If war breaks out in Iraq, it is expected to have a severe impact on Telkom`s New York listing planned for early March, as American institutional investors are traditionally skittish about offshore equities in times of turmoil.
However, war could have the opposite effect on the share prices of American telecommunications companies.
If the US invades Iraq it is likely that much of the country`s infrastructure will be destroyed, and America will almost certainly install the subsequent government. Such a government could be expected to be friendly towards US commercial interests.
As a result, American companies could be first in line when the time comes to rebuild destroyed infrastructure, and if funded by Iraqi oil, such contracts could prove extremely lucrative.
Telecommunications companies top the list of those expected to benefit. According the New York Times [free registration required], equipment manufacturers may even be quietly pinning their hopes on a quick war followed by a reconstruction effort.
According to the paper, Iraq has one of the least sophisticated telephone systems in the world, which never recovered from the 1991 Gulf War. The country of 24 million people has less than one million telephone lines and those that do have access to a telephone are often rationed in its use. The country also lacks any real cellular infrastructure, despite multiple attempts to construct one.
Experts say at least $1 billion will have to be spent soon to improve the fixed-line telephone system.
According to the Times, American companies such as Lucent Technologies and Motorola, as well as satellite providers, are among those most likely to see contracts after a war. At present, European manufacturer Alcatel and various Chinese companies hold telecommunications contracts in the country.
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