Vodafone Qatar says it will swing to a profit this year. The response from analysts: yes, we've heard that before.
After the company reported a fourth-quarter loss of 143.9 Qatari million rials, compared with a loss of 156 million rials in the year-earlier period, John Tombleson, the chief executive, said he expected the company to get into the black this financial year.
But analysts are not buying it.
"Since the IPO [initial public offering] in April 2009, we have been disappointed by Vodafone Qatar's inability to get close to its guidance," said Martin Mabutt, an analyst at Nomura in London. "While we always felt the initial guidance given at [the] IPO was bullish, in the past year we have seen guidance coming down to a long way below our starting point."
The operator also said it might defer dividend payments to 2014. Vodafone previously stated it would begin to pay dividends by May 2013.
The primary downside in the latest earnings was a decline in average revenue per user resulting from harsher than expected price competition and the fact that Vodafone Qatar's network was not good enough to attract higher-spending business customers, Mr Mabutt said.
And the country's telecommunications regulator is not doing Vodafone any favours. Just last week the regulator turned down a claim by Vodafone Qatar accusing Qtel of engaging in anti-competitive pricing of international calls.
Despite the challenges, Vodafone believes that by the end of this year it will be fully capable of competing head to head with Qtel for high-spending customers when its network, billing systems and customer administration operations are expected to be up to required standards.
Mr Mabutt still believes there is a long-term opportunity for a second operator in the Qatari market, in part because of the positive effect of the country winning the right to host the 2022 Fifa World Cup.
Vodafone was down 1.2 per cent at 7.79 rials a share on the Qatar Exchange. The shares have declined 6.1 per cent this year.