Top Iraq telcos asked to pay $2.85 bn license fees in one month


In what appears to be a clear case of arm-twisting by the
government towards telecom operators, Iraq’s parliament has asked the country’s three largest mobile
operators – Zain Iraq, Asiacell and Korek Telecom
to pay US$2.85 billion in license fees and fines within a month. According to a
statement released by the Iraqi government.  ‘The parliament voted that the
companies should pay their financial requirements, valued at US$2.85 billion,
to the federal budget within 30 days from the date of the vote.’


This ‘vote’ comes as a shock to the telcos, who were
earlier asked to pay the license fees over a five-year period by the previous
government. However, the present government claims that the previous deal
violated contracts with companies, although the telecom regulatory body in that
country and the Communications and Media Commission there are now questioning
the validity of the parliament’s ruling, which they feel will scare away future
investors in Iraq’s telecom industry.


The three operators in question were each awarded one of
three new 15-year national mobile concessions in August 2007 for a sum of
US$1.25 billion. The licenses awarded to them carry an obligation for the
holders to sell 25 percent of their shares and list on the Iraqi stock exchange
by the end of this month, which if not heeded will lead to them being fined.
Last month, it was reported that Iraqi telcos were likely to miss the August
deadline for filing IPOs, due to the three top telecom firms holding out until
market conditions improve. The financial break-up of the ruling requires that
Zain, a subsidiary of Kuwait-based Zain Group, pay US$803 million, Korek (part-owned by Qatar Telecom) pay US$768
million and Asiacell
(part-owned by France Telecom) pay US$625 million.


Iraq had 23.561mn mobile subscribers at the end of March
2011, reflecting a 10.4 percent growth y-o-y, especially in Q4 2010 and Q1
2011, after a lull in subscriber base in Q3 2010. Market experts predict mobile
penetration to reach 95.5 percent by 2015, up from about 70 pecent at the end
of 2010. This figure will be propelled by the expected entry of a fourth
operator in the market that will aid the increase in competition and therefore
better network expansion. Iraq is still not 3G-enabled, and hence is
concentrating all efforts on its voice and data VAS services to boost profits
and subscriber numbers. 


By Beryl M
[email protected]