Sunday, Aug 28, 2011
CAIRO (Zawya Dow Jones)--Iraqi authorities will meet after this week's Islamic holiday to determine possible legal action against the country's three telecom operators if they don't meet an Aug. 31 deadline to sell off parts of the companies through initial public offerings, officials in Baghdad said.
Under the 15-year licenses awarded to Iraq's mobile phone operators by the Communication and Media Commission, or CMC, in August 2007, the telcos are required to go public on the country's bourse within four years by Aug. 31 this year.
"If the companies miss the deadline, there will be legal procedures," CMC commissioner Ali Nasser Al Khoweildy said in a phone interview Saturday, adding that any procedures would begin after this week's Eid Al Fitr Muslim holiday that marks the end of the fasting month of Ramadan.
"The head of the executive authority (at the CMC), the party responsible for contracts' implementation, will take the case to a hearing panel, which will decide to issue a warning or impose a fine to the companies," Al Khoweildy said.
Iraq currently has three mobile phone operators--Zain Iraq, which is a unit of Kuwait-based Mobile Telecommunications Co. (ZAIN.KW); Asiacell, a unit of Qatar Telecom; and Korek Telecom, in which France Telecom (FTE.FR) and Kuwait logistics company Agility (AGLTY.KW) own around 44%.
The country's mobile phone market, which didn't exist under the rule of former ruler Saddam Hussein, has boomed since the U.S.-led invasion in 2003 that toppled his regime. Today, Iraq has about 23 million mobile phone subscribers.
"Until now they (the three operators) haven't been shareholders' companies. This is the first step before becoming listed companies," said Taha Abdoul Salam, chief executive officer at the Iraq Stock Exchange, or ISX.
He added that "for sure" the telcos would not meet the end-August deadline but added that a license withdrawal was "not practical." Instead, the CMC could decide on imposing a fine or postponing the deadline, he said.
Asiacell said in June it was concerned that the local stock market may not be sufficiently liquid to ensure the successful sale of a 25%-stake in one or more telco through an IPO.
A telecom analyst said market conditions were "definitely challenging" and it was difficult for the three telcos to go public at the same time.
"There wouldn't be enough appetite for three sizeable Iraqi telco issues in my opinion," said the analyst, who declined to be named. He said operators would likely seek to negotiate a new timeline for the IPO.
However, CMC's Al Khoweildy said the market was capable of absorbing three IPOs and blamed bureaucratic procedures for delaying the process.
Korek declined to comment when contacted by Zawya Dow Jones. Zain Iraq didn't respond to an emailed request for comment. Asiacell wasn't immediately available for comment.
-By Shereen El Gazzar, Dow Jones Newswires, +9714 446 1684 Shereen.elgazzar@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
28-08-11 0840GMT
