid by
Vodafone for one full year. In February, the first four winners
– out of 400 applicants – were chosen.
71
A future world
Throughout the next year, Qatar promises
to be a world full of changes and challenges,
many with sweeping implications for our
customers, all with endless opportunities
to make a world of difference for all people
in Qatar.
A world of new numbers
Vodafone Money Transfer
On 20 March 2010, ictQATAR announced that due to the
increasing demands of mobile telephone users in the State
of Qatar, the existing range of numbers will be expanded
exponentially through the addition to these numbers of
an “eighth” extra digit from 28 July 2010. Vodafone Qatar
is working with ictQATAR and Qtel to ensure that all
consumers are informed of the change. Our team is also
working to ensure that this change takes place as easily
and painlessly as possible for our customers.
The future of mobile telecommunications begins in Qatar
The open world of number portability
At Vodafone Qatar a new innovation project is underway
to develop a service called Vodafone Money Transfer.
The service lets customers instantly send money locally
and abroad from their mobile phone.
Vodafone Money Transfer is like having mobile cash.
To use the services customers must first load money onto
their phone and can then send it wherever it needs to go,
anytime they like. It’s safe, fast, simple and will be the
most convenient way to send money to family overseas.
In the upcoming year the tireless efforts of ictQATAR,
Vodafone Qatar and Qtel promise to be rewarded with
the introduction of Mobile Number Portability to the
Qatar telecommunications market.
To develop Vodafone Money Transfer we are using the
experience from across the Vodafone Group including input
from the world leading Vodafone M-Pesa service in Kenya.
In Qatar we are also working with local partners and the Qatar
Central Bank to ensure we build a service right for our market.
Fixed line services
Vodafone Money Transfer will launch in late 2010 and
establish Qatar as a leader in mobile financial services.
On 29 April 2010, ictQATAR issued the fixed line license
to Vodafone Qatar contingent on payment of the QAR 10m
license fee and shareholder approvals to the change in the
company’s Memorandum and Articles of Association. The
terms of Vodafone Qatar’s fixed line licence initially include
100% coverage of The Pearl, a large-scale residential and
commercial development project in Qatar, for which
broadband internet services must be provided within three
months and fixed line voice services must be provided within
12 months. The fixed license contains further obligations to
provide 100% coverage in the rest of Qatar. Vodafone Qatar is
working with ictQATAR and Qtel to use the proposed National
Broadband Network to provide these services.
Our vision is to be the most admired company in Qatar.
Working with all our local partners we will help
His Highness Sheikh Hamad bin Khalifa Al-Thani,
Emir of Qatar’s vision 2030 to be reached. In doing
so, we will make progress towards achieving our
own vision whilst continuing to make a world
of difference for all people in Qatar.
73
75
Independent auditor’s report
Statement of comprehensive income
To The Shareholders
Vodafone Qatar Q.S.C
For the year ended March 31, 2010
Report on the Financial Statements
Auditor’s Responsibility
Opinion
We have audited the accompanying financial statements
of Vodafone Qatar Q.S.C (the “Company’’), which comprise
the statement of financial position as at March 31, 2010 and the
statements of comprehensive income, changes in shareholders’
equity and cash flows for the year then ended and a summary
of significant accounting policies and other explanatory notes.
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing.
Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are
free from material misstatement.
In our opinion, the financial statements give a true and fair
view of, the financial position of Vodafone Qatar Q.S.C as of
March 31, 2010 and of its financial performance and its cash
flows for the year then ended in accordance with International
Financial Reporting Standards.
Management’s Responsibility
for the Financial Statements
Management is responsible for the preparation and fair
presentation of these financial statements in accordance with
International Financial Reporting Standards. This responsibility
includes designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement,
whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that
are reasonable in the circumstances.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Other Legal and Regulatory Requirements
Furthermore, in our opinion the financial statements provide
the information required by the Qatar Commercial Companies’
Law No. (5) of 2002 and the Company’s Articles of Association.
We are also of the opinion that proper books of account were
maintained by the Company. We have obtained all the
information and explanations which we considered necessary
for the purpose of our audit. To the best of our knowledge
and belief and according to the information given to us,
no contraventions of the Commercial Companies Law or the
Company’s Articles of Association were committed during
the year which would materially affect the Company’s activities
or its financial position.
