By John Lee.

Zain Iraq has posted a growth in net income of 77 percent.

In its results statement for Q1 2019, the company said:

Zain Iraq performed exceptionally well in Q1 2019 when compared to the corresponding three-month period in 2018, with revenue reaching USD 262 million, and EBITDA having reached USD 109 million, up 13% Y-o-Y and reflecting an EBITDA margin of 42%.

“The operation reported a net profit of USD 14.2 million, up 77% on the USD 8 million profit recorded in Q1 2018.

“The operator added 1.5 million customers (up 10% Y-o-Y) to reach 16 million and witnessed significant growth in data revenue, as well as profitable progress in the enterprise (B2B) segment.

(Source: Zain)

(Picture: Bader al-Kharafi, Vice Chairman and CEO of Zain)

By John Lee.

Kuwait’s Qualitynet is reported to have been granted a licence to provide internet, telecommunications and satellite services in Iraq.

According to CommsMEA, the move makes it the first Kuwaiti telecommunications service provider to win a service licence in the country.

Said Qualitynet CEO Mohammed Nizar Al-Nusif is quoted as saying:

Winning this licence comes after an extensive study of the needs of the Iraqi market, the estimation of investment volumes and feasibility studies for the establishment of infrastructure, and will complement our strategic plan for regional and international expansion.

“Our experts are currently working on deploying the network and infrastructure to provide our services to our customer base across Iraq, and to provide the network with point-of-presence devices through Qualitynet Iraq, for which it was officially established.

(Source: CommsMEA)

(Picture credit: Tasnim, under Creative Commons licence)

Parallel Wireless has announced that Kalimat Telecom, a subsidiary of Kuwait’s Trade Links, has selected Parallel Wireless to build out their mobile broadband network in Iraq.

According to the GSMA Mobile Economy: Middle East and North Africa 2018 report, Iraq has only a 52% wireless Internet penetration rate, presenting a great opportunity for telecom service  providers in that market.  Poor infrastructure and high operating costs are currently stunting development.

Kalimat recognized the inflexibility of legacy cellular solutions to bring digital services to the Iraqi population that is hungry for digital services.

Parallel Wireless says that its fully-virtualized HetNet and core solutions enable Kalimat to deploy a distributed virtualized mobile broadband network delivering consumer and enterprise wireless services across the region cost-effectively and on an accelerated timeline.

(Source: Parallel Wireless)

By John Lee.

In its consolidated financial results for the full-year 2018, telecommunications group Zain reports that the improving socio-economic situation sweeping Iraq is providing the much-needed stimulus to support Zain Iraq’s turnaround efforts.

The company said in a statement:

The operation performed exceptionally well when compared to the previous year. Revenues and net profit are consistently growing on a quarter-on-quarter basis, with full-year revenues reaching USD 1.1 billion, a 3% increase Y-o-Y and EBITDA reached USD 423 million, up 11%.

“The operation reported a net profit of USD 49 million, up 70% Y-o-Y compared to a profit of USD 29 million in the previous year, with EBITDA margin standing at 37%.

“The expansion of 3.9G services across the country and restoration of sites in the West and North (97% of all sites restored to date), combined with numerous customer acquisition initiatives, especially in core regions, resulted in an impressive addition of 1.3 million customers (9% increase) to reach 16 million.

“Another contributing factor to the operation’s financial revival included cost optimization initiatives in areas such as repair and maintenance, as well as the significant growth of data revenues, robust growth in the Enterprise (B2B) segment and the revamping of Zain Iraq’s call centers, which significantly improved customer service.

(Source: Zain)

By John Lee.

Asiacell Iraq has reported that it has benefitted from improvements in the security and economic situation in the country paving the way for network expansion and reconnections.

The telecommunications company said its revenue was “stable” at QAR 4.4 billion, compared to QAR 4.5 billion in 2017. EBITDA was up 6% to QAR 2.1 billion for 2018, reflecting better cost efficiencies by the management.

Customer base increased 10% to 14.2 million customers in 2018 period.

Asiacell Iraq also launched its B2B line offering a range of services to address the needs of Iraq’s business community and create a new revenue stream.

(Source: Asiacell)

By John Lee.

Docomo Digital, part of Japan’s NTT Docomo, has said it is launching a mobile gaming platform with Zain Iraq, giving more than 16 million subscribers the ability to access hundreds of titles using direct carrier billing on monthly phone bills.

Zain Games’ GamEmpire is a bundle of native and HTML5 games that can be streamed directly to mobile phones or tablets.

Docomo Digital and Zain, a leading mobile operator in the Middle East and Africa, signed the initial agreement in early 2018 at the Mobile World Congress in Barcelona. The partnership allows Zain’s 46.9 million customers to access mobile content from Docomo and have it billed monthly through the carrier.

