Iraqi Fourth Mobile Licence to Go Ahead

A senior government official has announced that a fourth mobile licence will be made available in the near future, Reuters reports. As part of the agreement, the operator will have to pay the government 35% of its revenues. The announcement comes almost six months after the government has been in talks with operators to make this decision (see Iraq: 8 January 2010: Iraqi Government in Talks with Operators for Fourth Mobile Licence). There are now 15 operators interested in purchasing a licence, including major MENA operators such as MTN and Etisalat, although Etisalat has been in long talks with Korek to purchase a stake in the operator and help it deploy a national network. Currently Asiacell, which is backed by Qtel is the only operator to provide full national services, while Zain is in the process of deploying this. Although Korek was part of the three operators who won the new set of licences at the end of 2007 it has struggled to deploy national services and still primarily operates in the north of the country.

Outlook and Implications

A fourth mobile operator will infuriate the country’s mobile operators which at the end of 2007 paid US$1.25 billion for the licences. Most of the mobile operators have invested heavily in the country; Zain has stated its total investment would come close to US$5 billion in the country within the next few years. Asiacell also confirmed a further US$1-billion investment for its mobile operations. However, the new operator would be paying a significantly higher premium for the licence as the revenue share agreement is considerably higher than the existing operators which pay the government between 22–28%. The Iraqi regulatory environment is going through a transition and licence agreements the operators have made with the Iraqi Communications and Media Commission (CMC), an independent body, have been taken over by the government-owned Ministry of Communication (MoC).

• Iraqi Competitive Market: There are very few countries in the MENA region which have four mobile operators, Iraq is still a relatively new mobile market; however, there has been significantly faster growth in this market than any other in the past few years. As well as the mobile market, fixed-wireless operators are also providing services in the country which provide low-speed broadband connections and limited mobility fixed-line services. The number of communications products and services available in the Iraqi telecoms market is also much higher than most other Middle Eastern markets and is especially competitive considering the mobile market has been one of the shortest in existence in the region. Current mobile operators especially Asiacell and Zain have managed to capitalise on the lack of competitive services from Korek, the extreme demand for mobile services and the lack of fixed-line infrastructure prior to the entrance of the fixed-wireless operators. Asiacell for example has offered a range of mobile services, including melody services, proving it is trying to attract youth users as well as the increase in business users (see Iraq: 25 August 2009: Asiacell Launches Melody Service for Iraqi Customers).

• Past Struggles of Current Mobile Operators: Iraqi mobile operators have faced some of the toughest operational difficulty in the region. Limited and fluctuating supply of electricity has been one of the hardest factors to overcome. Operators have tried to compensate this by using wind, solar, and even hydroelectric power to maintain reasonable levels of communication in the most remote areas. Other major problems have been theft of infrastructure and terrorism; in the past, the U.S military introduced jamming signals to prevent mobile phones from operating when they suspected improvised explosive devices (IED) from causing a bomb to explode. This resulted in much confusion between quality of service and military intervention resulting in fines well over US$1 million for Zain and Asiacell (see Iraq: 28 May 2009: Iraq Fines Mobile Operators for Poor Services).