An American businessman, Chris Catranis, lost his company in the tech bust and is seeking opportunities in Iraq. He traveled to Iraq to bid on one of three mobile phone licenses being awarded by the U.S.-led occupation. Although the security situation is dangerous and unstable, Catranis assembled a consortium with companies from Kuwait, Iraq, and the U.S. in hopes of winning a license and starting a new mobile phone network in Iraq. The competition for the licenses is intense as many regional telecom companies are also bidding.

1. WSJ.com - A Risk-Taker in His Element: Iraq Page 1 of 3
September 11, 2003 12:27 a.m. EDT
IRAQ IN TRANSITION
A Risk-Taker in His Element: Iraq
Singed in Telecom Bust, Entrepreneur
Chases Baghdad Cellphone License
By CHIP CUMMINS
Staff Reporter of THE WALL STREET JOURNAL
TIKRIT, Iraq -- Chris Catranis, a Pennsylvania businessman, got burned in the U.S. telecom bust. So, in July he went looking for cellphone
work in Iraq, a wartorn land that he figured offered better prospects.
"Business is not so good in America," he explained to a bemused Jamaa al-Jabouri, regional director of the Iraq Telephone & Postal Co., when
Mr. Catranis showed up for a visit last month.
IRAQ IN TRANSITION Like thousands of scrappy entrepreneurs, Mr. Catranis, 47 years old, lost everything in the tech and
1 telecom bust that started in 2000. He hasn't drawn a paycheck in almost three years and is struggling to
See the status of contracts 2 to reconstruct make mortgage payments on a seven-bedroom Pennsylvania farmhouse. He's still fighting a lawsuit
Iraq.
involving his failed broadband company, and revenue from a telecom-billing service he runs out of St.
See continuing coverage 3 of developments in Iraq. Peters, Pa., doesn't make ends meet.
In early July, Mr. Catranis bought a satellite phone and a plane ticket to Kuwait. He hired a driver to take him to the Iraqi border, which he
crossed on foot. On the other side, he found a local taxi to take him the hour's drive to Basra, Iraq's southern hub. There he hired a translator
and started putting together a plan to win one of three cellphone licenses that U.S.-led occupation officials in Baghdad plan to award as early
as tomorrow.
His odds of winning a license seemed remote when he arrived in Iraq, but Mr. Catranis now seems to have a chance at a payoff. He quickly
assembled a consortium that made a formal bid. Controversial licensing terms -- including a limit on ownership by foreign state-owned
telecom providers -- may have scared off some competition. U.S. officials won't disclose names or details of the three dozen consortia they say
are bidding.
But the competition is likely to be fierce. Regional powerhouses such as Egypt's Orascom Telecom Holding are bidding. Bahrain
Telecommunications Co. and Kuwait's Mobile Telecommunications Co. have shown interest as well, and may have pulled together enough
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2. WSJ.com - A Risk-Taker in His Element: Iraq Page 2 of 3
outside partners to meet the limits on state ownership.
Despite a Wild West economy that sprouted here after the war, few American entrepreneurs are venturing into the chaos
of postwar Iraq. Amid anti-American violence, even giant U.S. firms with big reconstruction contracts are keeping a low
profile. Mr. Catranis, who slipped into Iraq before the State Department allowed Americans to travel in mid-July, is an
exception.
He said he's here out of "desperation." Though there are signs that the U.S. telecom and tech markets are on the mend,
Mr. Catranis doesn't think real opportunities will surface at home for years. With an initial budget of $100,000 in
investments and loans from friends, he has stayed in crumbling hotels, traveling with a $25-a-day translator who speaks
marginal English. He has checked out population figures in towns like Tikrit and surveyed Iraq's dilapidated telephone
infrastructure.
MCT Corp., a closely held Alexandria, Va., company, agreed to lead the consortium Mr. Catranis launched, naming it
Babylon Telecommunications Co., or Babtel. MCT has cellphone experience in central Asia, including Afghanistan.
