Zain Iraq aims for stock market float in Baghdad by early 2013

Reuters Middle East

* IPO likely to be single listing on Iraq bourse

* Zain's stake to fall to 51 pct from 76 pct if IPO fully

subscribed

DUBAI, Oct 2 (Reuters) - Iraqi mobile phone company Zain

Iraq plans to go ahead with a long-delayed stock market listing

in Baghdad by early 2013 at the latest, its chief operating

officer said on Tuesday.

Zain Iraq, owned by Kuwaiti telecom group Zain,

still needs to convert to a joint stock company in preparation

for the float, Hisham Akbar, Zain deputy chief executive and

chief operating officer, told reporters on the sidelines of a

conference in Dubai.

"We are hoping for the last quarter of this year (to IPO),

but the joint (stock) company got delayed," Akbar said.

Zain Iraq and rival operators Asiacell - a unit of Qatar

Telecom (Qtel) - and France Telecom affiliate

Korek have to sell a quarter of their shares to investors via an

initial public offereing to meet conditions for their mobile

phone licences in Iraq. But all have missed a deadline of August

2011 for the IPOs and been fined for doing so.

Iraq did not have a mobile phone market under Saddam Hussein

and the sector has boomed since his fall from power in 2003. It

has become the country's fastest growing industry after oil.

The requirement for the phone companies to list on the Iraqi

stock market are part of efforts to create a more diversified

economy and move away from state-run companies.

But preparations for the listings have proved chaotic and

there has been uncertainty over whether the share sales would be

open to foreign investors or if dual listings were possible.

Also the Iraq Stock Exchange, which has a combined market

capitalisation of about $3.4 billion and trades around $3

million daily, is small relative to the size of the phone

companies.

In 2011, Nomura gave Zain Iraq an enterprise value (equity

plus debt) of $4.9 billion and Asiacell $4.4 billion.

Zain Iraq was fined $12,864 per day for missing the IPO

deadline. Akbar expects an appeal against this penalty to be

heard by year-end.

"The total (fine) we envisioned as a worst case scenario if

we list (in the) first-quarter (of 2013) is around $4 million,"

he said.

When asked whether Zain Iraq would opt for a single listing

on the Iraq bourse, Akbar said: "most probably yes", adding Zain

has also considered listings in Jordan and London.

"The chances were stronger (of a dual or secondary listing)

nine months ago."

Zain's shareholding in Zain Iraq would fall to 51 percent

from 76 percent should the IPO be fully subscribed, Akbar said.

Asiacell will probably be the first operator to float. In

August, it received preliminary approval from Iraqi regulators

and has placed advertisements in Iraqi newspapers to publicise

the flotation.

(Reporting by Matt Smith. Editing by Jane Merriman)

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