Vodafone Qatar, a leading telecom service provider, said its quarterly net loss narrowed 5 per cent from the previous quarter as it grew its customer base by 15 per cent.

The Qatari affiliate of British mobile operator Vodafone, which is fighting a regulatory decision to allow new competitor Virgin Mobile into the Qatari market, said its net loss for the first quarter narrowed to QR148.7 million ($40.9 million) from QR155.7 million in the previous quarter.

Vodafone Qatar, which began its operation 2007, has a financial year that runs from April 1 to March 31.

The company posted first quarter revenue of QR175.8 million, up 22 per cent from the previous quarter.

It had 534,000 customers by the end of June, up 15 per cent from the end of March, representing 32 per cent of the population of Qatar and a 19 per cent market share.

The result was good, but not too much of a worry for dominant provider Qtel, said Martin Mabbutt, Nomura telecoms analyst.

"Qtel has been under pressure on pricing, which is to be expected. Qtel was a monopoly in a lucrative market, so was able to charge high prices," Mabbutt said.

"Vodafone Qatar has been quite disruptive, but Qtel has reacted aggressively ... The market is big enough for two players."

Average revenue per user (ARPU), a key industry measure, grew 3 per cent to QR104 and the company said it had captured about 50 per cent of the international worker community.

"Qatar's population is very fluid and changes almost entirely every few years and most people are migrant workers, giving a big opportunity to company like Vodafone, which has an international brand," said Mabbutt.

"A lot of migrant workers will be much more familiar with Vodafone than they are with Qtel, but Vodafone also needs to attract more of the high value customers, which are probably almost entirely still with Qtel."

In May, the company said it would take legal action against Qatar's telecom regulator for allowing Virgin Mobile into the market as a third provider, calling it a breach of Vodafone Qatar's licence agreement.

Virgin signed a partnership deal with Qatar Telecom (Qtel) in May, under which Qtel will offer a prepaid mobile service under the Virgin brand.

Vodafone Qatar broke Qtel's monopoly with its bid for Qatar's second mobile telephone license for $2.12 billion in 2007.

Vodafone Qatar earlier this year said it planned to launch services including Blackberry, mobile broadband and mobile cash transfer services, subject later this year to regulatory approval, as well as develop its billing systems and fixed-line business.

Vodafone Qatar is jointly controlled by Vodafone and the Qatari government.

Shares of the company closed up .64 per cent at QR7.9 before the results were announced on Tuesday. – Reuters