Greenfield prospects-Iraq

The licensing process in Iraq can be described as opaque at best.

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By  Tawanda Chihota Published  August 2, 2007

The licensing process in Iraq can be described as opaque at best. The three temporary licences have been extended several times, and the latest extension keeps them valid until the end of March 2007. Expectations were that a process was set to happen in 2H06, though this time-line came and went.

The regulator's decision to delay the licensing process further is a sign that the already overdue auction of four 15-year mobile licences now faces even more problems. The process was scheduled to get underway in December 2005, with the aim of replacing the three temporary concessions in force at that date. This deadline was missed and was put back to June 2006; existing licensees were granted a six-month extension to their licences. By that date there was still no firm timetable for the auction and a further three-month extension was granted.

At the Iraqi Telecoms Conference in early September 2006 it was announced by the Minister of Communications that one of the four concessions had been procured by the government of Iraq, although this has not since been confirmed by the regulator, whose original proposal was that no licensee may have more than 10% ownership by any government entity, foreign or Iraqi. In the meantime Iraq's three mobile operators - Asia-Cell, MTC Atheer and Orascom (Iraqna) - have each received a series of extensions to their temporary licences.

There is also no doubt that the persistent and increasing levels of violence in the country have served to restrict investment in the country's telecoms sector to date. The instability has slowed the rollout and investment rates of the current operators. In the case of the mobile players, progress has been hampered by restricted access to facilities caused by fierce fighting. Facilities, especially generators, have to be constantly guarded to counter theft attempts. And, most gravely, insurgent groups have directly targeted staff, kidnapping and threatening personnel for either political or financial gain.

Negotiating these challenges has cost operators time and money, to the detriment of capital investment in Iraq. And while it would appear from the growth of mobile subscribers that the market is receiving substantial investment at least in this area, comparing capital spending across markets tells a slightly different story.

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