For Deloitte & Touche
Notes
Revenue
6
Midhat Salha
Licence No. 257
Period from June 23, 2008
to March 31, 2009
QAR ‘000
QAR ‘000
361,522
28
(247,570)
(31)
(339,253)
(123,942)
(225,301)
(123,945)
(80,007)
(752)
(369,265)
–
26,680
11,841
(25,495)
(20,067)
(673,388)
(132,923)
–
–
(673,388)
(132,923)
Other comprehensive income
–
–
Total comprehensive loss
for the financial year/period
(673,388)
(132,923)
(0.82)
(0.26)
Direct costs
Other expenses
7
EBITDA
Depreciation
Amortisation of licence
Interest income
Financing costs
8
Loss before taxation
Income tax expense
9
Loss for the financial year/period
Doha – Qatar
May 13, 2010
Year ended
March 31, 2010
Basic and diluted loss per share (QAR)
21
The accompanying notes are an integral part of these Financial Statements
77
Statement of financial position
Statement of changes in shareholders’ equity
At March 31, 2010
Notes
Non-current assets
Property, plant and equipment
Intangible asset
Trade and other receivables
Total non-current assets
Current assets
Inventory
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
12
13
14
Equity
Share capital
Legal reserve
Accumulated losses
Total equity
15
16
Non-current liabilities
End of employment benefits
Provisions
Long term borrowings
Total non-current liabilities
Current liabilities
Trade and other payables
Short term borrowings
Total current liabilities
Total liabilities
Total equity and liabilities
10
11
13
17
18
19
18
2010
2009
QAR ‘000
QAR ‘000
The financial statements were approved
by the Board of Directors on May 13, 2010
and were signed on its behalf by:
832,283
7,346,735
4,432
8,183,450
388,517
7,716,000
5,348
8,109,865
21,713
118,207
85,356
225,276
8,408,726
4,784
25,705
554
31,043
8,140,908
Grahame Maher
8,454,000
11,442
(806,311)
7,659,131
5,072,400
–
(132,923)
4,939,477
John Tombleson
1,972
4,848
379,083
385,903
392
250
–
642
363,692
–
363,692
749,595
3,165,789
35,000
3,200,789
3,201,431
8,408,726
8,140,908
Issue of shares
Share capital
Legal reserve
Accumulated
losses
Total
QAR ‘000
QAR ‘000
QAR ‘000
QAR ‘000
5,072,400
–
–
5,072,400
–
–
(132,923)
(132,923)
Balance at March 31, 2009
5,072,400
–
(132,923)
4,939,477
Issue of shares
3,381,600
–
–
3,381,600
Net issuance fee in respect of the IPO
–
11,442
–
11,442
Comprehensive loss for the financial year
–
–
(673,388)
(673,388)
8,454,000
11,442
(806,311)
7,659,131
Comprehensive loss for the financial period
Chief Financial Officer
Balance at March 31, 2010
79
Statement of cash flows
Notes to the financial statements
Notes
Net cash flows used in operating activities
20
Year ended
March 31, 2010
Period from June 23, 2008
to March 31, 2009
QAR ‘000
QAR ‘000
(147,863)
(99,715)
Cash flows from investing activities
Purchase of property, plant and equipment
(423,994)
(389,269)
(3,086,400)
(4,629,600)
26,680
11,841
(3,483,714)
(5,007,028)
3,393,042
5,072,400
Proceeds of long term borrowings
379,083
–
Net movement in short term borrowing
(35,000)
35,000
Interest paid
(20,746)
(103)
3,716,379
5,107,297
84,802
554
554
–
85,356
554
Payment for intangible assets
Interest received
Net cash flows used in investing activities
Cash flows from financing activities
Issue of ordinary share capital
Net cash flows from financing activities
Net cash flows
Cash and cash equivalents at the beginning of the financial period
Cash and cash equivalents at the end of the financial period
14
1. Incorporation and activities
2. Basis of preparation
Vodafone Qatar Q.S.C (“the Company”) is registered as a Qatari
Shareholding Company for a twenty- five year period (which
may be extended by a resolution passed at a General Assembly)
under article 68 of the Commercial Companies Law Number
5 of 2002.
The financial statements are prepared in accordance
with International Financial Reporting Standards (“IFRS”).
The Ministry of Business and Trade granted its approval for
the incorporation of the Company, as per Ministerial Resolution
Number (160) of 2008, dated June 22, 2008. The Company
was registered with the Commercial Register of the Ministry
of Business and Trade on June 23, 2008 (“inception date”)
under number 39656. The incorporation of the Company
was completed upon the publication in the Official Gazette
of Ministerial Resolution Number (160) of 2008. During the
year, the Company successfully completed the initial public
offering of 338,160,000 ordinary shares and was listed on
the Qatar Exchange.
The Company is engaged in providing cellular mobile
telecommunication services and selling mobile related
equipment and accessories.
The preparation of financial statements in conformity with
IFRS requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date
of the financial statements and reported amounts of revenue
and expenses during the reporting period. For a discussion
on the Company’s critical accounting estimates see “Critical
Accounting Estimates” under note 4. Actual results could
differ from those estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision
affects both current and future periods.
The amounts in the financial statements are stated in thousands
of Qatari Riyals (QAR) unless otherwise indicated.
The Company’s head office is located in Doha, Qatar
and its registered address is P.O. Box 27727, Doha, Qatar.
The financial statements were approved by the Board
of Directors and authorised for issue on May 13, 2010.
