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Reuters reports that Iraq has fined Kuwait-based telecoms provider Zain $262 million for putting 5 million Sim cards in the local market without permission, contravening its licence. The company has three months to pay.

Zain's Iraq unit will appeal the fine, its chief executive, Emad Makiya, said.

"They have no right to issue such a penalty," Makiya told Reuters.

The Iraqi government has criticised Zain and other providers for patchy coverage. Zain has blamed reception problems on military jamming as U.S. and Iraqi security forces try to prevent militants from detonating bombs.

Zain, the Gulf region's third-biggest telecoms firm by value, competes with Korek, based in Iraqi Kurdistan, and AsiaCell, part-owned by Qatar Telecommunications.

Zain, which has around 53 percent market share, won a 15-year licence for $1.25 billion in 2007. It was fined $18.6 million by Iraq for poor cellphone service in 2009.

It had more than 12 million subscribers at the end of 2010 and expects to add up to 18,000 a month after launching services in the Kurdish region, Makiya told Reuters.

Iraq had no mobile phone market under the rule of Saddam Hussein but market growth has been rapid since the 2003 U.S.-led invasion that ousted him.

Zain Iraq said it was surprised by the penalty and was preparing a formal legal challenge.

Makiya said the license fee Zain paid Iraq allowed it to build a network, use the spectrum and issue a range of SIM card numbers. "This is the price. We've already paid the price," he said.

(Source: Reuters)

Reuters reports that the chief executive of private equity group MerchantBridge and two JPMorgan executives were among seven people killed when a small plane crashed in northern Iraq.

The plane went down shortly after takeoff on Friday from Sulaimaniya airport in Kurdistan.

MerchantBridge CEO Basil al-Rahim and Abdallah Lahoud, a partner in the company, died in the crash, MerchantBridge said in a statement.

Airport officials said the businessmen on the plane had flown to Sulaimaniya to visit the offices of AsiaCell, one of Iraq's major mobile phone service providers, which is partially owned by Qatar Telecommunications.

Bloomberg reports that a mechanical problem led to a fire in one of the engines.

Rahim was a member of the AsiaCell board of directors, AsiaCell said in a statement. JPMorgan executives Murad Megalli and Javier Zurita also were killed in the crash, along with the three crew members on board, it said.

MerchantBridge said last October it had launched an equity fund in Iraqi equities. An executive said at the time that the company had over $1.5 billion worth of investments in the Iraq.

Speaking from Beirut today, MerchantBridge Chairman, Abdulaziz Al Abdulkader said:

"Our thoughts are with the families of our much loved brothers, friends and colleagues Basil and Abdallah. We will pray for them and may God have mercy on their souls. We give thanks for all they have achieved in their lives. Speaking as Chairman of MerchantBridge, I would also like to ask that they be remembered for everything they have contributed to the commercial regeneration of the Middle East and in particular to Iraq.

"The partners and employees of MerchantBridge intend to continue the valued work of our colleagues Basil and Abdallah. We ask for a period of calm reflection whilst we decide how we best continue to advise our investors and partners."

(Sources: Reuters, PR Newswire, Bloomberg)

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%.

Business Monitor International (BMI) has published a new report on the oil industry in Iraq.

Summary:

BMI forecasts that Iraq will account for 10.27% of Middle East (ME) regional oil demand by 2015, while providing 11.56% of supply. Middle East regional oil use of 4.98mn b/d in 2001 will rise to an estimated7.40mn barrels per day (b/d) in 2010. It should average 7.70mn b/d in 2011 and then rise to around8.70mn b/d by 2015. Regional oil production was 22.83mn b/d in 2001 and will average an estimated24.96mn b/d in 2010. After an estimated 25.22mn b/d in 2011, it is set to rise to 27.24mn b/d by 2015. Oilexports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001,the region was exporting an average of 17.85mn b/d. This total will ease to an estimated 17.55mn b/d in2010 and is forecast to reach 18.54mn b/d by 2015. Iraq has the greatest export growth potential, followedby Qatar.

In terms of natural gas, the region will consume an estimated 391bn cubic metres (bcm) in 2010, with demand of 483bcm targeted for 2015, representing 23.7% growth. Production of an estimated 467bcm in2010 should reach 614bcm in 2015 (+31.4%), which implies net exports rising to 130bcm by the end ofthe period. In 2010, Iraq will consume an estimated 1.28% of the region's gas, with its market shareforecast at 2.38% by 2015. It will contribute 1.07% to estimated 2010 regional gas production and by2015 could account for 2.93% of supply.

The local administration in Basra decided to allocate the sum of 242.2 billion Iraqi dinars (ID) [$207m] to carry out service and urban projects in preparation for the hosting of the Khaleeji 21 soccer tournament [21st Gulf Cup of Nations], a spokesman said on Thursday.

“The higher committee for the rehabilitation of Basra, chaired by Governor Shaltagh Abboud al-Mayyah, earmarked ID242.2 billion for projects including the construction of three bridges in the city and two others in the province’s districts as well as the rejuvenation of five main intersections,” the source told Aswat al-Iraq news agency.

“The projects also include the rehabilitation of a road between the Khalid Bridge on the Shatt al-Arab waterway, the airport road and other roads leading to the Sports City,” he added.

The Arabian Gulf Cup of Nations, also known as Khaleeji, is a soccer tournament currently held every two years, rotating the host city each time.

While the competition is usually held on a biannual basis, the history of the competition has also seen it held every three, or even four years, due to political or organizational problems.

