Irak 2011 - Supporting the development of telecommunications

Supporting the development of telecommunications in Iraq

For conflict-affected countries such as Iraq, where the movement of people and goods is complicated and heavily restricted, access to reliable, high quality voice and data services is key for economic activity and for personal and family safety. This project will support Zain Iraq, the country’s largest mobile phone operator, to expand service coverage and improve telecommunications quality throughout the country. It will support the strengthening of Iraq’s communications infrastructure as well as the extension of mobile networks into more remote and poorer areas of the Country.

Project start-up: 2011
Financing: $75m senior loan
 Partner: Atheer Telecom Iraq Limited (Zain Iraq)
 
Context
Zain Iraq launched commercial operations in 2004, having been awarded a license to provide mobile telecommunications services in southern Iraq in 2003 through an open tender process. Gradually, Zain Iraq began to expand its network into other regions. At present, Zain Iraq has operations in all of Iraq’s main regions, with the exception of Iraq’s Kurdish region, where the Company expects to begin offering service in early 2011. Zain Iraq has approximately 11.8 million subscribers and controls a 56% market share. The company is currently adding both capacity and coverage to a GSM network operating in both 800-900 MHz and 1800–1900 MHz bands, which has already been upgraded to provide EDGE capability in over 70% of the network.  Zain Iraq aims to invest heavily in network expansion and subscriber acquisition, as well as to offer new services geared toward Iraq’s emerging post-paid market.
 
Project objective
With approximately 22% of Iraqis living below the poverty line, unemployment remains high and access to basic services is severely limited. For conflict-affected countries such as Iraq, where the movement of people and goods is complicated and heavily restricted, access to reliable, high quality voice and data services is key for economic activity and for personal and family safety. This investment will support the strengthening of Iraq’s communications infrastructure as well as the extension of mobile networks into more remote and poorer areas of the Country.
 
Project description
PROPARCO has allocated its funding to the project alongside IFC, DEG, FMO, ICF and Ahli United Bank through senior debt ($75m). This investment is earmarked to cover capital expenditures to upgrade and expand ZAIN’s network especially in the Kurdish areas of Iraq, payments in respect of the network license and refinancing of existing debts. This long-term debt facility will help Zain Iraq expand service coverage and improve telecommunications quality throughout Iraq, help unlock opportunities for entrepreneurship and innovation, and increase employment in a key, non-oil industry.