81
3. Significant accounting policies
Accounting Convention
Equity instruments
The financial statements are prepared under the historical
cost basis.
Equity instruments issued by the Company are recorded
at the proceeds received, net of direct issuance cost.
Financial assets
Trade payables
Cash and cash equivalents
Liabilities for trade creditors and other amounts are carried
at cost which is the fair value of the consideration to be paid in
the future for goods and services received whether or not billed
to the Company. Amounts payable that have been denominated
in foreign currencies have been translated to local currency
using the rates of exchange ruling at the end of the period.
Cash and cash equivalents comprise cash on hand and
call deposits, and other short term highly liquid investments
that are readily convertible to a known amount of cash and
are subject to an insignificant risk of changes in value.
Trade receivables
Trade receivables do not carry any interest and are stated
at their nominal value as reduced by appropriate allowances
for estimated irrecoverable amounts. Estimated irrecoverable
amounts are based on the ageing of the receivable balances
and historical experience. Individual trade receivables
are written off when management deems them not to
be collectible.
Financial liabilities and equity instruments issued
by the Company
Financial liabilities and equity instruments issued by the
Company are classified according to the substance of the
contractual arrangements entered into and the definitions
of a financial liability and equity instrument. An equity
instrument is any contract that evidences a residual interest
in the assets of the Company after deducting all of its liabilities
and includes no obligation to deliver cash or other financial
assets. The accounting policies adopted for specific financial
liabilities and equity instruments are outlined below:
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently
stated at amortised cost, any difference between the proceeds
(net of transaction costs) and the redemption value is
recognised in the statement of income over the period
of the borrowings using the effective interest method.
Inventory
Inventory is stated at the lower of cost and net realisable
value. Cost comprises the purchase price, import duties,
transportation handling and other direct costs incurred in
bringing the inventories to their present location and condition.
Cost is calculated using the weighted average method.
if it is probable that the Company will be required to settle the
obligation and a reliable estimate can be made of the amount
of the obligation. The amount recognised as a provision is
the best estimate of the consideration required to settle the
present obligation at the reporting date, taking into account
the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle
the present obligation, its carrying amount is the present value
of those cash flows.
Property, plant and equipment are stated in the Statement
of Financial Position at their cost less any subsequent
accumulated depreciation and any subsequent accumulated
impairment losses. The cost of property, plant and equipment
includes directly attributable incremental costs incurred in
their acquisition and installation. Subsequent costs are
included in the asset’s carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably.
All other repairs and maintenance are charged to the statement
of income during the financial period in which they are incurred.
Assets in the course of construction are carried at cost, less
any recognised impairment loss. Depreciation of these assets
commences when the assets are ready for their intended use.
Net realisable value represents the estimated selling price
for inventories less all estimated costs of completion and
costs necessary to make the sale.
Depreciation is charged so as to write off the cost of assets,
other than properties under construction, using the straightline method, over their estimated useful lives, as follows:
Provisions
Network and IT Equipment Others
Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event,
3- 8 years
2- 5 years
The estimated useful lives, residual values and depreciation
methods are reviewed at each balance sheet date, with the
effect of any changes in estimate accounted for on prospective
basis. An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets
or, where shorter, the term of the relevant lease.
The gain or loss arising on the disposal or retirement of
an item of property, plant and equipment is determined
as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the statement
of income.
Licence fees
Licence and spectrum fees are stated at cost less accumulated
amortisation. The amortisation period is determined primarily
by reference to the unexpired licence period, the conditions
for the licence renewal and whether licences are dependent on
specific technologies. Amortisation is charged to the statement
of income on a straight-line basis over the estimated useful
lives from the commencement of service of the network.
Impairment of assets
At each balance sheet date, the Company reviews the carrying
amounts of its property, plant and equipment and intangible
assets with finite lives to determine whether there is any
indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent, if any, of
the impairment loss. Where it is not possible to estimate the
recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash-generating
unit to which the asset belongs.
If the recoverable amount of an asset or cash-generating unit
is estimated to be less than its carrying amount, the carrying
amount of the asset or cash-generating unit is reduced to
its recoverable amount. An impairment loss is recognised
immediately in the statement of income.
Where an impairment loss subsequently reverse, the carrying
amount of the asset or cash-generating unit is increased to
the revised estimate of its recoverable amount, not to exceed
the carrying amount that would have been determined had
no impairment loss been recognised for the asset or cashgenerating unit in prior periods. A reversal of an impairment
loss is recognised immediately in the statement of income.
Employees’ end of service benefits
The Company provides end of service benefits to its employees.
The entitlement to these benefits is based upon the employees’
final salary and length of service, subject to the completion
of a minimum service period, calculated under the provisions
of Qatar Labour Law and is payable upon resignation or
termination of the employee. The expected costs of these
benefits are accrued over the period of employment.
