Man on a mission
Iraq is a potential goldmine for operators, but for Emad Makiya, bringing robust telecoms services for the benefit of the Iraqi people is the main priority.
With mobile penetration rates in most of the Gulf countries now well above 100%, it is not surprising that all eyes are on Iraq as one of the region’s last markets to harbour significant growth potential.
And this potential has already been instrumental in potentially redrawing the boundaries of the region’s telecoms sector. Indeed, with the UAE’s Etisalat Group planning to acquire Zain Group, analysts have suggested that Iraq is one of the main draws of the deal.
Many other operators are also lining up to bid for the country’s fourth mobile licence, which the Ministry of Communications is expected to issue in the first quarter of 2011. Indeed, about 15 telecom operators have already expressed an interest including Verizon, MTN Group, Turkcell and French incumbent, Orange.
But amid this clamour for a stake in one of the region’s most promising markets, Emad Makiya, the recently appointed CEO of Zain Iraq, harbours no illusions about the challenges at hand, and the reasons for working to bring telecoms services that are on par with developed countries, to Iraq.
Indeed, Makiya, who is originally from Iraq, says that his most important task is to expand Zain’s network into the country’s northern province of Kurdistan, and to “improve the service, add data and enable more applications for Iraqis.”
“My participation in the rebuilding of Iraq is really important and this is my mission,” he says.
Iraq certainly requires this level of dedication from its telecom leaders. The country, which has a population of some 30 million people, is expected to achieve a mobile penetration rate of about 73% this year, according to Dubai-based analyst and consulting group, Delta Partners. While this would show a strong growth compared with 2007, when the country had a penetration rate of just 44%, the country lags far behind its Gulf neighbours.
Furthermore, mobile can be viewed as a bright spot in a country where nationwide fixed line services are negligible and internet usage languishes at just 1.1% of the country’s population, or just 325,000 people, according to the ITU.
But Iraq’s operators appear to be responding to the situation, with some aggressive investments. Given the size and potential of the market, Makiya says that Zain has already invested about $4.5 billion in Iraq.
“We intend to do more coverage and more investment to fulfill the licence obligations, so soon we will go into Kurdistan. We just signed an agreement with one of the suppliers to extend our network,” he says.
Zain, which already covers all of Iraq’s provinces except Kurdistan, plans to invest about $40 million in the first phase of its expansion into the province. “This will give coverage for Dihuk, Arbil and, Sulaimaniyah and phase-one will be completed by the end of this year or January 2011,” Makiya says.
“For us Kurdistan is an important region and we intend to invest. We plan to go there and put a fully fledged network in there, and we will have some coverage in Kurdistan by January 2011.
“We continue to invest in coverage and capacity around the country.” The directors of Zain hope that the investment will help cement the company’s lead in Iraq’s mobile market, where it competes with close rival Asiacell, and third player Korek Telecom.
“We are the market leader in Iraq. We finished 2009 with about 10.7 million subscribers, and we should be able to finish the year with 12 million subscribers, so we are the leader in Iraq in mobile telecoms,” Makiya adds.
“We want to maintain this. According to different sources, we have anywhere between 52% to 54% market share in Iraq.”
These figures tally with market share estimates from Josep Moya, partner, Delta Partners. He estimates that Zain has a market share of about 54%, Asiacell around 36% and Korek the remaining 10%.
This is based on a subscriber base of just over 11.6 million for Zain, 10.9 million for Asiacell and 2.1 million for Korek, he says.
But while mobile telecommunications is growing rapidly, and is expected to pass the 115% penetration rate in 2015, according to Moya, the development of mobile broadband, and indeed all broadband, remains stymied.
This is something that Zain, along with Iraq’s other two mobile operators, is hoping will change soon, with the government having already said that a licence will be issued by the end of the year. Zain is already using 2.5G and Edge, and is keen to start offering full 3G services.
“According to CMC, they will issue a licence by the end of the year, we are excited about that, we will be in the auction. We will definitely be there,” Makiya says.
But there remains a lack of clarity around the mechanism for offering a 3G licence, and it is not known how many licences will be offered. “This is going to take some time,” Makiya says.
“I think they will give it to all three operators. They have to be fair with everyone. We are the early investors, so we deserve it.”