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Iraq Awards Mobile Telephone Contracts

October 8, 2003

BAGHDAD, Iraq (AP) _ Iraq’s reconstruction got a boost Monday when licenses were awarded for wireless phone networks that are expected to be operating within weeks in a country bypassed by the cellular revolution.

The licenses were awarded to three Middle Eastern companies that have investors in Iraq and elsewhere in the region. Each winning bidder is putting up a refundable $30 million bond for the license, which is to last two years. Collectively, they will also pay $9 million to fund a wireless regulatory agency.

``This is an important day for Iraq,″ said Communications Minister Haider Jawad al-Aubadi. ``Iraq badly needs the mobile system to enhance the security of the country.″

The mobile system will especially help in Baghdad, where 12 landline telephone exchanges were knocked out during the U.S.-led invasion last spring. Nationwide, one in four phone lines remains out of service. Before the war, Iraq had just three phone lines for every 100 people.

The wireless buildup will bring hundreds of millions of foreign dollars into Iraq, where continuing guerrilla violence against U.S.-led occupation forces could delay major redevelopment investment.

The winning wireless bidder in the central part of the country, including Baghdad, was a consortium headed by Orascom, an Egyptian telecommunications company.

The license for southern Iraq went to AtheerTel, a joint venture between the Kuwaiti wireless company MTC, private Kuwaiti investors and Iraq investors in a group called Degla, said Saad al-Barak, MTC’s general manager. He said the consortium would be ready to provide services within two months and aims to target 300,000 subscribers.

The license for the northern region was awarded to AsiaCell, which had been operating in the Kurdish-held region even during Saddam Hussein’s rule. A Kuwaiti official, speaking on condition of anonymity, said AsiaCell had taken Kuwait National Telecom as a small percentage partner.

Overall, each of the three winning bidders has between 10 percent and 50 percent local ownership, al-Aubadi said.

The companies all operate with the GSM phone standard widely used in Europe and the Middle East. Once the networks are built, calls will cost 8-10 cents per minute, al-Aubadi said, and phones will cost $50 to $60.

``Until now, we were denied mobile phones. Iraqis will welcome the chance to use mobile phones to talk to their families, friends and for business,″ al-Aubadi said. ``The race is now on to see which of the three will launch the first service to the public.″

The licenses were issued after 35 companies submitted more than 100 bids. At least one of the bidders was a U.S. company, according to a source familiar with the process.

The bidding, conducted by the U.S.-led Coalition Provisional Authority, closed Aug. 21. Al-Aubadi said the announcement of the winners was delayed until Monday because he was only just named minister Sept. 4 and needed time to review the submissions.

Over the summer, Bahrain’s telephone company, known as Batelco, spent $5 million setting up a wireless network in Baghdad without the permission of the U.S.-led authority, which ordered Batelco to cease service.

Other than that short-lived network and existing systems in Kurdish areas, Iraq’s only wireless service consisted of a Pentagon-funded system installed after the war for officials and aid workers in Baghdad by WorldCom Inc., now known as MCI.

MTC and Britain’s Vodafone set up a temporary network in the south.

At least one American company could stand to benefit from the new licenses. Network equipment supplier Motorola Inc. has contracts with Orascom and MTC and hopes to be involved in the Iraqi network deployment, Motorola spokesman Norm Sandler said.

Also, some companies that bid for the wireless licenses planned to use MCI as a long-distance provider, according to MCI spokeswoman Natasha Haubold. But she would not say whether those wireless network operators ended up winning the licenses.

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AP Technology Writer Brian Bergstein in New York contributed to this report.

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