The mobile phone operators are finally getting their IPOs [initial public offerings - A company's first offering of common stock to the public] organized. Recently Asiacell and Zain began conversions to joint stock ownership. Zain is also reported to have engaged Citibank and BNP Paribas to work on valuation. So far as I know, Korek has not been in the news but it is presumably on a similar track.

These will be enormous offerings for a market as small as the ISX. Each company is required by the conditions of its license to list 25% of its shares. Asiacell alone will have to list 67.5 bn shares. (See this post.) At par (IQD 1), that would be about US$ 58 mn and they will certainly be looking for a higher price than that. With ISX daily volume now averaging only around US$ 2 mn, the total for the three IPOs could easily be the equivalent of a year’s worth of trading.

You might think the ISX would be overwhelmed. In fact, shouldn’t the market be falling already, as people raise cash for the new issues?

Actually there’s no cause for alarm. The companies clearly will not be trying to raise hundreds of millions of US dollars from local investors. The involvement of Citi and BNP makes it obvious that the main focus will be on foreign institutions, most of which are not yet in Iraq at all.

For these investors, the key obstacle to investing in Iraqi shares is the lack of a custodian bank. (See this post for more on the custody problem.) But this will be easy to fix. According to the Word Bank’s Republic of Iraq Financial Sector Review (p. 54), “a major international bank” [i.e. HSBC] has already made the necessary preparations to provide custody services and is just “waiting for the necessary licenses to be granted.” (There’s a link to the World Bank report here.)

The real significance of the IPOs is that they can provide the stimulus necessary to get those licenses issued. That, in turn, will allow a host of new foreign investors, potentially commanding far greater amounts of capital than the telcos will be raising, to get into the market. This portends not so much a flood of new shares as a deluge of new money.

Image by Angela See. Used by permission.

Asiacell has launched what may be the world’s smallest ever public offering, raising about US$ 8,500 through the sale of 10,000,000 shares at IQD 1 each. The subscription period started on September 14 at the Baghdad and Sulaimaniya branches of Al-Shamal Finance and Investment Bank and will continue for up to sixty days.

Obviously this is not the long awaited IPO called for by the conditions of the company’s operating license. That would require the sale of a 25% stake. With share capital of 270 bn, Asiacell would have to be selling 67.5 bn shares.

The current micro-offering is merely a preliminary step to convert the company to joint-stock status. I don’t know why this couldn’t be taken care of as part of the actual IPO. My guess, for whatever it’s worth, is that the existing shareholders might otherwise have to do the entire offering at par (IQD 1).

As I understand it, the Company Law (Article 154), requires new shares to be issued when a company converts to joint stock form but does not allow for these to be sold for more than their IQD 1 par value. Once the conversion has happened, however, Article 55/4 says that new shares “may be offered at a price equal to or greater than their nominal value…and priced in light of the company’s performance.”

If I’m right, two separate offerings would make sense. In the first, you try to set the record for world’s smallest IPO, selling only a tiny number of shares at par. Then you do the real IPO, selling the shares for what they are actually worth.

Mobile telecom operator Asiacell has streamlined its business processes to improve services to its 8 million subscribers across Iraq with a business service management solution from HP.

HP Business Service Management software gives Asiacell’s IT team full visibility of the company’s IT infrastructure, applications and services as a single integrated platform that can be tracked, managed and controlled more efficiently, a statement said.

Tool consolidation and the automation of previously manual tasks have boosted productivity while cutting operational expense. Intelligent monitoring capabilities expedite problem diagnosis and resolution to keep Asiacell’s operations running without disruption to services, ensuring customer satisfaction, according to the statement.

“Phase 1 of Asiacell’s project to build an enterprise-class management and monitoring system, starting with the IT department, has been100 per cent successful,” said Muhammad Tawfiq, senior IT manager of Asiacell.

“HP Business Service Management software has improved our ability to respond to market changes and provide better quality services.”

“Using HP Software will help ensure that Asiacell experiences no disruptions in customer service as they adapt and evolve with market changes,” said Karim Cheikh Ali, software country manager, HP Kuwait & Iraq.

