Etisalat wants Zain deal in Iraq

MANAMA // A deal with Zain would give Etisalat a foothold in the emerging telecommunications sector in Iraq, which it has long coveted. Zain's chief executive in the country said yesterday the operator planned to expand its coverage into Iraqi Kurdistan by January. Zain controls 54 per cent of the Iraq market but is currently accessible only in the central part of the country. In Kurdistan, it would attempt to gain market share from the region's main network provider, KOREK Telecom.

"We want to be able to target the highest point in the north and provide quality in communication and reliability," said Emad Makiya, the chief executive of Zain Iraq, speaking on the sidelines of The Economist's Business and Investment Summit in Bahrain yesterday. Zain expects to finish the year with 12 million subscribers in Iraq, an increase of more than 20 per cent from last year, with revenues in excess of US$1.5 billion (Dh5.5bn), up from $1.3bn last year. More than 9 per cent of revenues will be channelled back into network expansion.

Although Iraq represents potential for significant growth, it does come with unique challenges. Mr Makiya said as much as 30 per cent of calls were blocked by military jamming equipment, which the Iraqi military inherited from the US. "The military uses jammers to stop and freeze all telecoms activities in an area where they suspect some sort of threat …," Mr Makiya said. Zain is the largest operator in the country and has invested $4.5bn in its network after securing a 15-year licence for $1.25bn in 2007. Its main competitors are Asiacell and KOREK.

Speaking before the Etisalat offer was made public, Mr Makiya said Zain's Iraq unit was planning to list on the Iraq Stock Exchange. "They are pressuring us," he said of the Iraqi government. "It is part of the licence requirements."