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Zain Iraq hires investment bank as it prepares for a public offering

The Kuwaiti mobile operator Zain has hired an Iraqi investment bank to lead the initial public offering of its subsidiary in the country.

This comes after the US$1.3 billion Baghdad listing of the mobile operator Asiacell, which is part-owned by Qatar’s Ooredoo.

“We chose to appoint Melak Iraq and Rabee Securities as the leading adviser and broker because of their track record and because we need on-the-ground advisory and support in Iraq,” said Saif Altimen, the head of investor relations at Zain Iraq.

Melak Investments, run by the Iraq-born former Franklin Templeton asset manager Shwan Taha, will spearhead the public share sale of Zain Iraq, according to three sources familiar with the matter.

The Iraqi market has three telecoms operators – Zain, which is a subsidiary of Zain Group in Kuwait; Asiacell, which is owned by Ooredoo in Qatar; and Korek, which is a subsidiary of French operator Orange.

The Iraqi market had a 93 per cent mobile penetration last year, with 32 million subscriptions. Zain Iraq was the market leader last year.

“Despite the difficulties of operating in Iraq, the country has a substantial telecoms market that is particularly important to Zain and Ooredoo, which control Iraq’s two biggest mobile operators,” said Matthew Reed, the principal analyst for Middle East and Africa at Informa Telecoms and Media.

Zain’s Iraq operation accounted for 40 per cent of Zain Group’s revenues in the first quarter. There is also potential for substantial further growth, especially in data services, when the national mobile operators move beyond their existing 2G services and introduce 3G.

The operator last year hired the Kuwaiti investment firm Markaz and the London-based advisory Akkadia Partners to work on the team. It also appointed National Bank of Kuwait, BNP Paribas and Citigroup. Melak Investments’ associate, Rabee Securities, will be lead the broker.

The Iraqi government recently gave approval to mobile operators to introduce 3G services – but they are likely to contest the government’s proposed fee of $307 million for the right to offer faster connection, said Mr Reed.

Zain has delayed its mandatory IPO until the end of this year, having previously said it would be ready to go to market by June. The company is being sued for $4.5bn by Korek Telecom, which claims that Zain’s acquisition of the mobile operator Iraqna in 2007 stopped it from buying the unit, resulting in huge losses.

Iraq’s mobile companies are required to list 25 per cent of their shares under the terms of the licences bought in 2007.

Asiacell’s IPO, which was led by Melak Investments in March last year, doubled the bourse’s market capitalisation from $4.6bn to $9.2bn.

The Iraq Stock Exchange has 91 listed companies, 45 licensed brokers and a daily turnover of $2m.

Updated 16 May 2014 | Soruce: The National |
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