Straight talker

Zain Iraq’s CEO, Ali Al-Dahwi, tells George Bevir about the challenges of growing a mobile operation in the Iraqi market

Tags: 3GBroadbandIraqZain - Iraq
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Straight talker Ali Al-Dahwi stresses the need for greater investment in internet in Iraq. (Getty Images)
By  George Bevir Published  December 7, 2009 Communications Middle East & Africa Logo

Mobile number portability is one of the many instruments of market liberalisation sweeping the Middle East, but it is not an issue that sits near the top of Zain Iraq CEO Ali Al-Dahwi's to-do list. When delegates at last month's Iraq Telecoms conference suggested that Zain, the country's largest operator by subscriber numbers, was dragging its heels when it comes to letting subscribers transfer their mobile number to a rival network, Al-Dahwi gave an unequivocal response.

"Number portability is a ridiculous issue for Iraq right now," he says. "Is it really the priority of a country that doesn't have backbone, infrastructure, proper regulations, lawyers who know how to help assist the consumer and the investor? Is it right for a country that is lacking even the simplest type of instruments to check on the performance of companies to come and talk about something that even the most advanced countries are having a very tough time of?"

According to Al-Dahwi, Zain's operator licence states that number portability should be "encouraged", and he says that in principle Zain is not against the idea of porting numbers. It is just that now is not the right time. "How many companies in Iraq have a proper billing system right now?" he asks. "How many companies - including the government - can do interconnection and roaming? We need to consider the smaller telecom companies and we need to let them grow. We do not want to destroy them."

Data push

For Zain, the priority in 2010 is to "continue to bring in newer and more advanced technologies into Iraq". When pressed about Zain's plans he declines to elaborate, only saying that the new technology will be "data driven". It is no surprise, then, that the main concern for Al-Dahwi is the state of Iraq's fixed infrastructure which he describes as "non- existent".

"There is none, I insist. No one can tell me where the fibre begins or ends in any city in Iraq. It has to be accurate and it has to be predictable. We camped at the Ministry of Communications (MOC) trying to find where the fibre is in any place.

"They have a map and they say, ‘Oh by the way we had fibre here once'. Do they even have splicing capabilities; do they know how to fix it? Do they have somebody to maintain and manage the fibre? I don't think so. These are questions that need to be answered."

Iraq's infrastructure suffered as a result of the years of embargo imposed on the country and the effects of under-investment were compounded by the damage that resulted from the US-led invasion in 2003. The head of  Iraq's Telecommunications and Post Company (ITPC), which reports into the MOC and is responsible for Iraq's infrastructure, including fibre optic cables, landlines, switches and satellite communications insists that there is fibre optic capacity, although he concedes: "How reliable and how good it is, is another question". ITPC director general Kassim Mohammed Al-Hassani told CommsMEA that there is "a historical problem" with fibre in Iraq, but he says that improving it is the ITPC's top priority. A round of testing was due to take place at the end of November, and Al-Hassani says the ITPC is "working hard to make sure there is infrastructure for all the operators in Iraq".

Al-Dahwi's solution is for the MOC to strike a revenue share deal with a private company that can upgrade, maintain and monetise the network. "This way we will be able to offer fibre to a lot of hungry companies, businesses and people - you name it; all of us are dying for fibre. My entire network backbone is on microwave, and that's not fun.

"The internet is the game and if we do not have that Iraq is not going to be part of the world, in business, education, healthcare or every other area the world is using the internet for. We need to be part of this world; we cannot gamble on Iraq's future. And for that we need proper infrastructure. If you cannot build it, bring in the people who can and at the same time make the government money."

Regulator advice

When Zain was fined US$18 million by the MOC for "bad service" earlier this year, Al-Dahwi warned that such a decision would send the wrong message to the rest of the world. As well as questioning the legitimacy of the MOC fining operators when the operators' contractual agreements are with the country's regulator, the Communications and Media Commission (CMC), he said it was a signal that the Iraqi government was "very strongly anti-investment". Zain, along with the two other networks that were fined, rival GSM operators Asiacell and Korek, is contesting the fine.

The issue served to illustrate the muddled regulatory regime in Iraq, with an increasingly powerful MOC occupying the void left by the rudderless regulator. The CMC was without a director since April 2008, when the previous head, Dr Siyamend Othman, completed his term in office. The regulator now has a new head, Dr Burhan Shawi, who has taken on the role of director general.

Al-Dahwi welcomed Dr Shawi and his team of commissioners, who he says the operators have been fighting to get in place. He said that while the operators and regulator may have disagreements, "that's what it is all about". It is too early to judge at the moment, but if his comments on the MOC are anything to go by, Dr Shawi and his team will not be left in any doubt as to Al-Dahwi's thoughts on whether they are doing a good job of regulating the telecom sector in Iraq.

