Asiacell, Zain, Korek dreams and reality

Benaw Izzat | Exclusive to iKurd.net

ERBIL,— Bravo! The Iraqi Stock Exchange market capitalization doubled with Asiacell IPO in early February 2013, it now represents $9,8 billion and Asiacell itself has a company value of $ 4,7 billion.

On the first day of trading the share jumped 10% while Qatar Telecom used the public offering to raise its stake in Asiacell up to 64%.

Since then it quickly came back to the offering price of 22IDQ, Asiacell disappeared from the business news, there is no speculative fever, no articles in the newspapers, no analysis. Where are they all gone?

Well it seems that Asiacell is a listed company with a fixed price, no matter what is happening the share value is 22IDQ and it doesn’t move from this price.

At least it can be convenient for some; you can buy and sell the shares one month later and you only loose the brokerage cost but if a European bank compliance officer is asking where does your money come from? The answer will be, you just sold your shares in Asiacell. No one is to blame for this situation.

Soon Zain Iraq and its Kuwaiti parent company Mobile Telecommunications are also going to do their public offering on the ISX for 25% at least of the company shares. It will be interesting to compare the customer value just dividing the market capitalization by the number of customers.

But our favorite candidate remains Korek, 44% owned by Agilty and France telecom (Orange). In both case we don’t have much details now coming up at the surface from the two companies financial statements.

But on page 100 of France Telecom official “document of reference 2012” published in March 27th you can read the following comments which will brought a wind of optimism to all the Iraqis:

« L’Irak compte une population de 33,6 millions d’habitants à fin 2012 (source : FMI, octobre 2012). En mars 2011, FranceTélécom-Orange a acquis une participation indirecte de 20 % dans l’opérateur irakien Korek Telecom qui comptait 3 millions de clients à la fin octobre 2012. Avec un taux de pénétration mobile qui s’éleve a 77 % (source : Informa Telecom & Media), l’Irak se situe a un niveau bien inférieur a beaucoup de ses voisins. Le déploiement de Korek Telecom, qui détient une licence mobile nationale pour la 2G et la 3G, dans un pays en pleine reconstruction économique, offre de bonnes perspectives de croissance. »

You learn that Korek has still the same 3 million users and the latest update is at end of October 2012 while this document is released in March 2013. But the last sentence says:” The deployment of Korek Telecom, which holds a national mobile license for 2G and 3G, in a country in full economic reconstruction, offers good growth prospects.”

It is perfectly true, Korek holds a 3 G licence but no a single paragraph or sentence explains the reader that the Iraqi Government does not provide the spectrum or frequency for the 3G. Actually on November 2012 Ahmed Alomary, a representative of industry regulator, the Communications and Media Commission (CMC), said: ‘The committee discussed how to give them the spectrum, whether to auction a new licence or introduce new fees that the mobile operators will have to pay. They decided that it would be better to go through a new licence worth USD 3 billion to USD 6 billion’. (source: http://www.telegeography.com)

Neither France Telecom which share is always at historical lowest or Agility can afford to pay the 3G fees. Mrs Ghada Gebara, the chief executive of Korek Telecom cannot ignore it so as her parent company France Telecom.

But in March 2013 in the official document there is no mention of the daily fine to be paid to the Iraqi administration, no mention of the IPO requirement, just a nice fairy tale in a country in full reconstruction offering good growth prospect amid the bombs, the rivalries and the corruption. The UN figures showed that 1,045 civilians and security personnel were killed in May. That surpassed the 712 killed in April, the deadliest month recorded since June 2008.

We would conclude with a question to the French journalists:

France Telecom main shareholder is the APE ( Agence de participation de l’Etat) in other words the French state, do you believe that amid of the scandal rocking FT boat in 2010 , the new CEO Stephane Richard close to President Sarkozy could decide to invest in Iraq through an offshore legal framework without any member of the Government blessing and for which benefit?

Mrs. Benaw Izzat – a special reporter and senior writer for iKurd.net.

The opinions are those of the writer and do not necessarily represent the views of iKurd.net or its editors.