Zain to fight Iraq fine after some bank assets frozen

DUBAI, Sept 4 Tue Sep 4, 2012 4:48am EDT

DUBAI, Sept 4 (Reuters) - Kuwait telecom operator Zain has vowed to continue its fight against a $262 million fine imposed on its Iraq operations despite some of the unit's bank accounts being frozen, the company said on Tuesday.

Zain Iraq, the country's number one mobile operator with an estimated 53 percent market share, was fined $262 million in February 2011 for putting 5 million SIM cards in the local market without permission.

At the time, Zain said it would appeal this fine and after 18 months of deadlock, the Iraqi telecom regulator, Communications and Media Commission (CMC), has now upped the ante.

"Some Iraqi bank accounts pertaining to Zain Iraq have been frozen, however we are expecting some positive news regarding this soon," Zain said in emailed response to questions from Reuters. "Our official position is that we are not liable at all for this fine."

The company declined to reveal the value of the funds frozen.

When asked what it thought of the regulator's move, Zain said: "We think they have the best intention in doing what they believe is right, although we were very surprised for a decision like this to take place without a court ruling."

Iraq accounted for 12.4 million of Zain's 40.3 million customers as of the end of 2011, according to the company's annual report, as well as 35 percent of consolidated revenue.

Zain Iraq and rival operators Asiacell - a unit of Qatar Telecom (Qtel) - and France Telecom affiliate Korek must complete mandatory initial public offerings as part of their $1.25 billion licences, but all have missed the listing deadline of August 2011.

In July, the CMC said it would fine Zain Iraq $12,864 a day since September 2011 for failing to list on the Iraqi bourse, also imposing fines on the other operators. (Reporting by Matt Smith; Editing by Dinesh Nair)