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Iraq Preps for GSM Launch

Light Reading
LR Mobile News Analysis
Light Reading
12/23/2003

Iraqi wireless officials continue to deny any notion of corruption in the country’s recent round of GSM (Global System for Mobile Communications) license bidding, citing official contract signings yesterday as evidence that such deals are free from “claims of cronyism.”

In October the Iraqi Communications Ministry granted two-year licenses to Egypt’s Orascom Telecom; a partnership between Kurdish communications company Asia Cell and Kuwait’s National Mobile Telecommunications (NMT); and a consortium including Kuwait’s Mobile Telecommunications Co. (MTC) and Atheer Tel of Saudi Arabia (see GSM Wins Iraq Battle).

The high-profile deals later suffered a major setback, following reports that the bidding process had been “hijacked by associates of the new Iraqi governing council” (see US Refutes Iraq GSM Report).

Last month the Department of Defense confirmed it has begun to investigate allegations of wrongdoing. “It is the subject of a DoD Inspector General preliminary inquiry,” said Lt. Col. Kenneth McClellan, a Pentagon spokesman.

Despite the initial problems, the three license owners have now signed their contracts with Iraq’s telecommunications ministry -- a significant step towards network launch.

“There were sour losers in the bidding process,” claims Telecom Minister Haidar al-Ebadi. “Signing the license agreements proves the falsehood of these rumors... This is an important day for the new Iraq.”

According to The Chicago Tribune, Al-Ebadi said the delay has had nothing to do with Washington or U.S. officials in Baghdad. “The delay was only because of the progress we want in the new Iraq,” he told the newspaper, adding that officials wanted to ensure Iraqis were offered good quality services. [Ed. note: And Baywatch, we must have Baywatch!]

Naguib Sawiris, head of Orascom Telecom, said his company’s network has already launched in Baghdad, with full regional services available from the beginning of January.

“We did nothing wrong,” he told Reuters. “Let them investigate. The person who takes a bribe from me has not been born." [Ed. note: Er... come again?]

Until now, the only cellular services available have been systems set up exclusively for the American-led authority and the Iraqi government. In May MCI (Nasdaq: WCOEQ, MCWEQ) was authorized by the U.S. government to construct a GSM network in Baghdad (see MCI's Iraq Offensive). A month later MTC-Vodafone was granted authority to install a network within Southern Iraq aimed at supporting the Coalition’s reconstruction efforts (see GSMA Cheers Iraq Deployment).

The successful completion of Iraq’s commercial GSM networks is expected to have a huge impact on both the country’s post-conflict development and the industry in general.

Equipment vendors Motorola Inc. (NYSE: MOT), Siemens AG (NYSE: SI; Frankfurt: SIE), Huawei Technologies Co. Ltd., and Alcatel SA (NYSE: ALA; Paris: CGEP:PA) have all secured pieces of the lucrative network pie, while analysts expect wireless technologies to dominate the voice, data, and Internet services markets in Iraq (see Iraq Plays Global Game and IDC: Wireless to Dominate Iraq).

— Justin Springham, Senior Editor, Europe, Unstrung

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