Iraq's three mobile operators will have to pay at least US$3 billion (Dh11bn) to upgrade to third generation (3G) networks, according to a decision from the parliamentary higher committee for mobile.
The decision is at odds with the terms of the current mobile licences held by the operators and is the highest ever demanded for such a licence throughout the region.
"The committee discussed how to give them the spectrum, whether to give or auction a new licence or introduce new fees that the mobile operators will have to pay," said Ahmed Alomary, a commissioner at the industry regulator, the Communications and Media Commission (CMC). "They decided that it would be better to go through a new licence worth $3-6bn."
Iraq's three mobile operators, Zain Iraq, Asiacell and Korek Telecom, paid $1.25bn for their mobile licences in 2007.
These licences are technology independent, in other words they are not specific to any one particular type of technology. The operators are free to offer second, third or even fourth generation services if they wish.
"In short we can use any technology we want. The issue is with the frequency allocation," said Ghada Gebara, the chief executive of Korek Telecom.
Spectrum allocation lies with the CMC but the issue has become politicised, according to Mr Alomary.
In August, Mohammed Tawfiq Allawi resigned as communications minister and accused the prime minister, Nouri Al Maliki, of "political interference" in the ministry.
"For the price we have already paid, we should get the frequencies for free or for a minimal fee as was recently done in Morocco," said Ms Gebara. "If the issue of frequency allocation is not solved on cost and quality, then 3G will not be possible."
All three operators are in the process of going public as per the requirements of their mobile licence.
The deadline for the mandatory initial public offering was August 2011, but a lack of coordination among the CMC, the Iraq Stock Exchange (ISX) and the operators has proven to be an obstacle.
The biggest concern continues to be the weakness of the stock market and uncertainty over whether the ISX would be able to handle such flotations. The current market capitalisation of the ISX is about $4bn. With the telcos listed, that would jump past $8bn.
No new deadline has been set. Asiacell is believed to be ahead of its competitors and is likely to be the first to list its shares. Zain Iraq is in the process of converting to a joint stock company and expects to float its shares by the end of the first quarter in 2013 while Korek is looking to begin its valuation process.
