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Ooredoo SWOT & PESTLE Analysis

ID : 52187353 | Jan 2018 | 16 pages

COMPANY PROFILE - Ooredoo

Business Sector : Telecom

Operating Geography : Middle East, Global

About Ooredoo : Ooredoo is a leading international Qatari telecommunications company with international presence North Africa, the Middle East and Southeast Asia markets. It was established as Qtel in 1987 and is based out of Doha, Qatar. It was established in 1987 and is publicly traded with majority shareholding, approximately 69% with the Qatari government, 10% by UAE and the remaining 21% by public. Initially launched as a telephony company Ooredoo rapidly grew to become one of the largest telecommunications provider in Qatar offering trending technologies to the State like mobile, broadband, content, TV and fiber services. It currently employs more than 17,000 people. They connect 138 million customers across 12 markets globally (as of Dec 2016). Ooredoo features on the Qatar Stock Exchange and the Abu Dhabi Securities Exchange.

Ooredoo Revenue : QAR 32.5 billion (FY ending 31st Dec 2016)

Competitive Analysis of Ooredoo

The SWOT analysis report of Ooredoo presents the internal analysis and external analysis of the Company with insightful details of the current market position and future growth strategy of Qatar's most popular telecom player. This telco operates in 12 markets globally and has already launched 4G in 8 markets and 5G in its home State. The SWOT analysis of Ooredoo essays the detailed business case of Ooredoo with insights into its strengths, weaknesses, opportunities and threats. Its competitive advantage lays in its well established brand which consumers can easily connect to and diversified offerings which are keeping pace with advanced technology. With a strong financial portfolio underlining a prudent business strategy of upgrading infrastructure and catering to changing customer needs in this competitive telecommunication industry, Ooredoo is well on its way to set a benchmark and carve a niche of its own in the digital ecosystem. The internal analysis and external analysis of Ooredoo is presented below in a matrix.

Strengths
Weaknesses
1. Strong growth and brand value
2. Market leader in Qatar with best in class service offerings compared to regional and global peers
3. Data leader in its markets with 4G technologies available in Ooredoo’s eight out of ten key markets
4. Strong customer growth in emerging markets like Myanmar and Indonesia
5. Enjoys Qatari Government Support
1. Ooredoo total group debt on the higher side after issuance of bonds
2. Political interference can be a major factor interfering with business decisions
Opportunities
Threats
1. Launch of 4K TV services by Ooredoo has potential to revolutionize the entertainment segment with end-to-end digital experience
2. The FIFA football world cup to be held in Qatar in 2022 will bring in significant investments and tourism which will also a boost to Ooredoo
3. Scope for injecting venture capital for supporting huge investments needed for upgrading infrastructure.
4. Growth using merger and acquisitions
5. Emerging markets have growing demand with growing economy
1. Challenging political and business environment in Ooredoo’s markets like Iraq, Tunisia and Palestine.
2. Terrorist attacks in Europe and instability in Middle East increase geo-political risks which may dampen investment climate
3. Ooredoo’s success depends on Qatari economy which in turn is dependent on oil prices which have been quite volatile
4. Cut throat competition which exerts pricing pressures
5. Rapidly changing technology which demands capital investment

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Detailed SWOT Analysis of Ooredoo

 

Strength

1. Strong growth and brand value: Ooredoo has experienced phenomenal growth in the past six years where it has transformed from a single market operator in the State of Qatar to an international telecommunications player with 138 million customers across 12 global markets (as of Dec 216). With significant organic growth, educated investments, diverse offerings, Ooredoo has become the fastest growing telecommunications company in the world by revenue since 2006 and its market value has more than triples since 2005. The credit rating profile for Ooredoo looks promising (Fitch: A, Moody's A2, S&P, A-) which underlines its capital discipline, domestic strength and success in the international markets.

Ooredoo has a strong liquidity profile with a cash balance that covers all group debt maturities until end 2019. The Company has significant leadership in the lucrative domestic Qatari market and is mostly on number one or two positions in its international markets with stable performance across its operations. Year on year they increased customers by 19% i.e adding 22million customers. Group EBITDA spiraled by 3% at QAR 13,379 million (FY 2015: QAR 13,018 million) with EBITDA margin increasing to 41%. Net profit margins for 2016 was QAR 2,193 million (FY 2015: QAR 2,118 million). “Brand Finance Middle East 50”, bestowed Ooredoo brand an estimated market value of QR 7,647 million in 2016.

