The Coalition Provisional Authority (CPA) released today
two significant changes to the bid requirements for wireless telephone
service in Iraq. CPA adopted the changes—opening the process to state-owned
telecommunications firms and reducing the bond requirement—in response to
concerns expressed by numerous bidders that certain conditions precluded
their participation or were unduly onerous.
The most significant change adopted by the Ministry was to
increase the possibilities of participation in licensing by companies owned
in part by foreign governments. Before today, companies more than 10% owned
by a foreign government could not participate. Under the new requirement,
they may participate, so long as total foreign government participation in a
bidding consortium does not exceed 10%.
“We would have preferred zero percent ownership by foreign
governments in Iraq’s system, obviously, but as a compromise we agreed to 10
percent at the absolute highest,” said Dr. Shakir Abdulla, Secretary General
of the Ministry of Transportation and Communications.
This change opens the bidding process to most companies
world-wide, even if they are wholly state-owned, provided that company’s ownership
of a consortium does not exceed 10 percent.
The second change reduces the cost of the performance bond
required to be secured as part of the license. The original rule required a
bond for the full price of the build out, thought by some to impose a very
significant bonding fee for a build out estimated at $150 million. The new
rule requires bonding to $30 million at a substantially reduced cost.
“We have provided a level playing field for all interested
parties to submit substantive bids for wireless communication in the three
designated regions,” said Ambassador L. Paul Bremer, CPA Administrator. “We
are proceeding at a rapid pace in this endeavor because Iraq must have a
modern communications system for voice and data to jump start the post-war
The Iraqi Ministry of Transportation and Communications,
under the auspices of the CPA, will issue licenses for three wireless
telephone operators in September. Licensees will initially provide service in
one of three Iraqi zones, north, central and south. However, to encourage
rapid deployment of services, licensees meeting growth goals are given the
right to expand throughout Iraq.
The CPA believes the changes adopted today will encourage
more companies to participate in the bid process and thereby increase the
likelihood that its objectives for the rapid build out of sophisticated
wireless mobile networks throughout Iraq will be achieved.
The Ministry has designed the bid process to create three
vigorous nation-wide competitions in little more than one year, bringing to
Iraqi citizens a wide choice in services and price in an accelerated period.