Zain, which operates in eight countries in the region, has already launched the service in Saudi Arabia,  Kuwait and Jordan. Additional rollouts are scheduled for Bahrain and Lebanon over the next few months.

Hiroyuki Sato (pictured), Docomo Digital CEO, said:

Launching our games platform in Iraq marks yet another important milestone in our important partnership with the Zain Group, and our first such partnership in Iraq.

“We are committed to expanding our footprint across the Middle East and we hope to bring our latest suite of content and billing services to Zain’s subscribers across the region.”

(Source: Docomo Digital)

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Average daily turnover in November continued to improve, increasing 24% on the back of October’s 24% month-on-month growth. However, the recovery is coming from an incredibly low base and still shows the average daily turnover in-line with the dismal levels of September, which were among the lowest for some time (chart below).

With the gradual recovery in turnover, the market, as measured by the RSISUSD Index, moderated its month-on-month declines, down -1.7% for the month- continuing to test the major bottom of May 2016.

However, the end the Arbaeen, summer, and the government formation are yet to mark the end of the period of, probably, the lowest daily trading volumes on the Iraq Stock Exchange (ISX) since it first witnessed an expansion in volumes in 2010. The anomaly and un-sustainability of these low levels was discussed last month, and logic continues to argue for a reversion to the mean.

(Source: Iraq Stock Exchange, Rabee Securities, Asia Frontier Capital)

It was also argued last month that an uptick in M2 (broad money and a proxy for economic activity) could imply that liquidity, brought on by a two-year recovery in government finances, has finally begun to filter down into the economy – which should accelerate as the new government begins to act on its spending programme.

A nascent recovery in telecoms adds support to this line of reasoning. The two major mobile operators out of three national operators, reported Q3/2018 earnings that display the markers of recovery in earnings, margins and profits. Of the two, AsiaCell (TASC) has been listed since 2013 and as such its reported earnings span the period 2012-2018, and thus reflects the operating environment before, during and just after the ISIS conflict.

(Sources: Rabee Securities, ISX, Company reports, Asia Frontier Capital)

TASC’s earning’s profile marked by rapidly increasing revenues – driven by the country’s adoption of mobile phones – peaked in 2013. The turn for the worst started in late 2013 with the increasing violence before the May 2014 elections, which accelerated by mid-2014 with the ISIS invasion and the loss of over a third of the country, and with that a significant loss in TASC’s subscriber base.

The roll out of 3G in early 2015 brought its own set of problems. The amortization of the fees of $307 million (on top of fees of $1,250 million in 2007 for a 15-year licence) to access the 3G spectrum increased costs meaningfully. While, revenues took a hit as free IP voice telephony soon replaced most expensive regular telephony-especially for international calls, while data fees could not fully replace these lost voice revenues. This was compounded by increased competition among the three mobile operators as they sought to replace both lost consumers and voice revenues through competitive price offerings to lure consumers from each other.

Capping the woes of mobile operators was the severe economic decline brought about by the ISIS conflict and the collapse oil prices as non-oil GDP declined by -3.9%, -9.6% and -8.1% for 2014, 2015 and 2016, respectively.  Finally, the resultant weaknesses in both consumer and business demand was made much worse with the introduction of 20% VAT on phone cards in the summer of 2016.

For TASC, the revenue decline, while cost increases crushed its profits (as the chart above shows), however this decline in profits was moderated by very strict cost controls and decreasing capital expenditures reflecting an earlier heavy investment in infrastructure.

The bottoming in revenues over the last few years came to end in late 2017 with the liberation of Mosul and the gradual return of customers which contributed to the recovery in profitability. The company signalled its confidence in its future outlook with a distribution of a 12% dividend on the back of last year’s 14% dividend – however, in absolute terms the dividend is about one third higher than that of last year. The grandfathering of the transition to 3G, the amortization of the licence and the effects of the VAT introduction, all coupled with the return of customers as well as the expected growth in data usage should lead to a healthy period of resumed earnings growth.

The next few quarters should see a similar recovery for the battered banking sector, with probably the first to recover being the quality of loans. A return of liquidity and an economic pick-up should be followed by a recovery in the quality of bad loans and the reversal of NPL’s (non-preforming loans) with past provisions becoming earnings, thus providing the first boost to earnings recovery. This should be followed by growth in loans and deposits, as should growth in trade finance revenue, and therefore similarly to the case of telecom should lead to a resumption of a period of earnings growth, and with-it better stock price performance. For more details on the banks see “Of Banks and Budget Surpluses”.

