It is rare to focus on Iraq’s telecommunications sector, but it is hugely important for the country’s continued development. The war damage to Iraq’s telecommunications infrastructure was significant; but telecoms in the region was underdeveloped in numerous ways prior to 2003. The launch of mobile services in 2004, however, has had a positive impact on the telecoms market in post-war Iraq.
Iraq has three major mobile operators in what is now one of the fastest growing emerging markets worldwide. Research consultancy firm BuddeComm predicts that penetration will reach up to 76% by 2011 with over 25 million subscribers. Kuwaiti operator Zain has been operating in the region since 2004 and has the biggest market share with 12 million subscribers. Zain increased its presence in Iraq in 2007 after acquiring Iraqni, a subsidiary of Egyptian operator Orascom Telecom, for $1.2 billion, and now provides services in central Iraq and Baghdad. The country’s other two operators are Asiacell and Korek Telecom, with seven million and 2.5 million subscribers respectively. At the time Capacity went to press, France Telecom was reported to be in talks to purchase a stake in Korek Telecom, in a deal worth up to $1.5 billion.
“After the war, the telecoms sector was in complete shatters, but there has always been potential since the liberalisation of the market in 2003 to allow private sector investment,” said Jawad Abassi, founder and general manager at the Arab Advisors Group. “If full peace and stability is achieved, the Iraqi middle classes will migrate back to Iraq and drive demand for broadband in the country. This is where growth in the sector lies, with a boom in the broadband market.”
Indeed, broadband and internet usage remains a significant area for growth, with the ITU noting that internet usage penetration was as low as 1.1% in June 2010, with only 325,000 users. The damage caused by the war on infrastructure, in addition to the delay in granting 3G licences to operators, has meant that the take up of internet and broadband remains limited in the region. Zain Iraq has called for the country’s regulator, the Communications and Media Commission, to invest more in the sector. “Zain Iraq is looking forward to the availability of 3G and LTE spectrum to extend its service to the Iraqi people. However, broadband services need fibre backbone, which remains in government control,” says Emad Makiya, CEO of Zain Iraq.
Considering the damage caused to cables, fibre, infrastructure components and commercial electricity, the development of infrastructure and international connectivity is essential for Iraq. The country’s entire telecoms infrastructure is owned by the Iraqi Telecommunications and Post Company (ITPC), a subsidiary of the Ministry of Communications (MoC). The ITPC has secured contracts for terrestrial roll-out with a number of neighbouring countries, and is charged with ensuring a shift from satellite technology as Iraq continues to rebuild.
Kassim Mohammed Al-Hassani, director general at ITPC, believes that despite lagging behind its Middle Eastern neighbours, Iraq is well placed for development because the ITPC is ensuring new technology is introduced, rather than simply developing old infrastructure like many countries in the region. He believes the contracts ITPC has secured will “significantly advance the region by 2011 or 2012.” This includes ITPC’s 2009 deal with data capacity and internet services provider FastIraq to purchase wholesale fibre-optic capacity from the MoC. “We have four submarine cables going through Iraq and we are talking to HTC and Turk Telekom for transit potential. In 2011, we will secure MoUs with neighbouring countries to ensure Iraq is one of the smartest transit hubs in the region,” says Al-Hassani.
Foreign investment in Iraq is still subject to stringent security and Al-Hassani has called for the government to establish a clear telecoms and investment law to ensure external capital is secured. “There is no clear national investment facility and this needs to be updated and restarted to show why Iraq is a good place to invest. Despite small outbreaks of terrorism, Baghdad is safe and Iraq has the potential to be a very prosperous country.”
Source: Arab Advisors
Source: Arab Advisors
Source: Arab Advisors
Source: Arab Advisors
