Iraqi lawmakers seek $2.85 bln from telecom firms

Thu Aug 11, 2011 4:17pm EDT

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* Unclear telecoms regulation creating confusion

* Gov't officials, lawmakers disagree on decision

By Waleed Ibrahim

BAGHDAD, Aug 11 (Reuters) - Iraq's parliament has ruled that three mobile operators must pay $2.85 billion in licence fees and fines within a month, overturning a deal allowing them to pay over five years, lawmakers and officials said on Thursday.

The ruling late on Wednesday could reinforce investor worries about unclear regulations over who controls the telecommunications sector, one of the fastest growing industries in a country pulling back from years of war.

Iraq's Ministry of Communications and the Communications and Media Commission (CMC), an independent body linked to parliament, both oversee the telecoms sector, but they are usually at odds over who has the final word on regulation.

Iraq's parliament voted late on Wednesday to recommend Kuwait operator Zain (ZAIN.KW), Asiacell, an affiliate of Qatar Telecom QTEL.QA (Qtel), and Korek, part-owned by France Telecom SA FTE.PA, pay all the $2.85 billion within a month.

But in a reflection of the murkiness of regulations, officials and lawmakers gave conflicting interpretations on whether the vote was binding because the companies had struck a deal with the previous government to pay that amount over five years.

The payment covers the cost of their operating licences in Iraq, interest for delayed payments and fines.

"The parliament voted ... that the companies should pay their financial requirements valued at $2.85 billion to the federal budget within 30 days from the date of the vote," the parliament said in a statement.

Ahmed al-Jubouri, a lawmaker, said the previous deal violated the contracts with companies. He said AsiaCell should pay $625 million, Zain $803 million and Korek $768 million, and other fines were pending.

CONFLICTING ACCOUNTS

But officials from the ministry and the CMC gave conflicting accounts of the parliamentary vote.

Salim Meshkur, a CMC member, said the parliament's vote was not binding, but just a recommendation to the new cabinet.

"The money is being collected with interest, according to the installment plan," he said, referring to the five-year payment agreement.

But Kassim al-Hassani, director general of the Iraqi Telecommunications and Posts Co (ITPC), an affiliate of the Ministry of Communications, said the parliament's decision was binding and the three mobile operators must pay this year.

Political infighting may also have played a part. Iraq's fragile power-sharing government among Sunni, Shi'ite and Kurd parties is often hampered by sectarian squabbling as one bloc accuses the other of misusing the government posts they control.

Iraq's three mobile phone operators, Zain, AsiaCell and Korek, which in 2007 each secured $1.25 billion licenses to operate in the country, use microwave links instead of fibre and have been criticised for their patchy coverage.

Mobile companies say military jamming to stop insurgents from detonating bombs by using cell phones, costs them millions of dollars in maintenance and upgrades to services in a country still fighting insurgents and militia groups.

Iraq did not have a mobile phone market under Saddam Hussein, who was ousted by the 2003 U.S.-led invasion, but the industry has exploded in the past eight years. There are now about 23 million mobile phone subscribers, the CMC says.

But some officials and executives said they fear confusion created by the parliament's decision could further deter investors who shy away from Iraq because of shaky security and lack of clear commercial and legal regulations.

"The CMC fears this decision could ... threaten the investment climate in Iraq and trouble investors who want to come and work here," said Ali al-Awsi, a CMC board member. (Additional reporting by Khalid al-Ansary; writing by Rania El Gamal; editing by Patrick Markey and Andre Grenon)

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