Despite of conflicts, Zain Iraq still considering listing in ISX

Mobile operator Zain Iraq still wants to list its shares more than three years after missing a deadline, parent Zain said on Wednesday, although fund managers warned violence in the country and weak market infrastructure could deter investors.
Iraq's three mobile operators - Zain Iraq, Ooredoo unit Asiacell and Orange affiliate Korek - were each required to float a quarter of their shares and list on the Iraq Stock Exchange (ISX) by August 2011, under the terms of their network licenses.
All missed the deadline, incurring ongoing daily fines, a delay some experts blamed on the exchange's low trading volumes and the small overall market capitalization of its companies. Asiacell eventually joined the ISX in February 2013, selling 25 percent of its shares for $1.27 billion in Iraq's largest ever initial public offering (IPO), while last September Zain Iraq said it hoped to float in the first half of 2014, raising "north of $1 billion".
But the prospect of Zain conducting such a process seems remote after much of the west and north of Iraq fell under the control of the Islamic State militant group.
A spokesperson from Kuwait parent company Zain, stated, "Against the backdrop of security and safety issues, Zain Iraq is today mainly focused on maintaining its network and providing much needed mobile services to our customers and the Iraqi community at large."
"Nevertheless Zain Iraq, in coordination with its advisors and the Iraqi authorities is continuing its efforts to undertake the IPO."
Iraq is Zain's top market, accounting for 35 percent of subscribers and 39 percent of revenue in the second quarter. The spokesman said Zain Iraq would stage the IPO "at a time deemed appropriate for all stakeholders and the investment community", but did not specify when, or what the firm would do with the money raised in a listing.
The ISX and the Communications and Media Commission - the telecommunications regulator - did not immediately respond to requests for comment.
Bombings
Last week, a Zain Iraq source said a spate of deadly bombings in Kirkuk had shut down its network in the province, while Asiacell said up to 30 percent of its 11.6 million subscribers were "affected by the overall security situation".
Foreign investors in Iraqi stocks are well versed in the country's troubles and do not scare easily. But one international fund manager with investments in Iraq, speaking on condition of anonymity, said Zain Iraq would be a tough sell, especially with Baghdad yet to form a government after the protracted exit of former Prime Minister Nuri al-Maliki.
The fund manager said, "From talking to brokers, the feedback I've got is that only one major foreign investor liquidated their positions in Iraqi stocks - we and many other have reduced our holdings, but we're still invested."
"We're unlikely to see incremental in-flows from foreign funds into the Iraqi market. It wouldn't be wise to IPO now."
Zain has held IPO road shows for investors, and Geoffrey Batt - a founding partner of New York-based Euphrates Advisors, a hedge investing in Iraq - said he did not doubt Zain's sincerity. But he added Zain Iraq was unlikely to float soon because market conditions "are rather challenged".
Asiacell's shares fell 3.2 percent to 15 dinars ($0.0129) on Wednesday, almost a third below their IPO price of 22 dinars. The stock's total turnover in July was $3 million, more than triple the month before, while in May it traded just $117,000.