Iraq’s telecoms sector has often appeared in news headlines for the wrong reasons in the past few years, with a perceived lack of effective regulation adding confusion to a market in need of stability.
But the past year has seen significant improvement, with strong growth from the country’s three mobile operators Zain Iraq, Asiacell and Korek, and a sense that regulation is slowly starting to improve.
Ismail Patel, an analyst covering broadband and wireless in the Middle East at Informa Telecoms and Media, says that Iraq stands as an “intriguing market” with “opportunities and weaknesses that are quite distinct from neighbouring telecoms markets”.
Iraq’s telecoms sector remains dominated by mobile, mainly owing to a weak fixed-line sector that relies on poor copper infrastructure and fixed-wireless technologies including CDMA.
According to figures from Informa, Zain Iraq remains the country’s market leader with over 12.4 million subscriptions. Qtel-owned Asiacell has 8.7 million subscriptions, and Korek Telecom, which leads in Kurdistan, has about 3 million customers.
“All operators have now diversified geographically, with Korek operating in central and southern Iraq since 2010, and Zain and Asiacell moving into Kurdistan earlier this year. As of end-3Q11, Informa puts mobile penetration of the population in Iraq at 74.03%,” Patel says.
The mobile operators have invested heavily in the past year. Most recently, Zain Iraq outsourced the management of its network to Ericsson in a five-year deal worth $650 million.
In September, Korek said that it had hired Ericsson to upgrade its network and make it LTE-ready, while in August, Asiacell said that it had expanded its mobile voice and data coverage in the Sulaimaniya region in Northern Iraq by deploying solar-powered cell-sites that use satellite backhaul.
In the first quarter of 2011, Iraq’s telecom sector managed to attract foreign investment when France Telecom and Agility announced a plan to acquire a 44% stake in Korek Telecom, Iraq’s third operator, for a combined sum of about $295 million, plus $285 million in loans.
Emad Makiya, CEO, Zain Iraq, says that the market has grown by an “encouraging” 12% in total revenues and about 7% in the total number of subscribers in 2011. He adds that the figures also indicate a growth in usage per subscriber compared to 2010.
Makiya is also optimistic about growth in Kurdistan, which represents a relatively new area of operation for Zain. “We expect to have faster growth in the northern regions in 2012,” he says. “Our plan is to double our network coverage in Kurdistan. Zain brand is attracting the youth with the variety of products and services.”
As head of the country’s biggest operator, Makiya also has a clear view of the many challenges faced by telcos in Iraq. A lack of consistent power and a lack of fibre backbone are among the chief problems. An inefficient banking system and a weak regulator add to the burden of the operators.
