Vodafone eyes first Middle East deal

Vodafone took a step closer to moving into the Middle East for the first time after the telecoms regulator in Qatar said the UK company is still in the hunt to win a contract to build a new mobile phone network in the Gulf state.

Vodafone will have to fight hard to win the contract if it proceeds with a bid against a host of local players as well as its US joint venture partner, Verizon Communications. The new Qatari licence could cost over $300m (£150m), a price that could test the UK operator's resolve in pursuing its interest.

Qatar's Supreme Council of Information & Communication Technology has confirmed that it has slimmed down a shortlist of 12 bidders to seven. The draft bids are being studied on technical grounds, with final offers set to be lodged in November.

Over the past two years, Vodafone has invested in high-growth emerging markets, most notably in India, where it fought off competition to purchase a majority stake in Hutchison Essar. The company is also in negotiations to increase its stake in Vodacom, the African operator of which it already owns half, and has invested heavily in Turkey and Egypt, pursuing growth in emerging markets while cutting costs and launching broadband services across Europe.

Qatar is perhaps a less attractive investment, given its small population of 840,000 and a saturated mobile-phone market. But winning a licence to compete with Q-Tel, which has a monopoly in Qatar, would strengthen Vodafone's hand in pursuing investment opportunities in other Middle Eastern countries. The Vodafone brand is already used in Bahrain and Kuwait via a partnership agreement with a local player, MTC – which is also bidding for the Qatari licence – but the UK company has yet to build a network in the region.

Vodafone declined to comment, and could yet pull out of the bidding. The other bidders include the US carrier AT&T and consortiums led by Verizon and India's Airtel, among others.