PRweek reports that the Iraqi unit of Kuwaiti telecoms company Zain has hired PR agency support in advance of its listing on the Iraq Stock Exchange.

The firm has been planning an initial public offering (IPO) in Iraq since the summer and has asked London-based M:Communications to support communications relating to the listing process.

M: will provide PR and investor relations advisory services in Iraq itself.

The Zain listing is one of three major telecoms floats in Iraq planned for 2012. However, the Zain account is understood to be the only one of the three that has specified on-the-ground support in Baghdad.

It is thought the need for representation in Iraq proved problematic for a number of agencies that ultimately declined to pitch for the brief.

Nicholas Lunt, MD of M:’s Gulf business, added that the company would also be working with the management of Zain Saudi Arabia.

The news comes days after it was confirmed that FTI Consulting was working for Iraqi telecoms firm Asiacell ahead of its planned flotation later in the year. The firm, partly owned by Qatar Telecommunications, plans to sell a 25 per cent stake, potentially valuing the firm at more than $4bn.

Korek, a mobile group in which France Telecom and Kuwaiti logistics group Agility have a stake, is also planning a 2012 IPO. Korek is not thought to have selected a comms consultancy at this stage.

(Source: PRweek)

In one of the largest deals of its kind in the Middle East, Zain, one of Iraq’s leading mobile telecommunications providers, has signed a US$650 million five-year network outsourcing agreement with Ericsson, the world’s leading provider of telecommunications technology and services and its local partner SIM (Service in Motion).

Under this agreement, Ericsson will optimize, modernize and manage IT operations and Zain’s mobile network in Iraq that currently includes more than 3,700 sites across the country. This agreement also extends to the northern region of Kurdistan where Zain has recently launched commercial services and is expanding to meet customer demand.

This is a significant deal for Zain as the agreement is expected to enhance the company’s competitiveness in the Iraqi market. Zain served over 12.4 million active customers in Iraq as of 30 September 2011. The deal with Ericsson will enable Zain to increase its focus on its core customer facing business activities such as managing its customer relationships and to offer a shorter time-to-market for offering new services and technologies. The arrangement with Ericsson has the objective of improving network efficiency, reducing operating costs and optimizing Zain’s investment in Iraq.

The deal also gives Ericsson its first major managed services agreement in Iraq, reflecting the increased attention of both companies on the growing Iraqi market.

Preparing for the future, Ericsson will replace and upgrade Zain’s network by introducing a single-RAN (Radio Access Network) platform, the latest advanced multi-technology, multi-standard and multi-band platform. This more advanced technology combined with Ericsson’s managed services offering built on improved quality of service and operational efficiency is a step towards giving Zain in Iraq the ability to launch and support 3G technology, and improve its customer experience.

Foreign investors’ appetite for Iraq’s stock market is rising before planned IPOs by the country’s three mobile telephone operators, but the fledgling market’s small size means it may struggle to cope with the listings, according to a report from Gulf News.

The Iraq Stock Exchange (ISX) is an outpost of private sector business in Iraq, which is still dominated by state-run firms. Market capitalisation of the bourse, which started operating in 2004, is about $4bn with average daily trading value only around $2.8mn.

Successful stock market listings of the three mobile phone firms, Asiacell, Korek and Zain Iraq—a requirement of their operating licences—would be seen as a triumph for Iraq’s effort to create a diversified economy and a sign that it was establishing a stable development path after years of conflict.

The listings could also trigger a fresh wave of foreign interest in the market, which currently is heavily weighted towards banks, accompanied by a range of industrial, insurance, hotel and agriculture firms.

ISX chief executive Taha A Abdulsalam has said he expects the initial public offers of shares to double the market’s capitalisation. But with fewer than half of the 85 listed stocks active daily, such a boost in value could destabilise the market.

“The IPOs, first of all, they should put it in the market gradually,” Iraq Communications Minister Mohammed Allawi told Reuters. “If you put all the shares, the price will collapse for sure.”

Taking the companies public will not be an easy task, however. The companies themselves have been reluctant to move quickly until the stock market is more developed and they can be sure of getting good prices for their shares.

