Zain Iraq, the country's largest mobile telephone operator, expects double-digit growth in profits and revenues this year as expansion in the north and Kurdistan boosts its subscriber base, a top executive said on June 06. The expected launch of 3G services in Iraq this year is also likely to boost growth, as is the ongoing development of the country's oil industry, which is fuelling a consumer boom, chief financial and operating officer Wael Ghanayem told Reuters.
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Iraq's mobile penetration rate is still only 80 percent, but that is changing as oil revenues push economic growth above 9 percent and drive demand for better services. Only a small fraction of Iraq's population has access to broadband and most Iraqis make do with 2G mobile services providing only basic Internet connectivity.
"The penetration rate of less than 10 percent for data is still low compared to neighbouring countries, so you still have a big margin to grow in the market," Ghanayem said. Zain Iraq is a unit of Kuwaiti telecommunications firm Zain, and a major money spinner for the group. Its 13.6 million subscribers constitute about 40 percent of the group's total subscriber base and its revenue of $1.73 billion last year was more than a third of the group's total revenue. Zain Iraq reported a 6 percent rise in 2012 net profit to $369 million.
Now the company is waiting for Iraq's telecom regulator to start the process of awarding 3G licences. The process has been long-delayed but this year Iraq's Communications and Media Commission appointed an advisor to help draft the licences, raising hopes that the launch can finally go ahead.
Zain Iraq is well positioned as a potential provider as it already has 3G equipment that can sustain data transfer speeds over 10 times faster than currently available, Ghanayem added. Zain Iraq claims over 50 percent of the country's mobile market with the rest held by Asiacell, an Ooredoo (Qatar Telecom) subsidiary, and Korek, a France Telecom affiliate.
It has invested over $4.5 billion since it started services in 2003 and is now expanding its annual capital investment programme to between 12 and 15 percent of revenues to cover its 3G plans, modernisation of its core network and entry into underserved northern areas, Ghanayem said. Last February Zain launched a full-scale commercial service in Kurdistan, which is autonomous and politically more stable than the rest of the country. It says it now offers 95 percent coverage of the northern cities of Irbil, Sulaimaniyah and Dahok. The firm aims to capture 20 percent of the market in Kurdistan within 18 to 20 months. While Zain, Asiacell and Korek have nation-wide licenses, each has a regional stronghold, and for Zain that has traditionally been the central and southern areas of Iraq.