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Orascom withdraws from Iraq, Zain buys its network

3 Dec 2007

Egyptian group Orascom Telecom Holding has withdrawn from the Iraqi market, selling its subsidiary Iraqna and all its assets to MTC Atheer for USD1.2 billion. MTC Atheer is a subsidiary of Kuwait’s Zain Group (formerly MTC). In August 2007 Atheer made a successful bid of USD1.25 billion to secure one of three 15-year nationwide licences awarded by Iraq’s Communication and Media Commission (CMC). Orascom had been widely expected to win a concession but did not. Instead of abandoning its Iraq operation, The Egyptian firm entered a 70/30 joint venture with Kurdish regional cellco Korek Telecom, which did won one of the national licences. The tie-up allowed Korek Telecom to use Iraqna’s infrastructure. It is understood that the two companies did not get along however, and Orascom’s Chairman Naguib Sawiris confirmed in a television interview that the troubles between the companies had forced him to sell Iraqna and dissolve the joint venture. He declined to explain what the problems between the two companies had been. The legal details of the Orascom – Korek deal had not been finalised, which allowed Orascom to sell its Iraqna infrastructure to MTC without involving Korek. MTC will pay half the purchase price on the first anniversary of the completion of the transaction, which is expected by the year-end. The remaining 50% will become due exactly twelve months later. The payments are fully guaranteed by Zain.

As a result of its purchase, MTC Atheer’s operation will cover all the major populated areas of Iraq and have a total footprint of over 15,000 sq. km, with further expansion to follow soon. Its subscriber base has jumped to over seven million making it far and away the market leader. MTC Atheer will be re-branded Zain in early 2008, in line with its parent.

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