Revenue recognition
Revenue is recognised to the extent the Company has delivered
goods or rendered services under our agreement, the amount
of revenue can be measured reliably and it is probable that the
economic benefits associated with the transaction will flow
to the Company. Revenue is measured at the fair value of the
consideration received or receivable.
Revenue from mobile telecommunications comprises amounts
charged to customers in respect of airtime usage, messaging,
the provision of other mobile telecommunications services,
including data services and information provision, and revenue
from the sale of equipment, including handsets.
Revenue from the sale of prepaid credit is deferred until such
time as the customer uses the airtime or the credit expires.
Revenue from interconnect fees is recognised at the time
the services are performed.
Other revenue from mobile telecommunications primarily
comprises equipment sales, which are recognised upon
delivery to customers and customer connection revenue.
Customer connection revenue is recognised together with
the related equipment revenue to the extent that the aggregate
equipment and connection revenue does not exceed the
fair value of the equipment delivered to the customer.
Any customer connection revenue not recognised together
with related equipment revenue is deferred and recognised
over the period in which services are expected to be provided
to the customer.
Revenue from data services is recognised when the Company
has performed the related service and, depending on the
nature of the service, is recognised either at the gross amount
billed to the customer or the amount receivable by the
Company as commission for facilitating the service.
For equipment sales made to distributors, revenue is recognised
if the significant risks associated with the equipment are
transferred to the distributor and the distributor has no general
right of return. If the significant risks are not transferred,
revenue recognition is deferred until sale of handset to an end
customer by the distributor or the expiry of the right of return.
83
4. Critical accounting estimates
Commissions
Intermediaries are given cash incentives by the Company
to connect new customers. The cash incentives are
accounted for as an expense.
Borrowing costs
All borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset that takes
a substantial period of time to get ready for its intended use
are capitalised as part of the cost of the respective asset.
All other borrowing costs are expensed as incurred.
Translation of foreign currencies
Foreign currency transactions during the year are recorded
using the rate prevailing at the date of transaction. At balance
sheet date amounts receivable and payable in foreign
currencies are translated at the exchange rates prevailing
on that date. Exchange differences are recognised in the
statement of comprehensive income.
Income tax
The Company prepares its financial statements in accordance
with IFRS as issued by the International Accounting Standards
Board, the application of which often requires judgements to
be made by management when formulating the Company’s
financial position and results. Under IFRS, the directors are
required to adopt those accounting policies most appropriate
to the Company’s circumstances for the purpose of
presenting fairly the Company’s financial position, financial
performance and cash flows.
Impairment testing is an area involving management
judgement, requiring assessment as to whether the carrying
value of assets can be supported by the net present value of
future cash flows derived from such assets using cash flow
projections which have been discounted at an appropriate
rate. In calculating the net present value of the future cash
flows, certain assumptions are required to be made in respect
of highly uncertain matters, including management’s
expectations of:
In determining and applying accounting policies, judgement
is often required in respect of items where the choice of
specific policy, accounting estimate or assumption to be
followed could materially affect the reported results or net
asset position of the Company should it later be determined
that a different choice would be more appropriate.
>growth in EBITDA, calculated as adjusted operating
Management considers the accounting estimates and
assumptions discussed below to be its critical accounting
estimates and, accordingly, provides an explanation of
each, below.
In estimating the value in use, the Company uses a discrete
period of 20 years and a growth rate which is comparable
to similar markets and industries.
Corporate income tax is levied on companies that are not
wholly owned by Qataris or any GCC nationals, based on
the net profit of the company.
The discussion below should also be read in conjunction
with the Company’s disclosure of significant IFRS
accounting policies, which is provided in note 3 to
the financial statements.
The Company is exempt from paying tax in the first five years
following its incorporation.
Impairment reviews
Leasing
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership of the asset to the lessee.
All other leases are classified as operating leases.
5. Segment reporting
IFRS requires management to undertake an annual test
for impairment of indefinite lived assets and, for finite
lived assets, to test for impairment if events or changes
in circumstances indicate that the carrying amount of
an asset may not be recoverable.
profit before depreciation and amortisation;
>timing and quantum of future capital expenditure;
>long term growth rates; and
>the selection of discount rates to reflect the risks involved.
Changing the assumptions selected by management, in
particular the discount rate and growth rate assumptions
used in the cash flow projections, could significantly affect
the Company’s impairment evaluation and, hence, results.
Revenue Presentation: gross versus net
When deciding the most appropriate basis for presenting
revenue and costs of revenue, both the legal form and
substance of the agreement between the Company and
its business partners are reviewed to determine each party’s
respective role in the transaction.
to comprise the gross value of the transaction billed to the
customer, after trade discounts, with any related expenditure
charged as an operating cost.
Where the Company’s role in a transaction is that of an
agent, revenue is recognised on a net basis, with revenue
representing the margin earned.
