European Mobile Giants Excluded From Iraq

The deadline for applications to run the mobile phone networks in Iraq may have been extended by two weeks from the original of July 28 but that won’t make any difference to the big guns in European telecommunications.

Ground rules laid out by the U.S.-backed administration in Iraq have excluded the likes of Deutsche Telekom’s T-Mobile arm, France Telekom’s Orange and mobile operators from Spain and the Netherlands due to the amount of governmental ownership in the companies.

Over 5 percent government control limit

​​The conditions set out by the Coalition Provisional Authority (CPA) strictly state that government-backed mobile phone operators need not apply for the three licenses up for grabs in the war-torn country, among the most lucrative of the international contracts available in Iraq. Any company in which more than a five percent stake is held by a national government will not be eligible to bid, even as part of a consortium.

As well as excluding the major Europeans, the rules are extended to Middle East companies such as Bahrain’s Batelco, MTC-Vodafone in Kuwait and the United Arab Emirates’ operator Etisalat. Privately owned companies still have a shot in the bidding but will be up against tough competition from the widely favored American companies vying for the three 24-month-long regional licenses which roughly cover the country’s north, center and south.

Backlash from war opposition?

The exclusions, specifically those of Deutsche Telekom and France Telekom, bring up the question of whether companies from countries who opposed the war in Iraq are feeling the backlash from the United States. It is quite possible that politics have already played a huge part in the selection process.

"A French company will surely not get a license," said Theo Kitz, a telecoms expert with German financial company Merk Fink in an interview with DW-WORLD. "After all, the Americans are still annoyed over the French attitude towards the Iraq war. The same goes for the Germans," he said.

Those companies who are not excluded will have to bid for two regions each, and will be expected to convert their regional licenses into a national franchise in the future. They will also need to demonstrate their capability to build and operate cellular networks in multiple countries. Networks must operate seamlessly with the Iraqi terrestrial network and other Iraqi cellular networks as well as offer roaming capabilities.

Responsible for own security

The lucky license winners will also need cast iron nerves. The guidelines for the bidding process specify that the license holders will be responsible for specific site, facility and personal security for their concern in Iraq while the coalition military and Iraqi police forces continue to struggle with security in the country. The guidelines also state that the CPA and Iraqi government will shoulder no liability for damage or loss to equipment during shipment or installation.

Years of sanctions have taken a heavy toll on technological advances in Iraq and the bombing and shelling campaigns during the recent war have left what remained of Iraq's communications infrastructure in ruins. Reports suggest that half the landlines in Iraq are still down due to damage inflicted during the conflict and the subsequent looting at the telephone main exchanges that took place in the void left by the collapse of security.

A return to communication

Once the applications have been processed and the licenses awarded, the return to a working communication capacity should be relatively rapid -- in theory. Setting up mobile networks takes a lot less time than installing fixed phone lines.

And those who find themselves in charge of the regional networks will hope that the profits outweigh the risks. Previously successful roll-outs of mobile networks in countries with poor telecoms systems -- like Nigeria, which only has one landline for every 500 people -- resulted in wildfire growth in mobile phone popularity.

Michael Knigge

© 2003, DW Online