“Customer satisfaction and superior service is a must in Asiacell’s business, and HP Software will be a key solution to help them pave the way for their flexible expansion in the future,” he added.

(Source: Trade Arabia)

Asiacell – the first and largest private Iraqi telecommunications company and the first mobile telecom company to provide coverage for all of Iraq – today announced rolling out mobile voice, broadband and SMS services across remote communities in Iraq using the Altobridge lite-site™ solution.

A satellite-backhauled, solar-powered, 2G/3G solution, the Altobridge lite-site™ enables mobile network operators to bring mobile connectivity to remote communities. Currently, the solution is being deployed in previously unconnected communities in Sulaimaniya in Northern Iraq.

“For over a decade, Asiacell has been pioneering the provision of products and services that enhance the quality of life and business for Iraqis. Telecommunications is the backbone of any progressive economy and is a key driver of socioeconomic growth, which is why we have made it our mission to ensure that telecom services are available to all Iraqis regardless of their location. Asiacell is the first telecom company to provide coverage for all 18 provinces, and to supply mobile voice, broadband and SMS services to remote communities that are not traditionally associated with revenue generating potential,” said Dr. Diar Ahmed, Asiacell CEO.

Dr. Ahmed went on to explain that the Altobridge lite-site™ is a cost-effective, energy-efficient solution that optimizes capital budgets while minimizing backhaul, making it an ideal choice for Asiacell’s plans towards efficiently expanding its nationwide coverage. “We are confident that by partnering with Altobridge, who are international mobile network solution leaders, we will enhance our ability to service the Iraqi community,” he said.

In turn, Mike Fitzgerald, Chief Executive Officer at Altobridge, said, “Mobile Network Operators are coming under increasing pressure to maximize their use of limited capital budgets. The Altobridge lite-site™ reduces capital expenditure and minimizes operational costs while providing superior coverage to targeted subscriber groups. Our solution is optimized for solar power, thereby removing the high cost barriers of diesel generators. Coupling this with industry leading transmission efficiency, Altobridge underwrites a return on investment from non-urban base station deployments. We are privileged to have been selected as a supplier to Asiacell and look forward to working together to drive prosperity throughout Iraq.”

Iraq’s three main mobile phone companies - Zain Iraq, Asiacell and Korek – appear unlikely to meet a month-end deadline to list on the local stock exchange, raising the chances of them being penalised, according to Reuters.

The companies are required by Iraqi law to launch initial public offerings on the Iraq Stock Exchange (ISX) by 31st August as part of the 15-year, $1.25 billion operating licences they secured in 2007.

None of the three limited companies has yet become a shareholding firm, a key requirement and the first main step towards going public on the local bourse.

“They must meet the requirement to be a shareholders’ company before anything,” ISX Chief Executive Taha Abdulsalam told Reuters. “After that, we will talk about listing.”

He said that after becoming shareholding companies, the firms would need approval from the ISX board and Iraq’s securities commission in order to be listed; the ISX board decision could take 24 hours, while the securities commission may take up to a week to give their consent. It would then take 2-3 weeks before the companies would be ready to trade.

He concluded that it was impossible for the companies to list on the bourse by the end of August.

“We still insist that they have to reach the licence conditions within the deadline of 31 August,” CMC Commissioner Ahmed Alomary told Reuters. “Otherwise they will receive penalties.”

Zain Iraq is a unit of Kuwait’s Zain, while Asiacell is an affiliate of Qatar Telecom (Qtel), and Korek is part-owned by France Telecom SA and Kuwait’s Agility.

There are now around 23 million mobile phone subscribers in the country, according to the Communications and Media Commission (CMC), which regulates telecommunications in Iraq.

(Source: Reuters)

Iraqi operators Asiacell, Korek Telecom and Zain are facing a mandatory deadline for an initial public offering of stock, with reports stating that the companies have to sell-off a 25 percent holding on the local stock exchange within four years of acquiring their licences, according to Mobile Business Briefing.

