Orascom Telecom Holding (OTH) is looking strong in the ongoing battle for the Iraqi mobile phone network licences. Wael Gamal reports In the latest development in the competition for an Iraqi mobile phone network, the Coalition Provisional Authority (CPA) relaxed its earlier ban on any company that is more than five per cent government-owned from participating in the bidding. This move had come as a surprise, immediately preceding a conference which was attended by 150 companies in Amman last Thursday. The CPA decision would have meant the exclusion of Arab firms such as Bahraini Batelco and Kuwaiti MTC-Vodafone and Wataniya Telecom (Kuwait) which are partly owned by their respective governments. In response to a furore raised by the relevant Arab companies and their governments, the CPA quickly backed off, upping the limit to ten per cent government ownership. The five per cent requirement would have left OTH as the only Arab competitor. The CPA is offering up to three separate licences for the distinct geographical regions of Iraq. The southern region includes the governorates of Al-Basrah, Al-Muthanna, Dhi Qar, Maysan, Najaf, Babil, Karbalaa, Wassit and Al-Qadisiyah, with a total population estimated to be 5.3 million. Central Iraq is primarily Baghdad and its suburbs, with a population of 6.9 million, while the north is comprised of the governorates of Erbil, Al-Sulaymaniyah, Al-Tamin, Dahuk and Ninawa Salaheddin, including 4.4 million people. Each applicant will be required to bid for at least two regions to encourage bidding for each of the regions and the swift fulfilment of service throughout the main population centres. Unlike most mobile telecommunications licences, which typically are valid for 15 years if not longer, the Iraqi licences are for only two years. Nonetheless, Iraq represents a promising, untapped market for the mobile companies, with an expected five million subscribers within a mere three years. With the pace of the telecommunications expansion slowing with the global economic recession, many companies such as Alcatel, Ericsson and Motorola are eager to seize this chance. Although Orascom has been drawing back from its earlier strategy of rapid expansion, divesting unprofitable holdings in seven sub-Saharan ventures, it is hoping to gain a foothold in Iraq. Orascom should be able to hold its own with the American and European giants -- last Thursday, it posted a 19.4 per cent rise in core first quarter earnings and a surge in net profits. OTH posted earnings before interest, tax, depreciation and amortisation (EBITDA) of LE557.78 million ($90.7 million) for the quarter ended 31 March versus LE467.31 million a year earlier. After slimming its ventures, net profits rose from LE3.12 million to LE102.42 million. As of 31 March, OT's total subscribers reached 4.8 million, a 14 per cent annual increase, the firm said. Early in July, the company also settled a dispute with DREX Technologies, its partner in Syriatel. OTH's prospects to a large extent are dependent on the choice of network system to be used in Iraq. The CPA has not specifically excluded either the Global System for Mobile Communication (GSM) or Code-Division Multiple Access (CDMA). CDMA is a relatively new entrant in the mobile market, predominant in North America, parts of Asia, and Israel. GSM is more widespread globally, with a nearly 70 per cent share, and is used throughout the Middle East and Europe. Choosing a CDMA system would give a major advantage to American companies in the competition with European companies and OTH, while the sensible choice of GSM would not preclude Motorola from participating. A mix between the two systems, technically allowed under current CPA regulations, threatens to isolate the three Iraqi regions from each other, while any regions using CDMA would be cut off from the rest of the Arab world.
