Kuwaiti-owned telecommunications company Kalimat is in discussions to secure a network licence in South Sudan. The licence, which will be flexible to include mobile and data services, is worth about $200-250m.

Kalimat hopes to launch a type of wireless communications service known as code division multiple access (CDMA) in the newly founded country.

Sudan telecoms penetration*
Market  Penetration rate
Mobile 54%
Internet 17%
Fixed  1%
*=At the end of 2010. Source: BuddeComm

“North Sudan already has operators, so it is not a great market for us to compete in, but South Sudan has much better prospects and its economy will be better due to its oil reserves,” says Wilson Varghese, Kalimat’s president and chief executive officer.

The company, which currently only has operations in Iraq, will be launching an initial public offering (IPO) in the third quarter of 2012 to raise $200m to help fund its growth in Africa and South America.

Kalimat is a subsidiary of Trade Links, a private company with headquarters in Kuwait. The company will be listed on the London and Iraq stock exchanges, with the IPO due to take place in London.

It will invest $250m in its Iraqi operations in 2011 to increase coverage to the rest of the country by November and increase its subscriber base. Kalimat won a wireless telecoms licence in Iraq to offer data and voice services in 2006. Its services are available in the major cities, including Baghdad, Irbil, Mosul, Kirkuk and Tikrit.

Its low-cost data service is the company’s biggest earner. Currently data services contribute 70 per cent to total revenues, with voice making up the rest.

While the political situation in Iraq is looking increasingly tense, the operator is planning to launch a set of e-commerce initiatives in the country. As part of a value-added-services (VAS) drive, Kalimat will launch the K-Club in six months, which will include the K-store, an Iraqi equivalent to US online retailer Amazon.

“The e-commerce market in Iraq has great potential. Users will be able to buy anything,” says Varghese.

The company is projecting revenues of $1m in the first year of operation, rising to $18m by 2016.

“Iraq is the best market for a telecommunications company, penetration rates are still low, there is huge appetite for data and voice, and literacy rates are very high in the country,” says Varghese.