The Arabian Gulf Cup of Nations was founded at the 1968 Summer Olympics in Mexico by Bahrain, Kuwait, Saudi Arabia and Qatar.

The First Arabian Gulf Cup tournament took place in Bahrain in 1970, and was won by the Kuwaiti team.

(Source: Aswat al-Iraq)

Iraq has applied to join the Economic Cooperation Organization, or ECO, Turkey's President Abdullah Gul has reported, according to an article at the weekend from World Bulletin.

Leaders of ECO-member countries gathered in Istanbul for a one-day summit meeting during which Turkey assumed the rotating term presidency from Iran. Iraq, as well as Qatar and Syria participated in the ECO summit as guest countries.

The meeting was attended by delegations of the Islamic Republic of Afghanistan, the Republic of Azerbaijan, the Islamic Republic of Iran, the Republic of Kazakhstan, the Kyrgyz Republic, the Islamic Republic of Pakistan, the Republic of Tajikistan, the Republic of Turkey, Turkmenistan and the Republic of Uzbekistan. The representatives of ECO Specialized Agencies and Regional Institutions also participated in the meeting. Also, present in the meeting were the representatives of the Turkish Cypriot State, Developing 8 (D-8), International Road Union (IRU) and Black Sea Economic Cooperation Organization (BSEC).

Turkish President said that all ECO-member countries have welcomed Iraq's bid.

"I hope Iraq will become a member," told a press conference following the summit.

ECO was co-founded by Turkey, Iran and Pakistan in 1985 in a bid to develop economic, technical and cultural cooperation between member countries. In 1992, Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan joined the organization.

President Gul also said that Azerbaijan applied to ECO secretariat to be a part of ECO Trade & Development Bank which he said was a major dynamo of economic activities within ECO zone. Istanbul-based bank, which was founded by Turkey, Pakistan and Iran, has a paid-in capital of 230 million USD.

Gul said the bank would finance an number of important projects and added that Asian Development Bank and Islamic Development Bank had plans to be partners with ECO Bank.

(Source: World Bulletin, ECO)

Qatar Telecom QSC, the country’s largest company by revenue, is mulling plans to sell shares to the public in its Iraqi unit in two years, according to its chief strategy officer.

“We are beginning to think now about doing an IPO in Baghdad,” Jeremy Sell said at a presentation in the Qatari capital Doha today. “We are going to start now. We are going to start planning for an IPO that is two years away.”

Qatar Telecom, called Qtel, owns shares in subsidiaries from Algeria to the Philippines including Iraq’s Asiacell. The company has sought to expand overseas because of increased competition in its home market following the entry of Vodafone Qatar last year.

France Telecom is understood to be close to a deal to buy a stake in Asiacell's competitor, Korek.

(Source: Bloomberg)

According to the Financial Times, the European telecom giant France Telecom is engaged in talks to buy a minority stake in the Iraqi mobile phone operator Korek, as part of a bid to expand its operations in the Middle East.

Although no deal has yet been struck, financial observers say that a potential agreement could give Korek an enterprise value of around $1.5bn.

Korek was founded in 2000 by Sirwan Mustafa, its sole shareholder and nephew of Kursdistan Region’s President, Massoud Barzani.

Although the company first concentrated on mobile telecom services in Kurdistan, it obtained a nationwide operating license in 2007 and now has an estimated 3 million customers.

Korek’s competitors in the sector are Zain, the country’s largest mobile operator with 11.8 million customers, and AsiaCell which has 7.9 million.

Zain whose network of affiliates includes several countries in Africa and the Middle East, is currently in talks to sell a controlling stake to the Dubai-based telecom group, Etisalat.

AsiaCell is part of the acquisitive Qatar Telecom which has extensive operations throughout the Middle East.

(Sources: AKnews, Financial Times)

AKnews reports that the first direct flight between Sulaimaniya and the Qatari capital, Doha, commenced on Wednesday.

Dana Mohammed, media secretary for Sulaimaniya International Airport, told AKnews on Thursday that the route is being operated by FlyDubai, the UAE-based budget carrier, in conjunction with the local Zozg and Azmar airlines, and will offer two flight per week.

The inaugural flight carried FlyDubai executives to Sulaimaniya, one of the three provinces in the Kurdistan Region, northern Iraq. The new route opened after the airport and the airline executives brokered a deal in October.

Flydubai flight to Sulaimaniyah is the airline's second destination in Iraq. It already flies to Erbil, the capital of the Kurdistan Region.

FlyDubai airline was launched in 2009. The new carrier has expanded rapidly using a fleet of new Boeing 737-800 planes. It currently operates around 20 routes in the Middle East, Gulf region, Asia, Europe and Africa.

(Source: AKnews)

The spokesman for the Iraqi Ministry of Transport said on Saturday that direct flights between Baghdad and the Qatari capital, Doha will commence today [Monday].

Initially there will be only one flight per week, according to the report from AKnews.

The spokesman stated that Iraq wants to open direct flights with all developed countries which enjoy strategic relations with Iraq. Resuming the flights will reinforce Iraq's economic ties since the country will be linked to the Gulf countries' economic institutions.

The economic embargo imposed on Iraq in 1990s due to the policies of Saddam Hussein's regime led to the suspension of most of the direct flights into and out of Iraq.

Recently direct flights between Iraq and France as well as the UK, India, and Yemen also were resumed.

Iraq Business News believes the new Baghdad-Doha route is being operated by Qatar Airways.

(Sources: AKnews, Gulf News)