This means that the companies must move toward a listing by the end of August 2011. According to Reuters, Asiacell, a Qtel affiliate, has expressed concerns about the timings, stating that it is worried that low liquidity on the bourse could stop it from raising enough cash. It notes that “the timing of an IPO may depend on clarifications on how to implement the requirements of the license, the stock market rules and Iraqi company law.”

Dow Jones Newswires said that an executive at Korek Telecom has stated that the company will “commit to the licence condition” that a stake has to be offered on the local market, and that its plans are “ready and maturing.”

As we reported last week, Zain is working towards a listing and says it will meet its commitments under the licence agreement. In addition to Reuters stating that the Iraq Stock Exchange has a market capitalisation of less than US$4 billion, with daily turnover averaging just US$1.6 million during May 2011, an unnamed analyst told Dow Jones that three telco IPOs in three months is “ambitious and aggressive.” The timings also mean the listings will coincide with summer and Ramadan, which may affect progress.

(Source: Mobile Business Briefing)

With 12 million subscribers in Iraq, Kuwait’s Zain is the market leader in the Iraq Telecoms industry, currently considering several tender offers to manage its telecoms network in Iraq. Zain is likely to award the contract in the next few weeks; the winner will be able to improve the network quality, while Zain will focus its efforts on marketing, sales and improving customer service.

Gold sponsors for Iraq Telecoms 2011 taking place between the 25-27 October 2011, Istanbul, Zain will host the welcome reception taking place on the 25 October, providing delegates with the opportunity to meet with key figures within the organization.

Zain has refused to name bidders for the managed service agreement, but have commented there are at least three, international players such as Nokia Siemens Network, Huawei Technologies and Ericsson to be likely candidates.

Iraq Telecoms 2011 presents a great opportunity to debate the latest industry updates with all the main players in this fast growing sector in Iraq. The event engages this year as every year, key government officials, service companies and operators within the Iraq Telecoms market.

Key industry support has already been confirmed for the Iraq Telecoms conference; sponsors to date include: Asiacell, CDN, Zain, Scopesky, Nokia Siemens Networks, Huawei, O3b, Korek, Arabsat, DragonWave, Ericsson, Silkroad Group, Zhone, PCCW Global, Kalimat, Eutelsat, Technology Partners and Alcatel-Lucent. Representatives from many of the sponsors will be delivering further insight into their plans for expansion.

For further information visit: http://www.iraqtelecoms.com/

Faruk Group Holding, a major conglomerate in Iraq, has unveiled big investment plans for the northern city of Sulaymaniyah.

According to Trade Arabia, the group with a diversified range of interests including telecommunications, cement, manufacturing, hotels, medical services, properties, construction and IT, has pumped more than $400 million into its hospitality industry alone.

Unveiling the new roadmap for Sulaymaniyah’s hospitality industry at the recent Arabian Travel Market expo, chairman Faruk Mustafa Rasool said, ‘Our aim is to make Sulaymaniyah a desired destination in the Arab world.’

‘The key hotel projects being planned include Grand Millennium Sulaymaniyah, Copthorne Hotel Baranan and Copthorne Hotel and Spa funded by more than $400 million investment,’ he noted.

He pointed out that Iraq was a promising market; with more growth potential than any other market in the world can expect to have in the next 5 to 10 years.

‘Our operations in Sulaymaniyah will support not only our entry into Iraq market but also global business community,’ he noted.

Hawre Daro Noori, CEO of Faruk Group Holding said, ‘We are from Sulaymaniyah and we are steering our city’s economy to become an industrial, telecommunications and education hub.’

‘We invite businessmen from all over the world to visit Sulaymaniyah and Iraq and have a look and perhaps start a business in our country, because we believe that Iraq is a promising market,’ he added.

Faruk Group, he said, will continue to invest in the hospitality sector to attract more visitors to Sulaymaniyah and provide international quality accommodations for guests and tourists from all over the world.

‘We will also target corporate clients, exhibition delegates, and other business and leisure visitors’, he added.

Faruk Group Holding had earlier set up Asiacell, the largest Iraqi private company and the first mobile company covering all of Iraq’s 18 governorates.

(Source: Trade Arabia)