Tuesday, Jul 27, 2010

(This item was originally published Monday.)

DOHA (Zawya Dow Jones)-Virgin Mobile Qatar, Richard Branson's new start-up in the Gulf Arab state, has been forced to change the way it advertises after the country's regulator ruled its behavior was "deceptive" and "anti-competitive," the head of the company's telecoms and media business said Monday.

In a telephone interview with Zawya Dow Jones, Robert Samuelson, Virgin's managing partner for telecoms and media, admitted that the company perhaps hadn't been "sufficiently cautious" in its launch into the world's second richest country after Lichtenstein.

"Maybe we were not sufficiently cautious," he said.

"The main change is more [about] when we talk about Virgin Mobile we also need to make sure that people understand it's a Qtel product," he added. There were certain situations where we had the Virgin Mobile name on its own -- we will now have it with the Qtel name."

Vodafone Qatar in May launched legal action against the country's telecom's regulator over Virgin Mobile, which earlier in the month formed a licensing partnership with incumbent operator Qatar Telecom, or Qtel.

Watchdog ictQatar on Saturday ruled that while Qtel had broken telecoms laws through its branding partnership with Virgin Mobile, it rejected Vodafone's claim that Richard Branson's company amounted to a third provider.

Vodafone Qatar, which paid $2.12 billion for the Gulf Arab country's second mobile license in 2007, argued that Virgin's launch was equivalent to a third operator entering the market and therefore unlawful.

Samuelson said Virgin was "aware" that their launch into the country, which has a population of 1.6 million, might antagonize the competition.

"I think we were aware that there was a possibility that Vodafone would react to us launching the business--it's clearly a potential threat to them," he said. "We felt we had been clear about how we explained the business; the regulator has decided that the explanation needed to be more clear."

Virgin slowed the business down in Qatar while the regulator's decision was pending but now intends to resume full operations, Samuelson said, adding that the issue wouldn't have a significant impact on revenue.

"This is more about clarity of message rather than change of business plan," he said.

Samuelson said Virgin had a "few thousand" customers in Qatar -- but declined to be more specific.

Virgin Mobile, part of U.K venture capital conglomerate the Virgin Group, was part of a consortium that lost out to the U.K's Vodafone Group in 2007 for Qatar's second mobile license.

-By Alex Delmar-Morgan, Dow Jones Newswires; +974 659 9818; alex.delmar-morgan@dowjones.com

(END) Dow Jones Newswires

27-07-10 0352GMT