Interview: Iraq mobile phone use could grow 400 percent in 2005

DUBAI (Reuters) - The number of mobile phone subscribers in Iraq could grow by 400 percent to about five million by the end of 2005, a leading telecommunications operator in the strife-torn country said on Sunday.

But MTC Atheer, a joint venture between Kuwait's Mobile Telecommunications Co and Iraq's Atheer Telecom, will not make profits until at least 2007 because Iraqi phone bills are still fairly small, said the firm's chief executive Ali al-Dahwi.

MTC Atheer has a market share of between 30 percent and 40 percent in a country where a conflict pitting insurgents against government troops and US-led forces has taken a huge toll on the civilian population.

"Today we are reaching very close to one million subscribers, I think we will achieve that within the next week or so, and I think we are going to exceed 1.5 million by the end of the year," Dahwi told Reuters in an interview.

Dahwi said that would amount to 400 percent growth over the whole of 2005 and that demand for mobile phones had greatly exceeded expectations.

"When we were provided the licence by the provisional government, they were hoping we would reach 340,000 subscribers by the end of two years. We have re-written the book," he said.

However, Iraqi consumers are spending just US$14 per month on their mobile phones, about one third of the average in neighbouring Gulf Arab states.

Another key concern was security costs, which Dahwi said accounted for more than one third of MTC Atheer's expenditure.

These factors meant the two-year licence issued in 2003 was too short for MTC Atheer to make profits, he said.

"But in about four to five years (from 2003) we will be able to achieve a return on investment, which is very reasonable in a greenfield market like this," said Dahwi.


Part of daily life

MTC Atheer has so far invested more than US$430 million in Iraq. Dahwi forecast that revenue per customer would grow as Iraqi incomes rise and consumer appetites grow for services such as text messaging.

"For ordinary Iraqis, it is becoming part of their daily life to carry a mobile. Yes, there is a big number of unemployed people, but those who are working are finding ways to invest in a mobile phone, invest in a SIM card."

Dahwi said the market would grow 400 percent in 2006 as well before slowing in 2007.

"Maturity in the mobile phone sector will not be there for two to three years. It is still a growth market, mainly driven by consumers and the low number of fixed lines in Iraq."

At present, MTC has regional licences, including the cities of Baghdad and Basra, but Dahwi said the company was in talks with the National Communication and Media Commission (NCMC) about applying for a national licence for Iraq.

He said he expected NCMC to issue multiple national licences, rather than regional licences.

"I feel very strongly they are doing it in a very transparent way. That transparency is needed to set an example for businesses operating in Iraq."

"If we win a (national) licence we will build a network that is three or four times the size of the current network."

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