Bidding starts for Iraq mobile licences

UPDATE: Five companies compete for the three 15-year mobile network licences up for grabs.

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By  Michele Howe and Reuters Published  August 16, 2007

The auction of the three mobile network licences on offer in Iraq began today in Amman, Jordan.

Egypt's Orascom Telecom, Turkey's leading mobile operator Turkcell and groups including Kuwait and Qatari mobile companies are expected to bid for the licences, an Iraqi news agency reported.

"Five companies will compete in the auction: Atheer, Orascom, AsiaCell, Korek and Turkcell," Iraqi government spokesman Ali al-Dabagh was quoted by the Voices of Iraq agency on its website.

Three of the bidders are already active on the Iraqi mobile market - AsiaCell, MTC Atheer, and Orascom, through its Iraqi subsidiary Iraqna.

All three hold temporary licences, which have been extended several times. The new licences, which are to last up to 15 years, are expected to replace previous licences awarded soon after the US-led invasion of Iraq in 2003.

Of the outsiders, Turkcell is likely to have the edge in securing one of the licences, Marc Hammoud, a senior telecoms analyst at Dubai-based investment bank Shuaa Capital opined. "I believe the three existing operators will remain in place. There could be an outsider. I don't think Korek will be one, Turkcell could take over the Korek Telecom assets and then expand to the whole country," he told ITP.net.

The starting price for the licences has been set at US$300 million plus 18% revenue sharing, communications minister Mohammed Allawi told Reuters ahead of the auction.

Allawi added that the winning bidders would be announced on August 20.

Iraq's mobile subscriptions surged to five million in the country of 26 million people at the end of 2006 from virtually nothing three years earlier because the fixed-line network was hit by sanctions after Iraq's invasion of Kuwait in 1990 and barely survived bombing during the 2003 US-led invasion.

Competitor profiles

MTC Atheer
MTC Atheer is owned by Kuwait's Mobile Telecommunications Company, the third-largest Arab telecom company by market value. It operates as MTC Atheer in Iraq. It was granted a licence in 2003 to operate a mobile telecom network in the southern region of the country. It later expanded its coverage to the central region and is now extending to cover northern Iraq. MTC Atheer had 3.35 million customers as of March 31, making it the largest operator in the market in terms of subscriber numbers.

Orascom
Egypt's Orascom Telecom, the largest telecom operator in the Middle East, operates in Iraq under the brand name Iraqna. While all three current players now have national licences, Iraqna has the advantage of having been the operator awarded the concession in central Iraq, which included Baghdad, enabling it to build up a presence there prior to the arrival of its two rivals. Iraqna has over two million subscribers on its network.

AsiaCell
AsiaCell is 40% owned by Qatar Telecom (Qtel) through Kuwait's Wataniya which it took over in March. The oldest mobile operator in Iraq, AsiaCell was threatened with closure in April after a shareholder in Asia-Cell Cayman filed a petition for it to be liquidated. AsiaCell claims on its website to have more than three million GSM subscribers.

Korek Telecom
Korek Telecom operates a mobile network in Erbil, the capital of Kurdistan and Iraq, and the province of Duhok. It plans to expand coverage of its mobile network to the rest of Iraq. Number of mobile subscribers not available.

Turkcell
The leading mobile operator in Turkey, Turkcell has international interests in GSM operations in Kazakhstan, Azerbaijan, Moldova and Georgia. As well as competing for the mobile licence in Iraq, Turkcell is also taking part at the pre-qualification stage for the 26% stake on offer in the third mobile operator in Kuwait.

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