Tuesday, Jun 07, 2011
By Shereen El Gazzar
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Zain Iraq, the largest mobile operator in the country by subscribers, expects revenues to grow by about 17% this year to $1.75 billion as the telco targets bigger spending mobile users and reaps the benefits of its infrastructure spending program, the company's chief executive officer said.
"By far we are the largest operator in Iraq from a subscriber perspective. From a revenue perspective this year we are expecting to do $1.75 billion. Last year we had $1.5 billion in terms of revenue," Emad Makiya told Zawya Dow Jones in an interview late Monday.
Zain Iraq will target higher spending mobile customers in order to boost it average revenue per user, or arpu, and meet its projected revenue forecasts, he added.
"This year we will not be focusing on adding more subscribers, but high value subscribers to increase the arpu," said Makiya. "This is what we are going after."
Zain Iraq is the largest revenue contributor to Kuwait-based Zain Group (ZAIN.KW). Income from the Iraqi unit made up 33% of Zain's overall revenue in the first three months of the year.
Makiya said he is confident that a $262 million fine levied by Iraq's Communication and Media Commission, or CMC, is likely to be removed in the months ahead. The CMC in January penalised Zain for issuing 5 million SIM cards without its prior approval.
"It (the fine) will be waived, I have a feeling. We are going through the legal process. It takes time," said Makiya. "This matter is almost resolved. They gave us 2 million (lines) back about 2 months ago and the 3 million (lines) about 10 days ago, so now we have full connectivity with Asiacell," he added.
The CMC had asked Iraq's three operators earlier this year to cut connectivity with unlicensed Zain lines. Zain, AsiaCell and Korek all bought 15-year mobile licenses for $1.25 billion each in an auction in 2007.
"Now it's back and we are starting a new awareness through the media to tell the people that connectivity is back with Asiacell," said Makiya.
CAPITAL SPENDING
Makiya also said that Zain Iraq plans to invest $500 million this year on developing its network.
"We are planning to invest $500 million compared to around $400 million last year. That will be spent on infrastructure, it will spent on network expansion and development, including phase two of Kurdistan," he said.
Zain Iraq in March said it launched telecom services in the northern part of the country. The service launch was the first phase of the project aimed at covering all the northern provinces in Iraq. The second phase will include covering remote villages.
"We have launched in March phase one and phase two has just started. We will be able to finish it around August or September at the latest. This will give us a strong foothold in Kurdistan and we will be a good competitor there," said Makiya.
Zain Iraq faces competition in the northern Iraqi region from the likes of France Telecom, who in March teamed up with Kuwait logistics company Agility to buy a 44% stake in Iraqi mobile operator Korek Telecom.
Makiya said that Zain Iraq is hoping to be able to provide 3G services at some point in 2011.
"Hopefully we will get the 3G spectrum this year. The technology is going to be obsolete and we are not even using it," said Makiya, adding that one of the challenges they are facing is the expensive price of fiber optics needed to offer 3G services.
"The pricing of the fiber optic by the Iraqi Telecommunications Postal Company, or ITPC, is very expensive. The minister said he is trying to offer the fiber for 10% of what it is today. I think it will be done before the end of this year," said Makiya.
Makiya also said that Zain Iraq is currently negotiating with three international telecom vendors over a managed services contract that could be signed by the end of this year.
"It could be Nokia Siemens, Huawei, it could be Motorola, or it could be Ericsson. One of them will be taking over the network so we can focus on our core business which is marketing GSM services," said Makiya. "We are thinking about doing some major improvement in the network in order to prepare us for the 3G and 4G license," he added.
-By Shereen El Gazzar, Dow Jones Newswires; +971 444 61684 +971 444 61684 ; Shereen.elgazzar@dowjones.com
Copyright (c) 2011 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
07-06-11 1218GMT
