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Accords with major companies are changing Iraqi telecoms

Article - October 8, 2012
Iraqi mobile operator Korek Telecom has joined forces with some of the biggest names in the industry and is keen to capitalize on 3G connectivity
Korek Telecom is the first privately owned telecommunications business to operate in the Kurdistan region of Iraq. The cellular phone operator has developed a lot since the turn of the millennium, when in 2000 the Ministry of Telecommunications granted Korek an exclusive five-year global system for communications (GSM) license to operate a mobile network, covering Erbil, the capital of Iraqi Kurdistan and the province of Duhok.

In August 2007, the Communications and Media Commission (CMC) granted Korek one of three long-term mobile service licenses, which enables the network to provide services throughout Iraq to more than 30 million people in 18 provinces. A few months later, it entered into a $2.2 billion joint venture with Orascom of Egypt. Last year, Agility of Kuwait and France-Telecom Orange took a combined 44% stake in Korek, as the company looks to expand its existing network and enhance its position in the Iraqi telecommunications sector.

At present, Korek holds a 70% market share in the Kurdistan region, and the company’s CEO Ghada Gebara realizes that there is always room for improvement.

“It all starts with good service, like having strong network coverage, stable connectivity, and accurate monthly billing statements,” she says. “We need to challenge the existing prices and give our subscribers more value for money. It is all about knowing our customers better.”

“ICT is a key component of infrastructure. It is as vital as roads, water and electricity. For every 10% mobile market penetration, you increase the GDP by 1%. The potential for internet is even higher.“

“nearly 45% of the Iraqi population is  less than 15 years old.  This means that almost everyone can afford a
phone.  Some even have more
than one unit.“

Ghada Gebara, CEO of Korek Telecom
Korek has actively sought to rectify any network coverage problems it might have by enlisting the help of Ericsson to prepare its network to cater for its rapidly growing customer base. Korek has awarded Ericsson with a three-year managed services contract, under which Ericsson will provide provisioning and field maintenance services including day-to-day services for Korek’s network in Baghdad.

Ericsson will help Korek achieve optimal network stability for 99.999% of its radio base station (RBS) and microwave sites, while finding better efficiencies by focusing on its core activities, which include network quality assurance and customer satisfaction, as well as business and strategy development.

Globally, Ericsson has signed more than 300 managed services contracts in more than 100 countries, signing 70 out of those 300 in 2011 alone. Ericsson manages networks on behalf of operators that service over 900 million subscribers worldwide so their undoubted experience, exposure and knowledge of the mobile network market can only further the development of Korek.

“Based on Ericsson’s successful track record and our experience with the company, we are positive that with their pool of knowledge, expertise and capabilities that we will be able to offer the highest standards of network quality and reliability, use our resources more efficiently, and focus solely on enhancing our customers’ experience,” says Ms. Gebara.

The agreement marks an extension of a longstanding relationship between Ericsson and Korek, during which they have worked closely on several projects, including the deployment of a post-paid billing system for Korek’s customers and the preparation of the telecom operator’s network for 3G and LTE (Long Term Evolution/4G).

Korek is keen to exploit the 3G market. While it is the dominant network provider in the Kurdistan region, Korek only holds a 13% market share of total Iraqi cellular subscribers. The company aims to launch a 3G network this year, but is awaiting the government’s release of the required spectrum.

The 3G launch may help Korek to attract customers from 2G operators Zain Iraq and Qatar Telecom’s Asiacell, resulting in a boost to its overall market share. However, Iraq’s government has not decided whether to charge a fee for the new spectrum, which could lead to increased tariffs and discourage investment in new technologies, ruling out significant profits in the short-term. Nevertheless, looking further ahead, Ms. Gebara realizes the importance of developing technology that the country and the consumer desire.

“At this juncture, 3G is a big investment with little return; however it is all about creating an ICT infrastructure in a country that does not have it. 3G will allow for fast and affordable Internet solutions at home and at work. It is not a luxury, but a necessity. You can check your e-mail, do transactions, access e-Libraries for research, read the news, share documents with colleagues, and complete work tasks in a quicker and more cost-effective way,” Ms. Gebara says.

“We need 3G to catch up with other countries, to develop our communication systems, and aid in the country’s economic growth. Of course, there is profit in the long run. By stimulating economic activity, we expand our subscribers’ purchasing power, allowing them to avail from more of our services. That is all in the future. Right now, we just need to get the ball rolling so that we can keep up with the global market. It is a strategic decision that the government needs to make,” she adds.

Creating a 3G network will attract more foreign investment, which Korek needs to support the initiative, as it seeks to provide the best service possible. Having a functioning 3G network is essential for infrastructure growth, along with information communications technology in general.

“ICT is a key component of infrastructure. It is as vital as roads, water and electricity. For every 10% mobile market penetration, you increase the GDP by 1%. The potential for Internet is even higher. For every 10,000 connections, you create at least 80 jobs. The effects are immediate. It stimulates start-ups. These start-ups eventually become profitable SMEs that contribute to the GDP, as is
evident in developed economies,” she says. 

The mobile telecommunications industry has come along way in Iraq since 2000, with a market penetration rate today of 75%. Unlike many Western countries, Iraq’s market is not saturated and there is ample room for further growth.

With the Iraqi population being so young, there are opportunities for companies to attract these potential clients in the future. The arrival of 3G will certainly help with this, as youngsters especially like to be connected to the world via a handheld device. If Korek successfully exploits this potential, there is every likelihood that it can be the market leader, not just in Kurdistan, but also in the whole of Iraq.