Asiacell plans $300m expansion in Iraq

QTel subsidiary Asiacell plans investment of up to $300 million per year to capitalize on Iraq licence.

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By  Reuters Published  August 19, 2007

Asiacell Communications Co., an affiliate of Qatar Telecommunications Co. (Qtel), could spend as much as $300 million a year to expand its Iraq network, a shareholder said on Sunday.

Asiacell paid $1.25 billion for one of three mobile licences sold last week and could consider a bid for the Iraq assets of Egypt's Orascom Telecom, which dropped out of the auction at the eleventh hour.

Orascom and two Kuwaiti operators, Mobile Telecommunications Co (MTC) and National Mobile Telecommunications Co., set up networks in Iraq after the U.S-led invasion that toppled Saddam Hussein in 2003.

Qtel bought a majority stake this year in National Mobile Telecommunications, which set up its Iraq operations through a separate affiliate, Asiacell Cayman Islands.

MTC and Kurdish operator Korek won the other two licences.

Asiacell Communications is looking to raise conventional or Islamic debt to fund expansion in Iraq, said Basil al-Rahim, managing partner of UK-based investment bank Merchant Bridge, which holds a 19 percent stake in Asiacell Communications.

"The rough ratios of what you spend per subscriber per year is anywhere between $120 to $127 per subscriber. Then you have the upgrade of old equipment and security, so it could be $200 to $300 million a year."

Rahim declined to comment on what the new debt would mean for Qtel, which owns 30 percent of Asiacell and is facing a surge in financing costs for $3.7 billion deal to buy into National Mobile, also known as Wataniya.

"We're looking to keep the facility as simple as possible, " he said. "Possibly, a long-term loan or it could be structured in a bond or sukuk," he said. Islamic bonds are known as sukuk and comply with Islam's ban on receiving interest.

Wataniya owned 40 percent of Asiacell Cayman Islands, which is in liquidation at the behest of its majority shareholder.

Qtel said on Sunday Asiacell Communications, of which it owns just over 30 percent, had bought the Iraq assets of Asiacell Cayman.

Rahim declined to say how much Asiacell paid for the assets.

Asiacell will consider buying Orascom's Iraqna subsidiary, which the Egyptian company said may be put up for sale.

"If the opportunity comes up, we will look at it," Rahim said.

Iraqna covers 99 percent of central Iraq and 90 percent of the country's south, according to its Web site.

Asiacell's network primarily covers northern Iraq.

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