Zain Iraq is preparing for its mandatory initial public offering (IPO) due to take place in August 2011.

According to the terms of the telecoms licences in Iraq, all three operators must float 25 per cent of their shares on the Iraq Stock Exchange (ISX) four years after the licence was issued.

“We’re working on it, it’s a lengthy process and it won’t be easy as a foreign investor, so it will take time. And we ask the Iraqi authorities to help us out and cooperate with us to get it up and running,” says Emad Makiya, chief executive officer of Zain Iraq.

The current value of the ISX is just $1.5bn, whereas the combined market capitalisation of the three national telecoms operators – Zain Iraq, Korek Telecom and Qatar Telecom-owned Asiacell stands at about $15bn.

Zain Iraq has invested close to $4.5bn in Iraq to date, with $500m to be invested this year in Kurdistan, where the telecoms provider recently began operations in March 2011.

In February 2011, the industry regulator the Communications and Media Commission (CMC) fined the operator $262m for issuing five million unlicensed sim cards. The numbers have since been reconnected but the fine, the highest issued by a regulator in the world, still remains. Zain is still adamant it will not pay.

“We are working on a way to dismantle the fine,” says Makiya.

Like the other operators, Zain has a Global System for Mobile Communications (GSM) licence and not a technology licence. In other words, there are no legal barriers for any of the operators to launch third- or fourth-generation capabilities, but the CMC has not issued the necessary spectrum for these upgrades.

“We have been told they will release the third-generation spectrum very soon, but we will have to wait and see,” says Makiya.

The company spends $100m a year for fuel for generators and security for their bases due to the lack of electricity in the country and the increasingly instability.

Zain has more than 12 million subscribers and the largest market share in the country.