Iraq to auction 3G licenses for at least $307m each, sources say

The country did not have a mobile phone industry under Saddam Hussein

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Iraq plans to auction third-generation (3G) telecommunications licenses for a minimum of $307 million each, sources familiar with the matter said, a move that could allow new entrants into the sector but slow the roll out of mobile Internet services.

The country did not have a mobile phone industry under Saddam Hussein but the sector expanded rapidly after the 2003 U.S.-led invasion which toppled the dictator.


Yet revenue growth has stagnated in recent years, largely because the government delayed permission for the three national operators - Zain Iraq, a unit of Kuwait's Zain, Ooredoo subsidiary Asiacell and Orange affiliate Korek - to launch 3G services.

The hold-up has persisted for several years, but last week the Council of Ministers agreed in principle to auction 3G licenses for a minimum price of $307m, Ahmed Alomary, a former commissioner at the Communications and Media Commission (CMC), told Reuters.

A government source, who declined to be named because of the sensitivity of the issue, confirmed this.

The Council refused a request from the CMC to grant the 3G licenses automatically to the three existing mobile operators, the sources said, because the Council believes that would be contrary to the regulator's statutes.

An open auction could potentially allow new entrants into Iraq's telecommunications sector, although the prospect of building out a network from scratch in crisis-torn Iraq may limit interest, and the process could slow the introduction of 3G services.

The government source said no time frame had been set for the auction, and it would take considerable time to study and decide on an auction mechanism. "I doubt it will happen this year."

The $307m minimum price has not been set in stone. "The price is more of a shot in the dark to see what the reaction is," the source added.

The current operators each paid $1.25 billion for their 2G licenses in 2007 and had argued they should not pay any more to launch next-generation services; 3G would allow for faster mobile Internet access, allowing users to access web-based videos or other data-heavy applications.

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