Arab firms win Iraqi phone contracts

The licences are among the most potentially lucrative and high-profile contracts to be offered in post-war Iraq. The country did not have a public mobile phone network during Saddam Hussein’s rule and much of the land-line network was destroyed in the war.

“The companies that will bring Iraq world-class mobile communications are, in the northern region, Asia Cell consortium, in the central region, Orascom, and in the south, Atheer Tel,” said the interim telecommunications minister, Haidar al-Abbadi, in Baghdad.

The three consortia will pay a total of $5 million as a fee for the two-year licence, with each consortium’s share determined by its potential subscriber base. The licence is relatively cheap, partly because of the high investment costs now facing the winners.

GSM network

Industry experts had expected the networks to be based on GSM (Global System for Mobile Communications) technology, which is already used across the Middle East and much of the rest of the world.

   
But the issue was clouded after one US lawmaker in March urged top politicians, including US Defence Secretary Donald Rumsfeld, to ensure that rival US-backed technology CDMA be deployed to safeguard American jobs and profits.
   
Orascom Telecom Holdings SAE is owned by Egyptian business magnate Najib Sawiris and is leading a consortium that includes Jordanian businessman Alaa al-Khawaja and Allied SA Ltd, a group of Iraqi businessmen.
  
Orascom’s concession will cover the key Baghdad area.   

Two-month wait

Sawiris told AFP that “service should be operational 60 days from the time the licence is awarded, not from the time it is announced,” adding that Iraq probably chose the GSM system over its US-developed rival CDMA standard because it is more widely used.

Asia Cell Telecommunication Company Ltd was set up in 1999 by primary investors including Kuwait’s Wataniya Telecom and the United Gulf Bank, an investment bank in the Gulf region, a spokesman who declined to be identified.   

It has been operating from the northern Iraqi province of Sulaymaniyah since 2000, where it has 55,000 subscribers. Its new contract will expand its concession to cover Dohuk, Mosul, Arbil, Kirkuk and Tikrit.
  
“We have the experience. We will do our best to offer these services as soon as possible,” the spokesman said, adding that infrastructure needs to be up within 20 days and service within two months. 

Kuwaiti investors
  
Atheer Telecom Iraq will cover southern Iraq. Its primary investors are Mobile Telecommunications Company of Kuwait (MTC), Dijla Telecommunications Corp of Iraq and Kuwaiti construction firm Kharafi National.

  
Iraqi shareholders or participants hold stakes of between 10% and 50% in the three groups of investors.

As many as 100 bids were received from interested parties in the contracts.   

Abbadi did not reveal who the other candidates were, but Orascom’s Sawiris said there were “more than four or five US firms” in the race.
  
The strong Kuwaiti participation is a sign that Iraq’s US-backed interim government wants to normalise relations between the war-ravaged country and its southern neighbour, which former dictator Saddam Hussein invaded in 1990.

Kuwait also is still demanding huge reparations from its cash-strapped Iraq for damage caused during the first Gulf war. 

Low cost
  
Abbadi said mobile phone lines are expected to cost between $50 and $60. Per minute charges will not exceed 10 cents.
  
Iraq’s communications network has been spotty since US forces entered the country six months ago, with 259,000 land lines out of 1.1 million nationwide rendered inoperable during the war.
 
The US-led occupation authority invited tenders for the mobile network in July and bidding closed 21 August. A decision was supposed to be announced on 5 September, though was delayed for unexplained reasons.

Mobile operators Batelco of Bahrain and Vodafone MTC of Kuwait informally launched services in Baghdad in late July, but the occupation authority quickly shut them down, explaining they needed to go through the official process with tenders.