Iraq’s telecommunications sector began on a positive note in 2015 with the roll-out of 3G services by the three major mobile operators – Zain Iraq, Asiacell and Korek Telecom. In addition, it was indicated by the Iraqi Commission for Media and Communications (CMC) that a proposal for 4G LTE license allocation would be put forward to the government in the near future. Prior to the current civil tension; 4G LTE had been deployed in some areas of Iraq by Fastlink (Regional Telecom) and there was also a progressive fibre optic deployment occurring across parts of Iraq.

While the introduction of 3G was certainly a step forward for Iraq – this was offset by the introduction of new taxes which saw both the prices of Internet and mobile top-up cards increased by 20% as part of austerity measures by the Iraq government.

Iraq’s economy faces continued pressure from the costs of financing war as well as the humanitarian costs related to the millions of displaced and destitute people. Iraq is also heavily dependent on oil prices which have recently declined. These demands on Iraq’s economy does not bode well for significant investment in the telecoms sector – especially when at some point there will need to be finances directed towards the rebuilding of infrastructure that has been destroyed or damaged.

Overall, the ongoing civil conflict has created a challenging environment for operators in Iraq with the destruction of infrastructure, fluctuating subscriber bases and resulting revenue declines all adding significant pressure.

At the end of 2015 Qatar-based Ooredoo Group’s consolidated customer base stood at 117 million, a 9% increase from 107 million at end-2014, although annual group revenue decreased by 3% to QAR32.161 billion (USD8.823 billion) in FY15 from QAR33.207 billion the previous year. Group EBITDA increased by 1% to QAR13.018 billion with EBITDA margin improving to 40% (FY 2014: 39%). Net Profit attributable to Ooredoo shareholders for 2015 stood at QAR2.118 billion (FY 2014: QAR2.134 billion).

Ooredoo Qatar saw revenues rise 10% to QAR7.897 billion in 2015 (2014: QAR7.148 billion), and EBITDA increase by 16% to QAR3.995 billion, resulting in a domestic net profit of QAR2.138 billion (an increase of 11% year-on-year). Qatari wireless broadband customers grew strongly while total customers increased by 11% to 3.5 million at end-2015, encouraged by ongoing expansion of 4G LTE-A and direct fibre services.

However, in the longer term – the Iraq telecoms market offers many opportunities once the civil unrest stabilizes and the government and operators are able to focus again on telecoms and digital growth. It has a large population of mobile phone users which have not yet adopted mobile broadband at any significant levels – and it has recently launched 3G services with an intention to adopt 4G LTE in the future. Iraq has also traditionally supported the deployment or fibre infrastructure which will create a strong backbone for telecoms growth in Iraq. The younger and well educated population have demonstrated a keen interest in utilizing video streaming, social media and potentially e-commerce and e-banking services in the future.

Key telecom parameters – 2012; 2015

Subscribers to telecoms services (million): (e)

Sector	2012	2015
Fixed Broadband	0.15	0.25
Fixed-line telephony	1.87	1.98
Mobile phone	27.76	33.00

 

Key developments:

– The mobile market has grown rapidly in Iraq since services were first introduced in 2004. This is due to the lack of fixed-line services and inherent popularity of mobile communication services. Mobile subscriptions are predominantly prepaid.
– Affordability is an ongoing issue in Iraq and in 2015 a tax levy of 20% was added across the board to mobile and Internet services as part of Iraq’s austerity measures.
– Zain Iraq and Asia cell have both launched an IPO, as required as part of their license agreement – and Korek Telecom is still required to do so.
– Some mobile network sites are currently unavailable due to seizure by rebel forces and the operators are concentrating their efforts on maintaining services at the sites they are able to readily access.
– Overall the current security situation is an impediment to telecommunications development in Iraq but there are positive signs for the future once stability has been reached.