Property, plant and equipment also represent a significant
proportion of the asset base of the Company. Therefore, the
estimates and assumptions made to determine their carrying
value and related depreciation are critical to the Company’s
financial position and performance.
Estimation of useful life
6. Revenue
The company only operates in Qatar and is therefore
viewed to operate in one geographical area. Management
also views that its mobile business is the only operating
segment of the Company.
Year ended
March 31,
2010
Period from
June 23, 2008
to March 31,
2009
QAR ‘000
QAR ‘000
305,130
28
Revenue from
sale of goods
42,079
–
Other revenue
14,313
–
361,522
28
Revenue from
rendering of services
The charge in respect of periodic depreciation is derived
after determining an estimate of an asset’s expected useful
life and the expected residual value at the end of its life.
Increasing an asset’s expected life or its residual value would
result in a reduced depreciation charge in the statement
of income.
The useful lives of Company assets are determined by
management at the time the asset is acquired and reviewed
annually for appropriateness. The lives are based on historical
experience with similar assets as well as anticipation of
future events, which may impact their life, such as changes
in technology
Where the Company’s role in a transaction is that of principal,
revenue is recognised on a gross basis. This requires revenue
85
7. Other expenses
Employee
benefits expense
Operating lease rentals
Other expenses
8. Financing costs
9. Income tax
10. Property, plant and equipment
Year ended
March 31,
2010
Period from
June 23, 2008
to March 31,
2009
Year ended
March 31,
2010
Period from
June 23, 2008
to March 31,
2009
Year ended
March 31,
2010
Period from
June 23, 2008
to March 31,
2009
QAR ‘000
QAR ‘000
QAR ‘000
QAR ‘000
QAR ‘000
QAR ‘000
144,891
56,378
–
–
62,311
29,192
132,051
38,372
339,253
123,942
Bank guarantee
charges on unpaid
40% licence cost
Bank guarantee charges
3,858
19,290
1,345
674
Interest on short
term borrowing
266
103
Interest on long
term borrowings
17,961
–
2,065
–
25,495
20,067
Others
Income tax expense
Corporate income tax is levied on companies that are not
wholly owned by Qatari citizens or GCC nationals, based on
the net profit of the company. The Company is exempt from
paying tax in the first five years following its incorporation.
Deferred tax assets have not been recognised on the basis
that the Company has a five year tax holiday following its
incorporation and is exempt from paying income tax under
its listed Company status.
Furniture, fixtures
and fittings
Network and IT
equipment
Total
QAR ‘000
QAR ‘000
QAR ‘000
Cost:
Additions
79,627
309,642
389,269
At March 31, 2009
79,627
309,642
389,269
Additions
24,776
498,997
523,773
104,403
808,639
913,042
Charge for the period
752
–
752
At March 31, 2009
752
–
752
Charge for the year
15,966
64,041
80,007
At March 31, 2010
16,718
64,041
80,759
At March 31, 2010
87,685
744,598
832,283
At March 31, 2009
78,875
309,642
388,517
At March 31, 2010
Accumulated Depreciation:
Net book value:
The net book value of furniture, fixtures and fittings and network and IT
equipment includes assets in the course of construction, which are not
depreciated. This amounts to QAR 103 million (2009: QAR 368 million).
87
11. Intangible asset
12. Inventories
At March 31, 2009
2010
2009
2010
2009
QAR ‘000
QAR ‘000
QAR ‘000
QAR ‘000
QAR ‘000
Goods held for resale
21,713
4,784
7,716,000
7,716,000
Additions
At March 31, 2010
14. Cash and cash equivalents
Total
Licence – Cost:
Additions
13. Trade and other receivables
–
7,716,000
Licence – Accumulated amortisation:
Amortisation charge for the period
–
At March 31, 2009
–
Amortisation charge for the year
369,265
At March 31, 2010
369,265
Licence – Net book value:
At March 31, 2010
7,346,735
At March 31, 2009
7,716,000
At April 1
–
–
Amounts charged
to income statement
943
–
At March 31
943
–
For the purposes of the cash flow statement, cash and cash
equivalents include cash on hand and in banks. Cash and
cash equivalents at the end of the financial period as shown
in the cash flow statement can be reconciled to the related
items in the balance sheet as follows:
Included within
non-current assets:
Prepayments
Inventory is reported net of allowance for
obsolescence, an analysis of which is as follows:
4,432
5,348
Cash at bank and in hand
Trade receivables
77,839
–
Prepayments
30,307
15,132
765
407
9,296
10,166
118,207
25,705
Other receivables
2010
2009
Number
QAR ‘000
Number
QAR ‘000
845,400,000
8,454,000
845,400,000
8,454,000
At April 1
507,240,000
5,072,400
–
–
Allotted during the year
338,160,000
3,381,600
507,240,000
5,072,400
845,400,000
8,454,000
507,240,000
5,072,400
Authorised:
Included within
current assets:
Due from related parties
(note 22)
15. Share capital
2010
2009
QAR ‘000
QAR ‘000
85,356
554
Ordinary shares of QAR 10 each
Ordinary shares allotted,
issued and fully paid:
At March 31
The carrying amount of trade and other receivables
approximate their fair value. Trade and other receivables
are predominantly non-interest bearing.
