Kurdish operator Korek Telecom said on Sunday it was in talks to buy the Iraqi assets of Egypt’s Orascom Telecom Holding and planned to invest $1 billion to expand its network across the war-torn country.
Korek paid $1.25 billion for one of three Iraqi mobile licences sold earlier this month at an auction in Jordan, replacing those awarded after the U.S.-led invasion that toppled Saddam Hussein’s regime in 2003.
Orascom, which set up a network under a licence bought in 2003, pulled out of the auction in Jordan at the eleventh hour and said it could consider selling its operation. Orascom’s stock tumbled on the news and hit an eight-week low on Aug. 20.
“We are in negotiations with Orascom,” Korek’s deputy chief executive, Hameed Akrawi, told Reuters in a telephone interview from Iraq.
“We are interested in buying the assets and the customer base, but this will depend on the price,” he said.
Credit Suisse estimated in a note last week that Orascom’s Iraq network, operated under the Iraqna brand, could be worth as much as $1 billion. Iraqna had around 3 million subscribers, according to its Web site.
The country of 26 million had around 8 million mobile phone users at the end of 2006, according to Iraq’s telecom’s regulator, and most people rely on cellphone because decades of war and sanctions have destroyed much of the fixed-line network.
Iraq had virtually no mobile phones before the invasion.
The interim administration set up by U.S.-led forces also sold licences in 2003 to Kuwait’s Mobile Telecommunications Co. (MTC) and Asiacell, an affiliate of Kuwait’s National Mobile Telecommunications Co.
MTC and Asiacell, now an affiliate of Qatar Telecommunications, won the other 15-year licences, leaving Korek as the only winner without a national network.
Korek, which runs a network in Iraq’s Kurdish northern region, is taking over Orascom’s assets until the end of the year, Akrawi said. Its rivals would be allowed to bid for Iraqna if a sale could not be agreed by then.
Asiacell would consider a bid for Iraqna, a shareholder of the company said last week.
Korek plans to add 4.8 million customers to its network in the next five years, Akrawi said. The operator has 1.2 million customers based mainly in the Kurdish region.
“We will need a minimum investment of $1 billion,” he said.
Korek would fund the expansion with equity and debt, possibly including bonds or loans that comply with Muslim law, Akrawi said.
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