When BMI last updated the Iraq report, we had estimated a rather poor fourth quarter in 2008, reflectinggeneral trends in the region. However, YE2008 data from Zain, which has now also been followed byQ109 data, showed us that this was in fact not the case. Iraq has been able to withstand the pressures ofthe flailing world economy and maintain its former growth trends. The principle trend is for strong butgradually slowing growth in the mobile subscriber base. In Q408, the mobile market grew by 8.2%,which was in fact higher than the average quarter-on-quarter (q-o-q) growth for 2008, which turned out tobe 6.7% based on BMI calculations.
As yet little progress has been made to dent Zain’s dominant market position. In Q408 and Q109, Zain’smarket share remained higher than it had been throughout the first three quarters of 2008. This is despitethe efforts of Asiacell, in upping its coverage to reach new subscribers, and the big investment announcedby Korek Telecom. It may be that these steps have yet to have their full effects felt, and that Zain willsoon start to see its position threatened. BMI would certainly welcome such a rebalancing of the market.
A new threat to all of the operators comes in the form of a potential new operator, as a licence tender hasbeen slated to take place before the end of 2009. This would certainly be a positive move for the market,which saw a big player removed when Zain took over Orascom’s Iraqna. Another piece of bad news forthe operator was the regulator’s decision to fine them for low quality services. Both Asiacell and Korekwere handed fines of just over US$1mn, but Zain was walloped with an US$18mn fine. The operatorsdispute that the ongoing service disruptions have been their fault, as they have to contend with mobilejamming devices frequently used by the various military forces present in the country. Zain even accusedthe Iraqi government of being anti-investment. Nonetheless, it has decided to take it on the chin andcontinue to operate in Iraq.
Iraq’s fixed-line market remains swathed in mystery, with virtually no information or data available on it.We are still positive that the rebuilding investment is leading to growth in the sector. Another positivesign, especially for broadband, was Asiacell’s announcement of its readiness to invest in fibre-optictechnology, both as a national framework and an international sub-marine connection. This couldcertainly have a very positive impact on the availability and affordability of broadband in Iraq.
Security remains a big concern in Iraq, and this goes a long way to keeping it fairly low down ourBusiness Environment Rankings for the Middle East.
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