Thursday, Apr 19, 2012
--Zain Iraq eyes capex spending increase this year and beyond
--Company is gearing up to be ready for when broadband services can be offered
--CEO says IPO process slowed by "complex" listing laws
By Shereen El Gazzar
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Zain Iraq, a unit of Kuwait's Mobile Telecommunications Co. (ZAIN.KW), or Zain, is looking ramp up its infrastructure spending this year and beyond, as it looks to cement its position as the country's top mobile operator in terms of subscribers.
"Under-investment hurts growth, however, our investment in 2012 and the coming years will be much higher," Emad Makiya, Zain Iraq's chief executive officer, said in emailed responses to Zawya Dow Jones questions. He didn't elaborate on how much the company will spend this year.
While Iraq is still primarily a voice-driven market, Zain Iraq is gearing up and "getting ready for broadband services" to help drive future growth.
"Iraq is expected to continue being a voice-driven market for the next couple of years. No change will take place unless broadband spectrum is assigned by the regulatory authority, and reliable fiber network infrastructure is realized. Industry demand is expected to grow faster with better availability of commercial electricity in the country," said Makiya.
In November last year, Zain Iraq signed a $650 million network outsourcing deal with Sweden's Ericsson, a move aimed at improving network quality in the war-torn country. Under the agreement, 3,700 sites are to be built across Iraq, including in the northern region of Kurdistan.
As it stands, Iraq currently has three mobile phone operators--Zain Iraq, Asiacell, a unit of Qatar Telecom; and Korek Telecom, in which France Telecom and Kuwait logistics company Agility own around 44%.
Iraq's minister of communications, Mohammed Allawi, said in October last year that the introduction of a fourth mobile operator in Iraq will help consumers and create competition.
A possible fourth mobile license could take the form of a local player only, a local partnership with foreign-telco majority ownership, or through a public-private ownership, say analysts.
Zain Iraq controlled 53% of the Iraqi market at the end of 2011, with a 12.4 million subscribers, according to Zain Group's 2011 annual report.
"We are confident that we can retain our leadership position in the Iraqi market whichever option they (regulator) choose. However, we believe that the need for a fourth license should be supported by proper market study; otherwise, the consequences are disastrous," Makiya said Thursday.
Commenting on Zain Iraq's readiness for an initial public offering, or IPO, in 2012, Makiya said: "we're working very hard with our team of advisers to try and make sure we'll be ready to IPO and meet our licence obligations but the regulations and laws are very complex and it is taking time to work our way through the process."
Last August, Iraq's three mobile operators all missed an August 31 deadline to list some of their shares on the local market, which was part of their original license requirement.
-By Shereen El Gazzar, Dow Jones Newswires; +971 444 61684; Shereen.elgazzar@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
19-04-12 1302GMT
