The telecommunications sector in Iraq and in the Kurdistan Region has undergone a transformation in the latest year, however the Internet penetration in Iraq remains as one of the lowest in the Region, between 13% and 17% depending on the source. What is the current situation of the telecommunications industry?
You are right to talk about Iraq, as the penetration rate is very low due to the wrong policy of the government in the telecom sector. But when it comes to Kurdistan, it is different as in 2006 the government started to privatize this sector and to make sure that investors would come to invest. In all regions and especially in Iraq, the government failed to fulfil the demand of the people when it comes to infrastructure. That’s the reason why Newroz Telecom entered the market in 2005 and we started to deploy fiber-optic cables. At that time, it was the post invasion of Iraq when the coalition liberated Iraq. The telecommunication sector was very bad in the whole country, Kurdistan included. This is when we came with the idea to develop the infrastructure and we convinced the government to start using and investing in fiber-optic cable to follow the trend of the world. It was a risk because the Kurdistan Regional Government (KRG) thought there was no return of investment in the telecommunications sector.
Newroz Telecom started to lay fiber optic cables and connecting the cities of Kurdistan, then the next step was to connect everywhere within the country and then to go to Turkey, sign an agreement with the Government and with the companies to connect us all around the world through the gateway of Kurdistan. That led to improving the internet and communication service in Kurdistan, but it never had an impact on Iraq despite a contract signed in 2011 to do a project with the Iraqi government. We connected and almost finished 80% of a huge fiber-optic network to connect the Far East to Europe and America, but unfortunately the insecure situation in Iraq and instability forced us to stop the project. In addition, there was political tension between Kurdistan and Bagdad, Iraq.
The consequence of all that is the low penetration rate of internet in Iraq, and the government is failing to reach the demand of their people because they don’t privatize the sector. In comparison, Kurdistan has a 65-70% penetration rate which helps Iraq to make their situation much better by 5%.
Allai Newroz Telecom introduced the Internet in Iraq between 2007 and 2008, especially in the Kurdistan Region, a crucial step for the future of the country. The establishment of a fibre optic connection through Turkey connected the Region to the world. How has the society changed in the Kurdish Region since the accomplishment of that project?
What Newroz Telecom built is an infrastructure for the country, not only an internet service to the end-users. Building infrastructures means connecting the entire government departments/offices, the hospitals, the schools, the airport and all the gateways coming to Kurdistan etc all together. This allows the government to connect all its files and systems together with the rest of the world which was not available before. The infrastructure always needs to be available if you wish to develop and prosper your country.
The same thing goes with the security, without infrastructure you cannot ensure security for the country. And it is well-known that today Kurdistan is a reference in terms of security and with the telecommunications infrastructure Newroz Telecom developed it is a key contributing factor in helping the KRG to arrive where it is today.
So the infrastructure that we built was not only for our end-users but an infrastructure for the whole country and it helped and opened the way for other companies to come and invest in Kurdistan. For instance, recently a company is trying to develop smart metering and we provided them with a solution to use our fiber optic cables. We built an infrastructure that is for the benefit of the country now and in the coming years.
One of the foundational goals of Newroz Telecom is to provide blanket coverage reaching every single house in all areas of the Kurdistan Region. In addition, efficient Internet connexion is a must for the development of the economy and a competitive private sector. What are the main services and products that you provide to families and businesses and how many clients or subscribers do you have at this moment?
We have to differentiate the type of clients. We have direct clients and indirect clients. The direct clients are through the companies that we own, such us Newroz or FastLink, while the indirect are the ones we provide them with access to our infrastructure and internet, but they have their own subscribers.
If you look at the direct customers, we have one million subscribers, and if you look at the indirect clients we have three million and a half in Kurdistan and around 10 million in Iraq, because 80% of Iraq’s internet services come through us –in total we have 13,5 million. We provide the infrastructure to those companies, but they have their own subscribers.
At this moment you are the first company to deploy 4G networks in the Region with FastLink, a branch of Newroz Telecom. How have you developed this technology and introduced it into the market?
When I started this company in 2001 we were only three employees and the strategy of the company was already –and is still- to think ahead. So we are not doing what other people are doing, we have always been investing in the future. We knew exactly at that time where we were going so we didn’t try to compete with the existing telecom company like Korek or Asiacell but instead to develop our own product. At that time, other telecommunication companies were competing for the 2G and 3G connections, but Fastlink was already thinking about the 4G; that shows how we conceptualized our business plan. And the key about 4G is to have fiber connection because it is not about the technology itself, but you need to have a good transmission to connect all the sites, all the towers, otherwise it cannot be successful.