During the financial year, the Company commenced
amortisation of its Public Mobile Telecommunications
network and service licence granted from ictQatar.
The licence will expire in June 2028.
89
16. Transactions with equity holders
Share capital
At June 23, 2008
Issue of new shares
At March 31, 2009
Issue of new shares
At March 31, 2010
Legal reserve
–
–
5,072,400
–
5,072,400
(i)
17. Provisions
–
3,381,600
11,442
8,454,000
11,442
(i) The Company successfully completed an initial public offering
of 338,160,000 ordinary shares. The offer price was QAR 10 per
share and QAR 0.25 per share was charged to cover the cost of
the share issue. All the shares were fully subscribed. The excess
of issuance fees of QAR 0.25 per share over the issuance cost
has been transferred to the legal reserve.
Asset retirement
obligation
18. Borrowings
19. Trade and other payables
2010
2009
QAR ‘000
QAR ‘000
4,848
250
Bank loan
–
–
–
35,000
–
35,000
4,848
250
Loan from Vodafone
Investment SARL
–
379,083
379,083
–
–
–
–
379,083
379,083
35,000
–
35,000
Asset Retirement Obligation
In the course of the Company’s activities, a number of sites
and other assets are utilised which are expected to have costs
associated with exiting and ceasing their use. The associated
cash outflows are generally expected to occur at the dates
of exit of the assets to which they relate, which are long
term in nature.
2010
Short Term
Borrowing
2009
Long Term
Borrowing
Short Term
Borrowing
Total
Long Term
Borrowing
Total
Trade payables
Accruals and
deferred income
Licence cost payable
Other payables
The Company obtained a long term revolving credit facility
of USD $110 million from Vodafone Investment Luxembourg
SARL. The loan bears interest at a variable rate and is
repayable by April 2, 2012. During the year, the company
has drawn down USD $104 million.
Due to related parties
(note 22)
2010
2009
QAR ‘000
QAR ‘000
36,119
23
310,971
47,631
–
3,086,400
11,273
8,450
5,329
23,285
363,692
3,165,789
91
20. Reconciliation of net cash flows used in operating activities
Operating loss for the year/period
before interest income and finance cost
21. Basic and diluted loss per share
2010
2009
QAR ‘000
QAR ‘000
(674,573)
(124,697)
Adjustments for:
Depreciation and amortisation
Financing costs
449,272
752
(4,749)
(19,964)
Increase in inventory
(16,929)
(4,784)
Increase in trade and other receivables
(91,586)
(31,053)
Increase in trade and other payables
184,524
79,389
1,580
392
Increase in end of employment benefits
Increase in provisions
Net cash flows used in operating activities
4,598
(147,863)
250
(99,715)
Year ended
March 31,
2010
Loss for the period
(QAR’000)
Weighted average
number of shares
(in thousands)
Basic and diluted loss
per share (QAR)
(673,388)
817,220
(0.82)
22. Related party transactions
Period from
June 23, 2008
to March 31,
2009
(132,923)
Related parties represent the shareholders, directors
and key management personnel of the Company and
companies controlled, jointly controlled or significantly
influenced by those parties.
The following transactions were carried out with
related parties:
507,240
Year ended
March 31,
2010
Period from
June 23, 2008
to March 31,
2009
QAR ‘000
QAR ‘000
(0.26)
2010
Balances arising from
sales/purchases of
goods/services
QAR ‘000
The remuneration of directors and other members
of key management during the period was as follows:
2009
QAR ‘000
Receivables from related parties:
Vodafone Group Plc
controlled entities
765
407
Vodafone Group Plc
controlled entities
717
407
Purchases of goods and services
30,754
24,562
Vodafone Group Plc
controlled entities
Qatar foundation
for Education, Science
and Community
Development
Salaries and
short-term benefits
Employees’ end
of service benefits
Payables to related parties:
Sales of goods and services
Vodafone Group Plc
controlled entities
Compensation of key management personnel
Goods and services are bought from related parties
at prices approved by management.
5,329
3,995
–
19,290
5,329
23,285
379,083
–
Year ended
March 31,
2010
Period from
June 23, 2008
to March 31,
2009
QAR ‘000
QAR ‘000
20,126
15,703
81
11
20,207
15,714
Interest on Guarantee
Qatar foundation
for Education, Science
and Community
Development.
Loan from related party:
3,858
19,290
Interest on Long Term Borrowing
Vodafone Group Plc
controlled entities
17,961
–
Loan from Vodafone
Investment SARL
The receivables from related parties arise mainly from
sale transactions which are unsecured in nature and bear
no interest. The payables to related parties arise mainly
from purchase transactions and bear no interest.