Recovery, in frontier markets, is a mirror image of Mark’s Twain’s phrase on going broke, in that recovery happens gradually and then suddenly. If similar experiences in other frontier markets of declining prices while fundamentals point to a start of a gradual recovery, then the trend of the last few months could be followed by a sharp reversal to the upside.

Please click here to download Ahmed Tabaqchali’s full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets. He is a non-resident Fellow at the Institute of Regional and International Studies (IRIS) at the American University of Iraq-Sulaimani (AUIS), and an Adjunct Assistant Professor at AUIS. He is a board member of the Credit Bank of Iraq.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

By John Lee.

Asiacell Iraq has benefitted from improvements in the security and economic situation in the country, according to its parent, the Qatari company Ooredoo.

In its results for the first nine months of 2018, the company said:

With more areas liberated and network restoration underway, Asiacell reported a 3% increase in Revenue to QAR 3.5 billion at 9M 2018, compared to the same period last year.

“EBITDA was up 8% to QAR 1.6 billion, growing at a faster rate than revenue and reflecting good efficiency management.

Customer base increased 6% to 13.3 million customers for the 9M 2018 period, and Asiacell received the prestigious CARE award for its excellence in customer care service.”

(Source: Ooredoo)

(Picture: Faruk Mustafa Rasool, Chairman of Asiacell)

Comtech Telecommunications Corp. (Nasdaq: CMTL) announced on Monday that during its first quarter of fiscal 2019, its Orlando, Florida-based subsidiary, Comtech Systems, Inc., which is part of Comtech’s Government Solutions segment, has received a $9.1 million sole-sourced contract from The Program Executive Office (PEO) Command, Control, Communications, Computers and Intelligence (C4I), International C4I Integration Program Office (PMW 740), to supply equipment and services in support of an existing C4I Surveillance and Reconnaissance Maritime Surveillance System owned by the Iraqi Navy.

Comtech will be supplying thermal imaging radar in conjunction with Comtech’s advanced digital troposcatter communications systems and backhaul microwave terminals. The communications network will provide radar and sensor data to an existing Command and Control facility.

In commenting on this important award, Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications Corp., stated:

“I am excited to be able to announce this important contract with a new foreign government end customer. While the sales cycles for opportunities of this type are long, this win is further evidence that demand for troposcatter equipment around the world is growing. We look forward to working with the U.S. FMS and Iraqi Navy on this and future opportunities.”

Comtech Systems, Inc. ( specializes in system design, integration, supply and commissioning of turnkey communication systems including over-the-horizon microwave, line-of-sight microwave and satellite.

Comtech Telecommunications Corp. designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. The Company sells products to a diverse customer base in the global commercial and government communications markets.

Certain information in this press release contains statements that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. The Company’s Securities and Exchange Commission filings identify many such risks and uncertainties. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties described in such Securities and Exchange Commission filings.

(Source: Comtech)

Zain Iraq has selected Ericsson (NASDAQ: ERIC) to modernize a number of its legacy sites with Ericsson Radio System in a contract signed recently that serves to strengthen the partnership of the two companies.

Under the terms of the deal, Ericsson will reinforce its role as a trusted business partner by providing higher capacity and improving network performance.

In an effort to accelerate digitalization in the region, Zain Iraq and Ericsson are enabling rapid deployment of innovative services in the Internet of Things (IoT) in the coming years. The partnership will also ensure seamless 4G and 5G evolution across Zain’s networks

Ali Al Zahid, Zain Iraq Chief Executive Officer, says:

“Zain is committed to bringing the latest technology and cutting-edge services to its customers.  Upgrading current networks with the latest technology to cater for increasing traffic volumes and enhanced customer experience is a key priority. It also reflects our commitment to providing the mobile community in Iraq with the highest quality of service available.”

In addition to consumer services, security and energy companies are some of several industries starting their own digital transformations. Ericsson Radio System offers far more than the benefit of capacity building and performance, it also provides high bandwidth for content-rich applications.

Rafiah Ibrahim, Head of Ericsson Market Area Middle East and Africa, says:

“I am glad that we continue a good cooperation with our long-term partner Zain.  This new contract will accelerate Zain’s digital journey and build its digital infrastructure with the introduction of new services and virtual functions.  This will enable Zain to deliver the best possible user experience in two major cities in Iraq and meet the data demands of tomorrow in a timely manner.”

Zain Iraq and Ericsson are pioneering the use of next-generation networks with the anticipated increase in data traffic as IoT promises new capabilities and use cases.

Network modernization and adoption of new technologies are essential to meeting users’ demand for capacity and coverage. Modernizing the network infrastructure of Zain Iraq’s network services will not only improve end-user experience through increased capacity, but also accommodate future needs.

(Source: Ericsson)