Iraq's three telecommunications companies say the country's stock exchange is not ready for their initial public offerings (IPOs), as a deadline for them to go public next month looms.
The operators are: Asiacell, in which Qatar Telecommunications has a 30 per cent stake; Korek, in which France Telecom has a 20 per cent stake; and Zain Iraq, the Kuwaiti telecoms group.
All have been under pressure from the government to list 25 per cent of their shares under the terms of the licences bought in 2007.
But all have concerns that the climate and timing are not right for the IPOs to proceed. "Asiacell has expressed its concerns regarding the capacity of the Iraqi stock market to absorb IPOs of one or more telecom operators at the levels called for under the licence," a company spokesman said. "Asiacell is in contact with the Iraqi authorities in Baghdad regarding a potential IPO of Asiacell's shares.
"The timing of an IPO may depend on clarifications on how to implement the requirements of the licence, the stock market rules and Iraqi company law."
The Iraq Stock Exchange is up more than 35 per cent to 142.57 points this year but is still in its infancy. A draft law expected to upgrade regulations for the bourse, which was submitted to the Iraqi parliament, has been stalled for more than a year.
The draft law incorporates many of the regulations from the International Organisation of Securities Commissions, a group of securities regulators from 100 countries.
The bourse has a market capitalisation of US$3.8 billion (Dh13.95bn) and traded value in May was less than $2 million. Emad Makiya, the chief executive of Zain Iraq, said the company wished to fulfil its contractual obligations as stated by the Iraq telecoms regulator, but there were "huge challenges".
"We are doing the preparations for the IPO but there are huge challenges ahead of us," he said. "There are several proposals being discussed with officials of the concerned bodies in order to get the best solution for everyone."
Humam Amara, Korek's chief executive, said the company was preparing for the IPO but would prefer to wait for the bourse to develop further.
The head of the stock exchange knows it is unlikely that the companies will be able to meet next month's IPO deadline.
"All three telecom operators need to change their ownership structure in order to proceed with the initial public offering," said Taha Ahmed Abdul Salam, the chief executive of the Iraq Stock Exchange. "Until now, none of them have converted to joint stock companies."
Ahmed Al Fawz, the chairman of Al Fawz brokerage in Baghdad, cited further obstacles.
"The legal framework is the biggest challenge for the IPOs," he said. "Also, local banks do not have the experience of managing listings of foreign companies of that magnitude and would require the cooperation of regional banks."