Huge boost to Iraqi mobile coverage predicted

Communications minister says new licences will improve networks dramatically.

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By  Reuters Published  August 23, 2007

Iraq's new licenses to three operators will dramatically boost the cellular network across a violence-torn country, relying on mobiles after war and sanctions hit landlines, the communications minister said on Thursday.

Iraq last Friday sold three 15-year licenses for $3.75 billion to Kuwait Mobile Telecommunications Company (MTC), Qatar Telecommunications (Qtel) affiliate AsiaCell and Korek Telecom, which is based in the city of Irbil in Iraqi Kurdistan.

"The most important matter we attained is opening Iraq for all mobile operators. There will be interconnectivity that did not exist previously," Mohammed Allawi said in an interview in Amman.

A fixed line network that had only 1.2 million lines in a population of 26 million had pushed cellular penetration rates to above 30 percent with around 8 million subscribers in around three years, Allawi said.

"The new licenses will boost coverage dramatically," he added.

The three firms with the previous interim licenses - Egypt's Orascom, MTC and AsiaCell - had all failed to achieve enough nationwide coverage, Allawi said.

Under the new licenses, Kuwait's MTC Atheer can expand beyond the central and southern parts of Iraq and likewise Korek Telecom, which has operated in Iraq Kurdistan since 2001 under a provincial license, can extend across Iraq.

Korek was best suited to acquire the operations of Orascom Telecom, which dropped out of the auction because the price was too high and had been the first company under its Iraqi subsidiary Iraqna to provide a full mobile service after the 2003 invasion, Allawi said.

Lucrative market

The intense competition among five consortiums in the auction - in which license bids rose to $1.25 billion, far surpassing the government's expectations - reflected the attractiveness of the Iraqi mobile market, Allawi said.

Investments in land lines was also expected to raise the number of phones to three million in the next three years from a current 1.2 million land lines, Allawi said.

Allawi said he foresaw larger investments by the new operators beyond an estimated $1 billion spent by the three operators in running their Iraqi network.

Tougher terms are now laid out in the new licenses that will be formally signed at the end of this month that should encourage more investments to upgrade services, Allawi said.

"They now have to build up their infrastructure to a high level to get good service... There will be now more competition and incentive to invest more heavily," Allawi said.

"The old licenses had a limited period... and the performance was weak because the firms did not want to spend their money on their infrastructure. This should change now," he added.

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