Vodafone Qatar has under-performed the market in the past few months in the face of fierce competition within the Gulf's telecommunications sector.
The company, a joint venture between Vodafone Group and the state-controlled Qatar Foundation, began offering mobile phone services last year following an initial public offering that raised US$1 billion.
But its share price has fallen 3.5 per cent since the end of June and yesterday closed down 1.22 per cent to 8.1 Qatari rials.
In contrast, Qatar Telecom (Qtel), the company's main rival and the GCC's largest telecoms operator, has rallied to 182.5 rials as it continues to pursue an aggressive expansion strategy.
Qtel's latest acquisition, the 50 per cent stake of Orascom Telecom's Tunisian unit, which it did not already own, puts further pressure on Vodafone Qatar's weakening subscription acquisition rate.
Since launching last year, Vodafone Qatar has struggled to take customers from Qtel and has notched up just 600,000 subscribers. Qtel had maintained its base of 2.4 million subscribers by September.
Sally Gerges, a telecoms analyst at Beltone Asset Management in Cairo, expects Vodafone Qatar's mobile subscribers to reach 735,000 next year but downgraded the stock to "sell". The price target was lowered to 8.95 rials, compared with 10.79 rials.
"Qtel has been around a lot longer and Vodafone Qatar is still a start-up, so it makes sense," Ms Gerges said.
"It's still a new company and so people are waiting for the performance to turn around … which is typical for a start-up," she said.
Qatar is already a mature market, with a 169 per cent mobile penetration as of September, making growth potential difficult for an operator trying to add new subscribers.
"Qtel has been a monopoly and doesn't want to give up market share. It's not very easy for Vodafone Qatar to break into this," said Ms Gerges.
Net loss at the company narrowed for the six months that ended in September to 312 million rials, from 349m rials for the same period a year earlier.
Ms Gerges expects Vodafone Qatar net losses to reach 566m rials next year.