Iraq - Telecoms, Mobile, Broadband and Forecasts

Additional Information

Executive summary

Market developments lay the foundation for future growth

Despite developing in leaps and bounds in post-war Iraq, the telecoms industry still holds much growth potential. The main story of telecommunications in Iraq continues to be mobile. Prior to the 2003 Iraq war mobile telecoms did not exist in most of Iraq outside the Kurdish areas. Since then mobile penetration has reached levels indicative of market maturity.

Four operators share the market but Zain of Kuwait’s subsidiary Zain Iraq has much the largest market share, with well over 50% of the market. Asiacell, which counts Qtel of Qatar as a major shareholder, has just over a third of the market. The market’s unrealised growth potential continues to attract international investment, most notably in early 2011 when France Telecom acquired a stake in one of the two remaining minor players.

In an effort to rapidly deploy telecoms network infrastructure a number of Wireless Local Loop licences were awarded. Licence recipients have since deployed CDMA networks and launched voice and broadband services in a number of regional cities, offering many in the market the opportunity to take up broadband subscriptions for the first time.

Competing against the CDMA networks in the broadband market are WiMAX, ADSL and satellite platforms. Current Internet user levels are very low and hence present a great investment opportunity. Impediments to market development include the lack of international backhaul and regulatory uncertainty.

Should 3G licences be awarded the mobile operators would be in a prime position to make inroads into the broadband market, given the reach of their networks, existing brand recognition and product distribution channels as well as established pool of customers.

Uncertainty continues to exist in the regulatory situation with several disputes existing between the Ministry of Communications and the mobile operators. The Ministry has claimed it is owed large sums by the operators and has also fined them substantial amounts for non-fulfilment of service conditions in their contracts. A key issue is the delayed implementation of Initial Public Offerings (IPO)s by the mobile operators, a licence requirement that was supposed to be implemented by 31st August 2011.