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US authority relaxes Iraqi mobile bidding rules

5 Aug 2003

The US-led interim authority in Iraq has revealed plans to relax the rules surrounding the mobile licence tender, following a series of complaints from the Arab nation that the recent restrictions imposed on bidding companies had given US companies an unfair advantage. On 1 August the Coalition Provisional Authority (CPA) announced that no firm in which the state has a stake of more than five percent could apply, a revelation that sparked controversy as it threatened to exclude many Middle Eastern firms, some of which are partly-owned by their respective governments. The new ruling has increased the restriction on the level of state-ownership from five to ten percent, a move which could benefit a number of Arab companies; the CPA has also extended the deadline for submitting bids by a week to 21 August. Despite the loosening of the rules, however, companies such as Batelco, Kuwait’s MTC-Vodafone and Wataniya Telecom, whose government stakes exceed ten percent, are still barred from taking part in the auction.

Although Iraq now has operational GSM mobile networks in Baghdad and Basra these are limited to coalition military personnel, aid workers and the like; cellular services are as yet unavailable to the Iraqi population. The CPA hopes that the forthcoming auction will change the state of the market considerably, although it will be many years before the country can boast a cellular industry analogous to those of its more technologically advanced neighbours. Mobile projects will require significant investment and in the early stages coverage is likely to be restricted to major towns and cities. However, cellular services will be considerably cheaper and faster to roll out than fixed line networks and given the urgent need for communications in Iraq due to its chronically underdeveloped PSTN, the wireless sector is likely to develop more rapidly than the wireline. Wireless services are expected to prove highly popular in Iraq, it is really a question of whether the market will be allowed to develop fully. Much will depend on the establishment of a new Iraqi regime, and at present it is impossible to predict when a new government will be formed.

PriMetrica's Yearbook of Middle Eastern Telecommunications 2003

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