Zain Iraq, a unit of Kuwait’s Zain, Asiacell, an affiliate of Qatar Telecom and Korek, part-owned by France Telecom SA and Kuwait’s Agility, all missed an initial August 31 deadline set by the CMC for their listings, which now look likely to go ahead sometime next year.

Iraq’s stock exchange market will double its capitalization to $8 billion once the three main mobile-phone companies operating in the country are listed, according to Taha A. Abdulsalam, chief executive of the Iraq Stock Exchange (ISX).

The three mobile phone operators, Asiacell, Korek Telecom, and Zain Iraq, are required by the terms to their licences to list shares on the local bourse.

The companies have yet to change to shareholding companies, a key requirement and the first main step towards going public on the local Iraqi bourse, but according to this report from Reuters, the regulators have given them more time to complete the process, which initially was supposed to have been done by the end of August.

On Wednesday, the head of the ISX told Reuters that the current market capitalization of the Iraqi bourse could double from $4 billion to $8 billion once the mobile companies managed to list in the coming month.

A commissioner of Iraq’s Communications and Media Commission or CMC, which regulates telecommunications in Iraq, said last week he did not expect any offerings until mid-2012.

The banking sector is the largest on the bourse, which also lists industrial, insurance, hotel and agriculture firms.

The exchange moved from manual to automated trading in 2009 and is open for trading two hours a day, five days a week. Each trade takes around 8 seconds to process.

The Iraq Stock Exchange (ISX), which started operating in 2004 and currently has 86 listed firms after Elaf Islamic Bank joined recently, is one outpost of private investment outside the oil industry in a country still dominated by state firms.

Abdulsalam said the volume of shares traded through Sept. 30 this year was $495 million compared with $337 million in full-year 2010.

(Source: Reuters)

Asiacell has selected HSBC and Morgan Stanley to manage its initial public offering (IPO) on the Iraqi bourse, according to Bloomberg.

Chief Executive Officer Diar Ahmed told the news agency that the company will offer 25 percent of its shares, but did not specify when.

The company, which is an affiliate of Qatar Telecom, is in talks with Iraqi authorities to complete the listing procedures and set a timeframe, he said.

According to regulations, it should also convert from a limited liability company to a shareholding company before listing on the stock exchange.

Along with its two competitors, Zain and Korek Telecom, it was due to trade 25 percent of its shares on the Iraq Stock Exchange by the end of August, according to the terms of its licence.

Reports were unclear as to whether the three companies will be fined for missing the deadline.

Reuters reports that Zain has also begun the process of changing to a shareholding company, and  has appointed BNP Paribas, Citigroup and National Bank of Kuwait to manage its IPO, while Korek Telecom has yet to invite banks to pitch.

Iraq has 23 million mobile-phone subscribers, according to the Communications and Media Commission.

(Source: Reuters, Bloomberg)

Iraq’s three mobile operators are unlikely to conduct initial public offerings until the middle of next year and will not be penalised for missing an August 2011 deadline, the country’s regulator said on Thursday, according to a report from Reuters.

Under the terms of the 15-year, $1.25-billion, operating licences they secured in 2007, Korek, Zain and Asiacell were supposed to sell 25 percent of their shares via an IPO by the end of August, but all three had missed the deadline saying the fledgling Iraqi bourse was ill prepared for these listings.

“To put these shares in the market, it takes time,” Ahmed Alomary, Commissioner of Iraq’s Communications and Media Commission, told reporters on the sidelines of a conference in Dubai.

Iraq’s bourse has a market capitalisation of around $4 billion, and average daily trading in May was less than $2 million, prompting analysts to question whether the market is ready for the telecoms IPOs.

The three operators must first change from private companies to shareholding companies, a process that takes at least a month.

“One of the operators has provided a timeframe for the whole transition – it will be 260 (working) days,” said Alomary, without naming the firm.

According to its chief executive, Korek Telecom is unlikely to launch an initial public offering this year.

Iraq is sticking with plans to auction a fourth mobile licence by the end of 2011, Communications Minister Mohammed Allawi told Reuters on Thursday.

(Source: Reuters)

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.

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)