93
23. Financial instruments
Capital risk management
At March 31, 2010
Categories of financial instruments
The Company manages its capital to ensure that it will
be able to continue as a going concern while maximising
the return to shareholders through the optimisation
of the debt and equity balance.
The capital structure of the Company consists of debt,
which includes the borrowings disclosed in note 18,
cash and cash equivalents and equity, comprising issued
capital and accumulated losses.
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and
expenses are recognised, in respect of each class of financial
asset and financial liability are disclosed in note 3 to the
financial statements.
2010
2009
QAR ‘000
QAR ‘000
Trade and
other receivables
85,356
554
122,639
31,053
Liquidity risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss
to the Company. The Company has adopted a policy
of only dealing with creditworthy counterparties and
obtaining sufficient collateral, where appropriate, as a
means of mitigating the risk of financial loss from defaults.
The Company’s exposure and the creditworthiness of
its counterparties are continuously monitored and the
aggregate value of transactions concluded is spread amongst
approved counterparties. Credit exposure is controlled
by counterparty limits that are reviewed and approved
by the management annually.
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due. The Company’s
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking
damage to the Company’s reputation.
Under the Company’s interest rate management policy,
interest rates on monetary assets and liabilities are
maintained on a floating rate basis.
Exposure to credit risk
Financial liabilities
Trade and other payables
Credit risk management
Interest rate risk management
Financial assets
Cash and cash
equivalents
Foreign currency risk management
The Company undertakes certain transactions denominated
in foreign currencies. Hence, exposures to exchange rate
fluctuations arise. Exchange rate exposures are managed
within approved policy parameters.
363,692
79,389
–
3,086,400
–
35,000
379,083
–
The carrying amount of financial assets represents
the maximum credit exposure. The maximum exposure
to credit risk at the reporting date was:
Carrying amount
Cash and cash
equivalents
Trade and
other receivables
2010
2009
QAR ‘000
QAR ‘000
85,356
554
122,639
31,053
207,995
31,607
The Company manages liquidity risk by maintaining adequate
reserves, banking facilities and reserve borrowing facilities,
by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and
liabilities. During the financial year, the Company secured
borrowing of US$110 million from Vodafone Investments
Luxembourg SARL which the Company has at its disposal
to further reduce liquidity risk.
The table below analyses the Company’s financial liabilities
based on the remaining period at the balance sheet to the
contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows. Balances
due within 12 months equal their carrying balances as the
impact of discounting is not significant.
Trade and
other payables
Less than
1 year
Between
1 and 2 years
QAR ‘000
QAR ‘000
363,692
–
–
379,083
At March 31, 2009
Trade and
other payables
Less than
1 year
Between
1 and 2 years
QAR ‘000
QAR ‘000
79,389
–
3,086,400
–
35,000
–
Fair value of financial instruments
Fair value is not materially different from the carrying amount.
95
24. Commitments and contingent liabilities
25. Prior year comparatives
26. Subsequent events
Commitments
Certain prior year comparatives have been reclassified
to conform with the presentation adopted in the
current year.
Borrowings
Capital commitments
Operating lease commitments
The company has entered into commercial leases on certain
properties, network infrastructure, motor vehicles, and items
of equipment. The leases have various terms, escalation
clauses, and renewal rights, none of which are individually
significant to the Company. Future lease payments comprise:
2010
2009
QAR ‘000
QAR ‘000
Contracts, placed
for future capital
expenditure not
provided for in the
financial statements
Contingent liabilities
2010
2009
2010
2009
QAR ‘000
QAR ‘000
QAR ‘000
QAR ‘000
220,000
220,000
700
452
Performance bonds
64,693
137,505
Credit guarantees –
third party indebtedness
In May 2010 the Company has a secured revolving credit
facility of USD 120 million from Vodafone Investments
Luxembourg SARL.
Fixed Telecommunications Licence
In April 2010, ictQatar has issued the Company with
the Second Public Fixed Telecommunications Networks
and Services Licence. The issuing of this licence is
contingent on the Company changing its Articles
of Association in June 2010. The licence fee payable
is QAR 10 million.
Performance bonds
Within one year
48,765
38,336
In more than one year
but less than two years
43,228
36,381
In more than two years
but less than three years
40,213
34,535
Credit guarantees – third party indebtedness
In more than three years
but less than four years
38,228
33,015
Credit guarantees comprise guarantees and indemnity
of bank or other facilities.
In more than four years
but less than five years
29,001
28,865
In more than five years
222,551
155,447
421,986
326,579
Performance bonds require the Company to make
payments to third parties in the event that the Company
does not perform what is expected of it under the terms
of any related contracts.