Fastlink was the first company to deploy 4G and we acquired the best frequencies available in the world. We tried to copy what the Americans were doing in terms of know-how and we had the frequencies available to be competitive against the best companies in the market. I don’t think that there is a single country with the coverage we have right now. We have been recognized for implementing the latest technology, 4G LTE, in a prestigious telecom conference held in Paris every year.
In 2013, when you were about to launch the 4G you said that “the big players in telecom all around the world are not just looking at us, they are looking for this road to connect to Europe. It's not just for us, this is a benefit to all of those around the world. » How do you further manage to reach out and show the international partners the opportunities to connect Kurdistan to the rest of the world?
We cannot call them partners but we do collaborate with international companies. Now, to show them the opportunities present in the sector, we have two businesses: the business of retail that we are doing right now plus the wholesale. Everybody knew that we were going to build a bridge within the region, which would have an impact on the world as a substitute for the submarine cable going through Egypt. Thanks to that, we were approached by Google, YouTube, and all the major submarines cables companies because they wanted to direct most of their traffic through that route. The reason is that they are currently dependant on the traffic through Egypt, which means that indirectly that country has a direct impact on the internet carriage, and there is not an alternative route.
Innovation and technology are in the DNA of Newroz Telecom and are also, along with education, the core values of Harvard Business Review. After developing a 4G cutting-edge technology, what are the main innovations that you working on?
At this very moment we are already planning for the 5G. We are following closely what the available frequency is to support 5G so we can acquire it now. Also, we are searching for the technology we’ll need, the space and the power. We have a project “fiber to home” that we will need to integrate with the 5G. So when the 5G will be mature, we will be ready to deploy it and we will as we did with the 4G. But it won’t be ready for the users before 2022.
You are the leading Internet provider in the Region thanks to your state-of-art telecom infrastructure. However, the Internet penetration still remains poor, especially in many areas of Iraq out of the Kurdistan Region, which means that there are still many challenges to face. What is the future of Newroz Telecom?
The future of Newroz Telecom is to go global. First of all, we are too big for our country and have already done what needed to be done. So now we have to think how we can benefit from the experience we gained, and try to invest outside the country. When we are talking about that road coming from Iraq, this is the strategic place and we want to use that and make it bigger. We want to develop more partners with us and invest in Turkey and Europe. We need to make sure that we own the fiber optic cable routes all the way from Europe to the south of Iraq to increase our network paths. This is the next step. Later on, we are even thinking of investing in submarines to reach countries like India and China.
What do you feel most proud of in your career? What are the main targets that you are hoping to achieve?
It was the transition I did for changing our source of internet to fiber and to connect Kurdistan and all Iraq through Turkey to all around the world, at a time when the political tension was very high between the Kurds and the Turks. They didn’t even want to talk to us, every relation we had was going through Bagdad and Bagdad also had problems with Kurdistan. So, the way I convinced them about all those business opportunities, about the future which convinced them to come work and sign with us was my biggest achievement.
Most of my time was not to technically focus on what to do but on how to fix this politically because the situation was very bad at that time, especially with Turkey. At first, they didn’t even want to hear about us, but after one, two, three, four meetings they believed that they had something they could offer and we are the only one who can provide this strategic location to connect Kurdistan to the rest of the world.
The hardest part as well is that in Iraq and in Turkey, they didn’t understand the value of what I was doing so they were not really keen to us. Until 2009, they didn’t see the true meaning of the fiber and the benefits of it so I depended only on myself. Once we had the connection then it was easier and the opportunities came and today we have more than 8000 kilometres of fiber between Kurdistan and Iraq.
Harvard Business Review Readers include the most influential business leaders and top decision makers in the world. As a conclusion to this interview, what is the final message that you would like to transmit to our readers?
We are trying to develop what we already started. Even if we have already done a lot, there is always more to do. We want to turn Newroz Telecom into an infrastructure company to try to prosper this country and to help Kurdistan and Iraq in all the other sectors because I believe that they will need a good communication to reach the highest development. The infrastructure that we are building and that we will continue to build, in addition to all the experience we have and the technology that we will bring will develop the country.
Besides, there are a lot of good opportunities for the investors. Even if you look now, with all the pressure that we are under and the many obstacles against the development of the country, we are doing much better than Iraq. So imagine if we get our independence, we can develop and prosper this country and will always need the experience of international companies. I really encourage every company to invest in Kurdistan, not only in the telecom sector but in so many sectors in Kurdistan as it is a really a rich country that can reach its full potential with its independence.