Report on Iraqi Telecommunications

BMI’s Q1 2011 update on Iraq’s telecommunications market provides comprehensive coverage of recent developments in the country’s mobile, fixed-line telephony and internet sectors. This quarter sees our five-year growth forecasts for the country’s telecoms service sectors extended through to the end of 2015. Our new mobile subscriber forecast for Iraq incorporates the latest subscriber data, published by the country’s two largest operators, Zain Iraq and Asiacell, for the third quarter of 2010. Data on these two operators is published by Kuwait’s Zain Group and by Qatar Telecom (for Asiacell). We continue to estimate the number of subscribers served by Iraq’s smaller mobile operators; among them is the Kurdistan-based cellco Korek Telecom. In late November 2010, it was reported that France Telecom had entered into talks to buy a minority stake in Korek Telecom, as part of a strategy to expand its presence in the Middle East. According to the Financial Times, the French telco is interested in eventually securing a controlling stake in Korek.

As of September 2010, we estimate there were 21.344mn subscribers in the Iraqi mobile market. Although this reflected y-o-y growth of 11.6%, it represented an increase of just 0.5% in relation to the previous quarter. Q310 was one of the lowest growth quarters experienced by the Iraqi mobile market to date. Furthermore, it stood in stark contrast to the 1.3mn net customer additions in Q210. It appears that both Zain and Asiacell experienced relatively weak customer growth in Q310 compared with the previous quarter. This contributed to the poor performance in the market overall. Despite the relatively poor performance in Q310, we estimate that, for 2010 as a whole, Iraq’s mobile market grew by 14.4%. By the end of the year, we believe there were some 23.57mn mobile customers, equivalent to a penetration rate of almost 75%.

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