The Effect of Initial Public Offering on Company Performance A Case Study on Asia Cell in Kurdistan Region

Abstract

In 2012, Asia cell was recognized by the French market research company Altai and it was the largest limited liability company in Iraq before its IPO. As a reflection of its well established reputation for quality, reliability and service. Asia cell accomplished nationwide network coverage by end of 2009 and continues to seek to be the individual and business first choice for mobile telecommunications in Iraq. Asia cell benefits strong support of its founder, Mr. Faruk Rasool, also its main and biggest shareholder Qatar Telecom that has enormous experience in successfully running and advancing mobile telecommunications providers across the MENA region and South-East Asia. Therefore, Asia cell’s covered a network 97% of Iraq’s population of 34 million people at 30 September 2012.The results shows that there is decline in the company’s performance measured by ROA, ROE, EBITDA, EBITDA margin, and net profit in four different times period (one week, one month, three month, and one year) from listing on Iraqi stock exchange. While, Asia cell’s Revenue increase in all times period. Additionally, Asia cell share price increase in the first week of IPO to across 25 Iraqi Dinars, but later face a severe fluctuations that lead to a decline to less than 20 Iraqi Dinars per share as shown in the Appendices (1-16). Its customers also increase from 9 Million customers, 10.1 Million customers and 10.7 Million customers in years 2011, 2012, and 2013 respectively. The successful IPO of Asia cell in 3 February 2013 was regarded as one of the two unprecedented developments potential may help lead remarkable foreign capital inflows into Kurdistan region and Iraq.

Keywords: IPO, Asia cell, Telecommunications Industry, Iraq, Kurdistan Region.