On October 2, 2013, MIGA issued a guarantee of $10.4 million covering an investment by Alcatel-Lucent International (AL) of France in Regional Telecom (RT) in Iraq. The coverage is for a period of up to three years against the risks of transfer restriction, expropriation, and war and civil disturbance.
The project involves vendor financing from AL to RT for a high speed mobile broadband data and internet service provider in Iraq. This investment is part of a three-phase engagement. In the first phase, to be covered by the proposed MIGA guarantee, AL is providing equipment, installation of infrastructure, and deployment of 4G/LTE covering four cities in Kurdistan. RT’s longer-term business strategy is to achieve 65 percent geographical coverage across Iraq. AL will also advise RT on improving operational functions such as corporate governance, financial reporting standards and risk management to help RT conform to international best practices.
The project is expected to expand Iraq’s information and communications technology sector by providing high-speed mobile data and voice services to the main cities in the Kurdistan region. Iraq’s mobile market is one of the least developed in the Middle East, with a sole regional operator providing mobile broadband services using 3G technology and fewer than 750,000 subscribers out of a population of nearly 33 million with access to any sort of 3G mobile service.
The investment will create a demonstration effect for other operators to invest in the sector and will open up access to the internet in many areas where no fixed line access exists. The expected developmental benefits of expanded mobile connectivity include enhanced knowledge and skills and increased private sector productivity.
The project is aligned with the World Bank Group’s Country Partnership Strategy for Iraq, which notes that the country’s telecommunications sector is under-exploited. MIGA’s support for this investment is also aligned with the Agency’s strategy of supporting investments in conflict-affected countries and its efforts to mobilize $1 billion in insurance capacity to support foreign direct investment into the Middle East and North Africa.