| DUBAI, Sept 3
DUBAI, Sept 3 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 licences.
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 capitalisation 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.
"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," said a spokesman for Kuwaiti parent
"Nevertheless Zain Iraq, in coordination with its advisors
and the Iraqi authorities is continuing its efforts to undertake
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.
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
"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," said the fund manager.
"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 roadshows 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.
(1 US dollar = 1,162.0000 Iraqi dinar)
(Editing by Pravin Char)