97
27. New accounting standards
Standards and Interpretations effective in the current period
Standards and Interpretations Issued Not Yet Effective
At the date of authorization of these financial statements,
the following standards and interpretations were effective:
At the date of authorisation of these financial statements,
the following Standards and Interpretations were in issue
but not yet effective:
(i) Revised standards:
IAS 1 (Revised) – Presentation of Financial Statements
IAS 1 has introduced the following:
>Terminology changes (including revised titles for the
financial statements) and changes in the format and
content of the financial statements.
>Comprehensive revision including requiring a statement
of comprehensive income
IAS 23 (Revised) – Borrowing Costs
The principal change to the Standard was to eliminate
the option to expense all borrowing costs when incurred.
IFRS 7 (Revised) – Financial Instruments
The amendments to IFRS 7 expand the disclosures required
in respect of fair value measurements and liquidity risk.
IAS 16 (Revised)
Property, Plant and Equipment
IAS 32 (Revised)
Financial Instruments: Presentation
IAS 36 (Revised)
Impairment of Assets
IAS 38 (Revised)
Intangible Assets
IAS 39 (Revised)
Financial Instruments- Recognition
& Measurement
Effective for annual periods beginning on
or after January 1, 2011 (early adoption allowed)
(i) New Standard:
(i) Revised Standards
IFRS 8 – Operating Segments
Effective for annual periods beginning on or after
July 1, 2009
(ii) New Interpretations
IFRIC 13 – Customer loyalty Programmes
The adoption of these standards and Interpretations had no
significant effect on the financial statements of the Company
for the year ended March 31, 2010, other than certain
presentation and disclosure changes.
January 1, 2010
IAS 1- Presentation of Financial statements
(ii) New Standard:
January 1, 2013 (Early adoption allowed):
IAS 27 (Revised) – Consolidated and Separate Financial
Statements
IAS 7 (Revised) – Statement of Cash Flows
IAS 28 (Revised) – Investments in Associates
IAS 17 (Revised) – Leases
IAS 31 (Revised) – Interest In Joint Ventures
IAS 24 (Revised) – Related Party Disclosures
IAS 38 (Revised) – Intangible Assets
IAS 36 (Revised) – Impairment of Assets
IAS 39 (Revised) – Financial Instruments: Recognition
& Measurement
IAS 39 (Revised) – Financial Instruments:
Recognition & Measurement
IFRS 2 (Revised) – Share-based Payments
IFRS 1 (Revised) – First time adoption
Effective for transfers from customers received on or
after July 1, 2009
IFRS 3 (Revised) – Business Combinations
IFRS 2 (Revised) – Share-based Payments
IFRIC 18 – Transfers of Assets from Customers
IFRS 5 (Revised) – Non Current assets Held for Sale
& Discontinued Operations
IFRS 5 (Revised) – Non Current assets Held for Sale
& Discontinued Operations
Effective for annual periods beginning on or after July 1, 2010
IFRS 8 (Revised) – Operating Segments
IFRS 9- Financial Instruments –Classification and
Measurement
(iii) New Interpretations
July 1, 2009
IFRIC 17 – Distributions of Non-Cash Assets to Owners
IFRIC 19 – Extinguishing Financial Liabilities with
Equity Instruments
Management anticipates that the adoption of these
Standards and Interpretations in future periods will have
no material financial impact on the financial statements
of the Company in the period of initial application, other
than certain presentation and disclosure changes.
99
101
Glossary
ARPU
HSUPA
Average Revenue Per User – Service revenue dividend
by average customers.
High Speed Uplink Packet Access is a wireless technology
enabling mobile to network data transmission speeds of
up to 2.0 megabits per second.
Champion(s)
The very special people who are the front line retail
and care people serving our customers.
EBIT
Earnings Before Interest and Tax.
EBITDA
Interconnect costs
A charge paid by Vodafone Qatar to other fixed line or mobile
operators when a Vodafone customer calls a customer
connected to a different network.
Mobile License
Earnings Before Interest, Tax, Depreciation and Amortisation.
The second public mobile telecommunications networks
and services license in the State of Qatar.
Fixed License
Red
The second fixed public telecommunications networks
and services license in the State of Qatar.
Vodafone Qatar’s Flexi plans which are like traditional prepay.
Freedom
Reach Out To Asia is a charity initiative founded in Qatar in
2005 under the auspices of the heir apparent, His Highness
Sheikh Tamim bin Hamad Al-Thani and guided by Her Excellency
Sheikha Al Mayassa bint Hamad bin Khalifa Al-Thani. The ROTA
charity focuses primarily on community development
projects in Asia with specific emphasis on promoting global
responsibility for basic, quality primary education.
Vodafone Qatar’s Flexi plans which are automatically
renewed every month or after expiry of credit, whichever
comes first. Renewal is by direct debit or credit card
deduction, triggered by Vodafone Qatar.
HSDPA
ROTA
High Speed Downlink Packet Access is a wireless technology
enabling network to mobile data transmission speeds of up
to 7.2 megabits per second.
103

Annual Report - Vodafone Qatar

Transcription

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