Iraq's Korek Telecom eyes sale of stake to rivals
Korek Telecom is in talks with two rivals to sell a minority stake and expects to strike a deal by the end of the week, the Iraqi telecommunications company's chief executive said.
The revelations follows speculation that France Telecom was interested in acquiring a stake in Korek Telecom but Humam Amara, the chief executive, said that no deal has been struck yet.
"It's still in discussions. We haven't signed anything with Orange [France Telecom]," Mr Amara said. "We're in discussions with another foreign, publicly-listed company but I can't tell you because we signed a [non-disclosure agreement] with them."
Mr Amara said that discussions between the two operators are in the "final stages" and it will decide in the next few days which company to strike a deal with.
"The market in Iraq leaves huge room for growth and [a deal] positions ourselves to grab our fair share of the market," Mr Amara said. "We're basically looking for a partner that we can create synnergies with, both financially and managerially."
Tom Wright, a spokesman with France Telecom, declined to comment on the possible deal, saying only: "We can only confirm that Iraq is part of a zone of strategic interest for France Telecom," Mr Wright said.
"We aim to double our sales in emerging countries, and in particular in Africa and the Middle East, by 2015. In this context, we examine all potential opportunities for growth."
Korek is looking to sell a 35 per cent to 49 per cent stake in the operator, which is valued at about $3 billion (Dh11bn), Mr Amara said.
Korek is Iraq's third mobile company after purchasing a licence from the government in 2008 for $1.25bn and has spent an additional $900m in building a mobile network across the country.
It has about three million subscribers and mainly operates in Iraq's semi-autonomous Kurdistan region with isolated coverage areas in some major Iraqi cities such as Baghdad and Kirkuk.
Iraq is viewed by industry watchers as the last major opportunity for telecoms operators to expand in the Middle East.
The country has a mobile penetration of about 75 per cent today and should rise to 86 per cent by 2014 or about 28.6m subscribers, according to Arab Advisors Group.
Etisalat, the UAE's largest telecoms operator, has had several discussions with Korek to acquire the company but talks broke off earlier this year.
Etisalat may still enter the Iraqi telecom market if its deal to buy 51 per cent of Zain for $11bn is finalised by January. Zain has an Iraqi subsidiary that has a market leading 12m subscribers in the country and is viewed by analysts as one of the crown jewels in Etisalat's deal.
Asiacell, which is partly owned by Qatar Telecom (Qtel), has 6 million customers in Iraq. The Iraqi government is planning to sell a fourth licence later next year to a shortlist of operators that includes MTN, Turkcell, Vodafone and Verizon.
Updated: November 30, 2010 04:00 AM