More than 300 senior telecoms industry experts gathered at the Iraq Telecoms 2011 event in Istanbul at the end of October for discussions on how to move forward with a sector that is experiencing ever-increasing demand in the country. Iraq’s telecoms market is expected to have reached a penetration rate of 73% by the end of 2011, with 100% penetration by 2015, meaning there is huge potential for service providers wanting to invest. Despite the global recession, Iraq has continued to experience incredible growth economically. 

Zain, Korek and AsiaCell are the three major service providers operating in Iraq, with Zain spending $4.8bn in the country over the past seven years as it looks to consolidate its market leadership position. Despite being the sector most known for foreign investment and coming second in income only to the oil and gas sector, a lack of infrastructure has significantly stunted growth in telecoms, with internet penetration at less than 3%. If Iraq were to reach 10% broadband penetration, this would lead to a 1% to 2% growth in GDP, as well as create 10,000 jobs, according to industry experts. 

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“There are huge hurdles but we are very optimistic. A lack of electricity, fibre-optic cables and the curfews have made it difficult but we are passing through this era and there is a new leadership that we feel will make dramatic changes,” Emad Makiya, CEO of Zain Iraq, told fDi. “Iraq is in its infancy after the Saddam era and it needs help and expertise in decision-making. We encourage [the country's leaders] to hire consultants, to get the right expertise.” 

It was also announced at the end of November that Zain has signed a $650m five-year network outsourcing agreement with Ericsson to optimise and modernise Zain’s mobile network in Iraq.

One of the major problems hindering progress in Iraq has been the regulatory environment. Conflicts and uncertainties over the roles of Iraq’s Communication and Media Commission (CMC) and the Iraqi Telecommunications and Post Company (ITPC) have led to high operating costs for Iraq’s mobile phone operators. The regulators' law of operation has still to be validated by the parliament and the regulatory board is still nominated by the government, meaning it cannot operate freely and independently. 

“The delay is bureaucratic [and] political. There is no one point of decision-making and no one is daring to take the first step. The government needs to realise we are not the enemy; it is in our interest for Iraq to flourish as it comes back as revenue for us,” said Ghada Gebara, CEO of Korek Iraq. “The infrastructure is there for 3G, the equipment is pre-enhanced for it, we just need the green light to go there.”

During the Istanbul conference, HE Mohammad Tawfik Allawi, minister of communications of Iraq, maintained that in spite of the problems operators have been facing in Iraq, they are studying privatisation and aiming to encourage a greater role for the private sector in communications as well as announcing plans to lay down 20,000 kilometres of fibre-optic cable next year, with a target of almost 1.8 million lines by the end of 2012.

“Success brings success and when companies worldwide see a sector and foreign investment succeeding, they will be encouraged to come,” said Ms Gebara. “We are one of the most important sectors for infrastructure. Internet and phones are a higher priority than roads – you use a road once a day but you use phones and internet all day.”