2. Market leader in Qatar with best in class service offerings compared to regional and global peers: Ooredoo is the largest and most popular player in Qatar with Vodafone as its only competitor. Qatar is a key market for Ooredoo, which contributes to about 30% of group EBITDA in 2016 and 2015. In a decade of its launch, Qatar Data Centre, has evolved into the largest and most advanced facility with best- in class value in the entire neighborhood. Ooredoo is emerging as a leader in cloud and data centre services, excelling in a spectrum of cloud based security, storage, hosting and managed services. It continues to work on pioneering revenue models for mobility offerings, broadband solutions, digital ecosystems and fibre technologies. It has many awards and accolades to its credit, which makes it a winning network. It beat its own record with 63 awards won across the Group in 2016, surpassing its previous years 55 count. This clearly underlines its clear visions, customer service and innovation in a host of fields like network development, digitization, marketing, etc.

3. Data leader in its markets with 4G technologies available in Ooredoo’s eight out of ten key markets: Ooredoo continued to deliver robust data revenue growth from both individual and corporate customers. Data revenue spiked to 40% of Group revenues in 2016, a landmark for the Company which is indicative that its business strategy is delivering real and sustainable results. The Company has invested in building state-of-the-art networks offering 4G services in 8 of the 10 markets by end of 2016. In May 2017, Ooredoo announced that 10 of its base stations have been equipped with 5G-ready technology and by 2018, 5G technology will be available for consumer usage when supported mobile devices are released. It already launched 5G services in Doha which comes with extremely high speeds (upto 1Gbps) and low latency network. It continues to improve and upgrade Qatar’s telephony, Wi-Fi, and Fibre networks on the Ooredoo Supernet.

4. Strong customer growth in emerging markets like Myanmar and Indonesia: Indosat Ooredoo roped in 80.5 million subscribers to its network in 2016, which was a record 17.5% growth over the previous year, attributed to its special Ramadhan internet and data promotion offers. An aggressive customer acquisition campaign and superior network quality were the key factors behind their 10.5% jump in revenue which added 12.9 trillion (Rupiah) from fixed line, voice, short messaging services (SMS) and digital services. Ooredoo Myanmar succeeded in securing US$ 300 million loan from the Asian Development Bank and International Finance Corporation to improve its infrastructure and expand its network in Feb 2016. Ooredoo’s Myanmar operations contributed QAR1 billion ($292 million) in revenues in 2015 which accounted for 3.5% of total consolidated revenues for that term. Through new mass market approach, in spite of stiff competition in the Myanmar market from Telenor and Myanmar Posts and Telecommunications (MPT), Ooredoo added 5.8 million customers to its network which was a magnificent achievement in user acquisition rate. In 2016, Ooredoo racked up 8 million users in Myanmar, with 108% year on year increase on its data network that covers 85% of the population.

5. Enjoys Qatari Government Support: The government of State of Qatar holds approximately 69% stake in the company, through direct and indirect holdings, thus it enjoys government support and overall stability. With the government of Qatar being a major stakeholder they have a lot of resources available to make sure that they get the best and the latest infrastructure at their disposal. Also, as the government is the major shareholder, many investors have a sense of comfort and do not mind investing in the company.

Weakness

This section is available only in the Complete report on purchase.

Opportunity

1. Launch of 4K TV services by Ooredoo has potential to revolutionize the entertainment segment with end-to-end digital experience: Ooredoo launched a new TV service which is a first of its kind in the entire region coming with crystal clear 4K image resolution. Ooredoo TV as it is called, replaced the older legacy offering of Mozaic TV, includes utility apps, digital content, time-shift TV, live streaming and services, video-on-demand (VOD) services. This service is available on a self-install basis to the 2.6 lac homes in Qatar that have already been installed with Ooredoo fibre and empowers them with unparalleled unlimited access to digital content. Ooredoo TV is available now via Ooredoo Shops and Starlink, TechnoBlue and Jumbo kiosks. The service comes with no upfront or device fees and no ongoing contracts. Ooredoo has partnered with Huawei to supply technology for this service. There is ample scope for expanding this service to other markets and also growing this indigenously.

2. The FIFA football world cup to be held in Qatar in 2022 will bring in significant investments and tourism which will also a boost to Ooredoo: Major sporting events like the FIFA football world cup, to be held in Qatar in 2022, is a major opportunity for the telecom major to skyrocket its subscriber base. Ooredoo can launch a special mobile portal for the FIFA World cup like it did in 2014 to host exclusive content, social media engagements, promotions etc. to share experiences of the exciting matches. Besides it can tie up with its global brand ambassador Lionel Messi, to create Group-wide competitions like “Simply Do Wonders” which saw phenomenal success to become the most watched campaign on a branded channel across the Arab World.

3. Scope for injecting venture capital for supporting huge investments needed for upgrading infrastructure: As the telecommunications industry faces the challenge of upgrading infrastructure with rapidly changing technology, there is a persistent demand for capital investment. Technology advancements happen speedily and there is an ever growing need to keep pace with latest technology in order to thrive in this competitive market. With strong growth and stable credit ratings, Ooredoo can attract good venture capital which can be ploughed for growth and development.

This remaining section is available only in the Complete report on purchase.