"The MOC failed in the following: It failed in IPTC miserably; it does not know how to run a fixed line company with thousands of employees. Secondly, the MOC does not know how to run the post office, and it is a total failure. Thirdly, the MOC failed miserably in building infrastructure in Iraq, in building the cables that are required, the fibre and even building the copper cables around cities. We need to get rid of companies that can't run things and create companies, list them and start making money in Iraq and allow everybody to share the wealth.

"My advice - and I have nothing against the MOC - is to get people in the MOC that do not want to have an everlasting position but that want to run themselves out of a job in X number of years...and it washes its hands of what it cannot fix."

Al-Dahwi is passionate when it comes to the issue of regulation and governance, and he is willing to talk at length about the problems facing the sector and possible solutions. But he is less talkative than many CEOs when it comes to discussing Zain Iraq's figures.

"I'm not going to discuss my forecast publicly or privately, in any shape or form," he says. "These are things that every company treasures. We have plans to maximise our efficiency and effectiveness, and we are sure that we will reach our goals like we always do in Iraq, which we have proved over the last six years when we have operated in the harshest times."

Subscriber drop

Zain's subscriber base stood at 10,063,000 as of the third quarter of the year, down from 10,195,000 in the previous quarter. The drop was blamed on rival Asiacell's aggressive customer acquisition policy and although Al-Dahwi will not be drawn on what he thinks will happen to the subscriber base over the next 12 months he is cautious when he suggests there is still room for positive growth. "In the first year or two of operations it is different from a green field scenario. So there you normalise your rate and we will continue to grow appropriately... and our numbers are not yet numbers of a saturated market, so we are still in a growth market in Iraq."

Over the next six months, capital expenditure for the rest of the country is expected to "level off", with a focus on fine tuning the network, which currently covers 90% of the population, to reach customers in less populated parts in the south and central areas of Iraq.

The bulk of Zain's expenditure will be in the north, in the autonomous region of Kurdistan where the operator has yet to establish itself. The 15-year licence issued to Zain in 2007 included Kurdistan, but so far it has encountered resistance from the government of the region.

 "We finally had to submit to the requirements of the government of Kurdistan, which has further requirements than the Iraqi licence," Al-Dahwi says. "We signed a deal in the first quarter of 2009, and unfortunately as we stared building our network we were asked to leave Kurdistan once and for all, because of this reason and that."

Al-Dahwi describes the reasons for the resistance to Zain's expansion as "old, small, non-material reasons", but the divide that exists between the north and south clearly rankles. During his keynote speech at the Iraq Telecoms conference in London he questioned whether it was appropriate to issue separate licences in the Kurdistan region.

"Nobody stops the two Kurdish operators from coming into the rest of Iraq, and nobody should. I don't believe in tit for tat, that is a very bad policy," he says. "We will continue to try to go back again, it is something that we will continue to try to do," he says.

"We already took steps, such as building a call centre in the Kurdish language, brochures and plenty of material and advertising material. So we are trying to make sure that we are ready. We know how to compete, and we are sure that we will win the game when we are there."

Waiting for 3G

The three national GSM operators in Iraq, Zain, Asiacell and Korek, have yet to get their hands on a 3G licence, and it is another area of uncertainty the plagues the telecom sector. The MOC announced plans to licence a fourth, government-backed operator, the process of issuing licences to the existing operators is unclear.

Parts of the country are served by regional WiMAX and CDMA operators such as Kalimat and Itisaluna, but they concentrate on data service. Zain Iraq's network currently uses Edge technology, with the operator's licence stipulating the use of GSM 900/1800. Al-Dahwi says that so far, a 3G licence has yet to be defined and no bidding process opened but that Zain would "love to pursue it".

"Right now we are focused on bringing the newest technology possible to Iraq. We were the first to introduce BlackBerry devices and we will be the first to introduce further technologies that are up to date in advanced markets," he says.

An operator that deploys a 3G network will need to use it for half a dozen years to get a return on the investment in licence fees and capital spending. Al-Dahwi admits there is a chance that Zain Iraq could bypass 3G altogether and jump straight to long term evolution (LTE).

"There are questions to be answered about whether it is a mere possibility and if it is a standard that can be set properly. There are a lot of questions we would like the answers to, and we invite the CMC to check such technology. It's not something we will not think about.

"As a developing country we want to make sure that we let the people of Iraq enjoy such products and services and we are focusing on that. Data is critical for the youth and the businesses, for upcoming businesses and for those that left Iraq and are looking to come back to Iraq."

3322 days ago
Ralph N. Cutter

It is a shame that the country of Iraq is not ready yet to implement the Number Portability capability at this time as it will allow the many customers the alternatives to move from one operator to the other. This luxury had provided challenge to providers but a big relief to consumers to get excellent services. Hopefully, once Iraq is all settled down and have ample of regulations and laws enforced then probably we will see the Number Portability implemented. Best of luck to all the operators in Iraq as they are working under extreme pressure to produce.

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