Public Warehouse Co., a Kuwaiti-listed firm, is putting up much of the capital, and the consortium said it has since lined up backing from the
al Bunnia family, a prominent Iraqi business clan. Late last month, Mr. Catranis said he had raised more than $250 million in investment and
loan guarantees -- contingent on winning a license.
WIRELESS BOOM? "There is a lot of money chasing this deal (a nice change from the States)," he wrote recently in an e-
Coalition officials will soon announce winners of three mail from Baghdad, where land-based telephone service is still spotty and most Iraqi businessmen
cellphone licenses for operators in Iraq. Officials say 36
consortia have submitted bids. must use clunky satellite phones or satellite-linked Internet cafés to communicate. (U.S. occupation
officials have built a limited cellphone system in Baghdad for themselves, top Iraqi officials and aid
A look at the potential market: agencies.)
Population: 23 million
Mr. Catranis uses trips to regional Iraq Telephone offices to build local knowledge. But the visits are
Estimated potential penetration rate: 30%, or some also about making contact with people who will be useful if his group wins out. "If you come into
seven million subscribers
these town and they don't know you, they'll cut your wires," said Mr. Catranis, a stocky man with
Estimated cost to build basic system: $400 million graying blond hair and a talent for hamming it up.
Largest potential markets: Baghdad, Basra, Mosul,
Nasiriyah, Kirkuk
In recent weeks, violence aimed at U.S.-led occupation forces has intensified, heightening the risks for
foreign businessmen. Back in Tikrit, Mr. Jabouri of Iraq Telephone pointed out his window to the
The current system: street where a bomb exploded recently, an apparent act of sabotage. Saddam Hussein's hometown
remains a hotbed of anti-American violence.
Land-based lines suffered major disruption across the
country during the war. Many neighborhoods in Baghdad
still don't have dependable phone service.
Omar J. Mahdi, Tikrit's manager of communications, told Mr. Catranis he probably isn't going to be
No cellphone operators in Iraq before the war, except in
able to charge much more than four cents a minute for cellphone services. "Four cents? My company
northern Iraqi territory outside Saddam Hussein's control. can't afford that," Mr. Catranis said. "You think five cents will work? You know how much it is in
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3. WSJ.com - A Risk-Taker in His Element: Iraq Page 3 of 3
Coalition officials contracted MCI to build a limited Philadelphia? Fifteen cents a minute."
cellphone system in Baghdad for themselves, top Iraqi
officials and aid agencies. MCI, formerly WorldCom, is
now in bankruptcy -court protection and has been barred
from winning new government contracts. "You know what my salary is?" Mr. Mahdi shot back in English. "Sixty dollars a month, and I'm the
director of communications. It's not enough to eat, let alone to make cellphone calls."
Source: WSJ research
Whatever happens to Mr. Catranis in Iraq, it'll be another interesting chapter in a career of highs and
lows. Since graduating from college, he has started an import-export business that almost sold school desks and chairs to Venezuela (the
contract fizzled at the last minute), bought a water-drilling company in Nigeria that went belly up, and sold satellite dishes in Kuwait after the
first Gulf war.
Returning to the U.S. in 1994, he started Skyway Partners, which wired buildings for satellite TV, Internet access and Internet-based telephone
service. Mr. Catranis said he raised more than $5 million from investors during the telecom and dot-com boom, and was aiming for a public
offering in late 2000. But the tech bust killed those plans.
Mr. Catranis tells Iraqis that the consortium hopes to turn itself quickly into a publicly traded company, a plan that Donald DePriest, MCT's
chairman, said he endorses. "My idea is to have a public company where you guys own shares," Mr. Catranis said in the Tikrit Iraq Telephone
office, as Mr. Jabouri and his engineers smiled and nodded.
Write to Chip Cummins at chip.cummins@wsj.com 4
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