Threat

This section is available only in the Complete report on purchase.

References

1. Ooredoo Annual Report 2016: http://ooredoo.com/wp-content/uploads/2017/03/Ooredoo-Annual-Report-2016-EN.pdf

2. Ooredoo Corporate Presentation: http://ooredoo.com/uploads/pdf/Ooredoo_Group_1H_2016_Results_Investor_Presentation_final_updated.pdf

3. Ooredoo CSR: http://www.ooredoo.com.mm/en/AboutUs/Community/Respecting-the-environment.aspx  

The PESTLE/PESTEL analysis report for Ooredoo demonstrates the various challenges faced by this telco in political, environmental, social, economic, technological, legal and environmental ecosystems. The external analysis of Ooredoo essays in detail the significant factors which impact the macro-environment of the telecom industry for this Qatari operator who is posed to face challenges with sliding oil prices as 69% stake is held by the State. Civil unrests and terrorism also threatens to weaken its growth in counties like Iraq, Palestine and Tunisia. Ooredoo is shifting its strategy from high investment portfolios to strengthening and upgrading its existing infrastructure to better cater to consumer needs in a highly competitive telecommunications industry. The analysis for the external environment of Ooredoo is presented in a matrix followed by the complete Pestle Analysis report.

Political
Economical
1. Enjoys political support and financial patronage by the local government
2. Political uncertainty and tensions in counties like Iraq, Tunisia, Myanmar can affect operations
1. Qatar having one the highest per capita GDP globally
2. Slowdown fears in the Qatari economy
Social
Technological
1. Growing demand for online video content
2. Qatarisation remains a key priority for Ooredoo
1. Cloud and IoT services opening up open up new growth opportunities
2. Activation of undersea cable by Ooredoo in 2017 will substantially improve data transmission in the region
Legal
Environmental
1. Accusations on Ooredoo by Qatar’s Communications Regulatory Authority (CRA)1. Priority focus on innovative energy sources to mitigate environmental impact
2. Ooredoo’s foray into smart technology to bring in environmental benefits
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Detailed PESTLE Analysis of Ooredoo

 

Political

This section is available only in the Complete report on purchase.

Economic

1. Qatar having one the highest per capita GDP globally: Ooredoo has the potential to promote premium offerings in Qatar which is one of the richest countries in the world. The per capita GDP of Qatar $124,930 is per person as of 2017, with consumers having high disposable income. This sets the ideal market conditions for offering premium telecom services to consumers.

2. Slowdown fears in the Qatari economy: Ooredoo’s long term success depends on Qatari economy which in turn is dependent on oil prices which have been quite volatile in the last two years. Crude oil prices have witnessed significant corrections over the past 2-3 years after reaching highs in 2013-14. The fall in prices is bad news for oil and gas exporting countries in Middle East such as Qatar. New investments in projects have been indefinitely delayed resulting in slowdown in the economy. Further, the political blockade of Qatar by other GCC member nations has also restricted the trade in the country impacting the economy.

Social

This section is available only in the Complete report on purchase.

Technological

1. Cloud and IoT services opening up open up new growth opportunities: Spending on research and development is an indicator of an organizations focus on innovation and technology development. R&D investments has helped Ooredoo optimize its production process to reduce costs while maintaining its technological leadership. It has also enabled Ooredoo to foray into cloud and IoT services leveraging its established data center in Doha will open up new growth opportunities.

2. Activation of undersea cable by Ooredoo in 2017 will substantially improve data transmission in the region: Ooredoo is a primary member of the Asia-Africa-Europe-1 (AAE-1) project which aims to connect the three continents through a submarine cable. This project will position Qatar as crucial global hub and allow consumers to access high internet speeds and support the launch of 5G services in Qatar. This project will also improve the data transmission in the region as it will provide new routes for Internet traffic.

Legal

1. Accusations on Ooredoo by Qatar’s Communications Regulatory Authority (CRA): Ooredoo has been accused by the telecom regulator in Qatar - Communications Regulatory Authority, for uncompetitive practices and restricted access. The allegation by the CRA point that Ooredoo has not allowed National Broadband Network (QNBN) or Vodafone access to its ducts. Further CRA has also alleged that Ooredoo has maintained high prices for consumers, thus damaging the economy. The final ruling, if is against Ooredoo will impact the company’s operation and profitability.

Environmental

This section is available only in the Complete report on purchase.

References

1. Ooredoo Annual Report 2016: http://ooredoo.com/wp-content/uploads/2017/03/Ooredoo-Annual-Report-2016-EN.pdf

2. Ooredoo Corporate Presentation: http://ooredoo.com/uploads/pdf/Ooredoo_Group_1H_2016_Results_Investor_Presentation_final_updated.pdf

3. Ooredoo CSR: http://www.ooredoo.com.mm/en/AboutUs/Community/Respecting-the-environment.aspx  

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