In its seventh year, the Iraq Telecoms conference will see more than 300 senior-level executives and industry experts gather in Istanbul in November to discuss fostering investment opportunities in the sector in order to build a reliable telecommunications infrastructure in Iraq. Acting minister of Iraqi communications and the minister of provinces, HE Torhan Mudher Hassan Al-Mufti, will be the keynote speaker. There will be no shortage of issues to discuss in this fast-evolving sector of Iraq’s economy.
Iraq’s telecoms and mobile phone industry was non-existent under the rule of Saddam Hussein, but since 2003 it has been one of the fastest growing industries in the country, second only to the oil and gas sector. By June 2011 it is estimated the country had just over 24 million mobile subscribers, indicating a year-on-year growth rate of 10.4%.
"The telecoms sector has been extremely successful for various reasons," says Hawre Daro Noori, CEO of Faruk Group Holding, majority shareholder of AsiaCell Iraq. "First, the government has kept away from it so it is purely private enterprises. Due to the lack of infrastructure in Iraq, we had the ability to grow very fast – we grew from 3 million in 2007 to 9.5 million now. [It was] expected that it would decrease per capita but we’ve had an increase every year."
Competition between Iraq’s three main service providers has been a major factor for growth in this sector. Iraq’s Korek Telecom hopes to launch a third-generation network this year, which has the ability to increase its competitiveness and help win customers from AsiaCell (an affiliate of Qatar Telecom) and Kuwait’s telecoms group, Zain.
While Korek’s licence allows it to use any technology, the government has yet to decide whether it will charge a fee for the new spectrum. However, there are concerns that this could raise tariffs and in fact slow down investment in new technologies. Korek also awarded a three-year managed services contract to Ericsson in July. The telecoms equipment maker will provide provisioning and field maintenance services for Korek’s network in Baghdad.
Zain Iraq, the country’s number one mobile phone operator, which holds an estimated 53% of the market share in the country, posted a 2% increase in quarterly profit in May, declaring that improved operations in Iraq had won over new customers. The company also signed a partner market agreement with Vodafone this year, allowing Zain Iraq access to Vodafone’s brand, devices and services in its home market. Multinational corporations operating in the country will also benefit from the introduction of mobile price plans and advanced roaming services as a result of this partnership.
All three companies are currently appealing against fines imposed for their failure to make initial public offerings on the Iraqi bourse. In 2007, they were given a deadline of four years to float their shares on the stock market as a condition of their $1.25bn operating licences. It was announced in August that AsiaCell had become the first operator to reach initial agreements to list with the Iraq Securities Commission. Listings by these operators could boost foreign interest in the stock exchange, which is currently dominated by banks.
"Hopefully by the end of October, AsiaCell will be listed on the Iraqi stock exchange. This will be something very new for the Iraqi market. The stock exchange is very small at the moment, in terms of market size, trading volume, etc, so we believe that this will make an impact and it will evolve heavily over the next five years," says Mr Noori.
It was announced in June that QTel had reached agreements to double its stake in AsiaCell to 60% for $1.47bn in order to exploit the demand for broadband in the country.