Hopefuls bid for Iraq mobile licences

There are some familiar names, but also a few surprises, amongst the companies that have submitted bids for Iraq's three mobile telecomms licences.

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By  David Ingham Published  August 27, 2003

The names of companies that made bids for Iraq’s three mobile telecomms licences are starting to emerge.

Some of the names are well known within the region, but there are some surprises. The format of the bids has also been affected by the CPA’s ruling that governments cannot hold more than 10% of a bidding consortium.

In practice, that has meant that state owned telecomms operators have had to find business partners from the private sector. For example, Batelco, majority owned by Bahrain’s government, has taken a minority stake of 10-15% in a consortium that also includes the Iraqi Al Bunnia group.

Kuwait’s MTC, 25% government owned, has adopted the same approach as Batelco. It has taken a 30% stake within a consortium, also held 20% by Kuwaiti and 50% by Iraqi investors. Surprisingly, Vodafone, with which MTC has a strategic relationship, was not named as a partner.

There are also some unexpected names amongst the bidders. Turkey’s largest mobile phone operator, Turkcell, said in a statement that it had bid for a licence within a consortium, whose other members have not been named.

Another surprise name was ZAGIL Wireless, which described itself as “an international consortium with strong regional connections led by a prominent group of Iraqi telecommunications and business leaders.” One of the consortium members is VOEX, a little known provider of internet telephony services.

ZAGIL has bid for all three licenses and has pledged to employ Iraqi personnel wherever possible. The company has also promised that it will float or sell shares to Iraqis by subscription as soon as it is practicably possible.

Further bids by consortia involving Qtel, Orascom and Wataniya are also reported, as well as a consortium backed by investors from Iraq, South Korea, the UK and the US, which is proposing to base its network on the CDMA standard that is used in North America.

The consortia themselves are reluctant to comment, for fear of compromising their bids, but what is clear is that they all want a piece of a market that currently has no commercial mobile operator.

“Opportunities knock once in a while and if you don’t jump on the bandwagon, then you miss it,” says Mohsen Malaki, telecomms analyst, IDC Middle East & North Africa. “So most of the operators right now are thinking that this is the opportunity that they need to expand rapidly and gain [entry to] those markets that are once in a lifetime opportunities.”

Iraq’s Coalition Provisional Authority will award three mobile licences, each one covering a specific region of Iraq and valid for 24 months. Each applicant was required to bid for at least two of the licences. The CPA says that it has chosen a regional licensing approach “in order to enable the rapid rollout of services to the main population centres.”

The unusually short lifespan of the licenses, explains the CPA, “reflects the special circumstances in Iraq. It is believed that this period will provide operators with sufficient opportunity to recover their investment while enabling a future Iraqi Authority to take responsibility for key decisions in relation to the long-term development of the sector.”

A decision on who will receive the licenses is expected to be made quickly, possibly by as early as September 5.

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