Kurdistan’s young and dynamic population, coupled with rapidly increasing mobile and internet penetration rates, indicates that there are long-term growth prospects in the telecom sector.
The telecom sector is among the fastest growing industries in the Kurdistan Region, and is one of the most strategically important sectors for the continued development of the Region. While the sector has been driven in the past decade by strong growth in mobile penetration, much of the sector’s continued growth and opportunity will likely lay in Internet and data provision and operation. While mobile penetration in the Region stands at 90%, only an estimated 7-10% of households have Internet access. Increased investment in cable networks and Internet provision are projected to raise Internet access rates to 50% by 2015-2018. Additionally, despite its relative maturity, there is substantial room for growth in mobile operations. Mobile data services are still operating at GSM (2G) technologies, which are slow by global standards. Many of the Region’s neighbors have mobile penetration rates at over 100% and offer 3G/4G data technology.
While the Kurdistan Region has a mobile phone penetration rate higher than much of Iraq, there is room for additional growth.
The young demography of the Region (the median age being 20) suggests that there are long-term growth prospects in the sector. The large, younger generation is increasingly present on the Internet, particularly in social media. Demand for ICT services will therefore continue to grow as this generation demands increased investment in the sector. Moreover, companies outside of the ICT sector will increasingly be reliant on social media use for public outreach and advertising.
While aggregated data on the Region’s telecom industry is sparse, the scale of the industry’s companies indicates that the sector comprises a significant percentage of the Region’s GDP. Asiacell, a Slemani-based mobile operator, alone is valued at roughly $5 billion (21% of the Kurdistan Region’s GDP), and earned nearly $1.9 billion in revenues in 2012 (8% of the Region’s GDP).
Household Internet statistics underestimate overall Internet access, as many in the Region use smartphones to access the Internet. Young people in particular increasingly use social media as a means to connect to peers, businesses, organizations, and leaders. According to a study by IREX, nearly 50% of people in the Kurdistan Region use social media at least once per week, and 72% of Iraqi Facebook users are between 18-34 years old. Facebook is the most visited website in Iraq, followed by Google, YouTube, and Yahoo, and its prominence allows for direct and current communication between companies and individuals in the Region. Asiacell, for example, has over 1.1 million followers in Iraq. Korek Telecom has over 500,000 followers, and the American University of Iraq, Sulaimani has over 200,000.
Whereas southern and central Iraq have maintained a monopoly on the country’s fiber optic network, the KRG has partnered with private telecom companies to develop a competitive data industry in the Region.
Increasing Internet connectedness and usage, particularly among youth, provides a convenient way to reach people. While many companies employ social media for public outreach, independent websites are also using such sites to reach people. The KRG has employed this technology impressively, targeting young graduates with its “Kurdistan Works” project to promote private sector employment. The website efficiently aggregates private sector job openings in the Region, and streamlines recruitment and job-seeking processes.
While e-commerce has skyrocketed in popularity throughout much of the world, online shopping has yet to catch on in the Region. The undeveloped banking sector has limited the local population’s ability to buy items online, and the poor postal services make shipping expensive and difficult. As these two sectors develop, however, e-commerce may begin to develop in the Region in coming years.
General consensus seems to be that the next major steps in the Region’s telecom sector will be the implementation of widespread 3G and 4G data technology and improved Internet access. Additionally, there is speculation that the fourth mobile operator, when and if licensed by the CMC, will provide higher tech data services. These innovations will allow for faster data to customers’ mobile and Internet connections, and will likely provide for a larger role in the telecom sector for data network companies such as Newroz. While this will provide major growth opportunities for data providers and operators, the increased online population will also carry major implications for how non-ICT businesses reach people.