Zain Iraq, the country’s biggest mobile phone network operator by subscribers, has applied for a listing on Baghdad’s stock exchange, parent firm Zain told Reuters, taking the first step in a long-delayed plan to go public.
Iraq’s three mobile network firms were required to float a quarter of their shares and join the Iraq Stock Exchange (ISX) by August 2011 as part of their 15-year licences awarded in 2007.
But so far only Ooredoo unit Asiacell has floated, joining the ISX in February 2013. Daily fines for not doing so are being levied against the other operators – Zain and Korek, the smallest of the three.
Zain Iraq has “filed its first set of application documents for its initial public offering to the Iraqi Securities Commission (ISC),” a Zain spokesman said via email.
“This is the first step in the process of Zain Iraq fulfilling its mobile licence obligations.”
Zain Iraq’s application is subject to approval from the bourse and telecommunications regulators, Zain added.
“They (Zain Iraq) have preliminary approval,” Abdul Razzaq Al-Saadi, ISC’s chairman, told Reuters.
“There are some technicalities that need to be ironed out, such as the mechanism of listing and subsequent trading and some further requirements from Zain that they have pledged to sort out.”
Once given final approval Zain Iraq will have two months to list otherwise its application will be void, Saadi added.
Zain Iraq has proposed a different method than the book-building share offer process Asiacell used.
Rather than selling shares before listing, Zain Iraq will join the ISX and allow bids from potential buyers on its first day on the bourse, a source familiar with the matter told Reuters.
There will be no trades that day but Zain Iraq will take the weighted average of these mock transactions to calculate its opening share price when trading starts the following day.
Iraq did not have a mobile phone market under Saddam Hussein but boomed following his fall in 2003 to become the country’s second-largest business sector after oil.
However, stiffening competition and network shutdowns in areas controlled by Islamic State has led to profit declines at Zain Iraq and Asiacell. Korek does not publish results.
Zain Iraq’s reported net profit fell 29 percent to $256 million in 2014 and currently about 400 of its sites are “off air”, a February presentation to analysts showed.
Shares in Asiacell, which raised about $1.35 billion from its flotation, have fallen by about 40 per cent since listing.