UPDATE 1-Iraq sells 3 mobile licenses for $3.75 bln

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AMMAN, Aug 17 (Reuters) - Iraq has sold three mobile phone licences for $3.75 billion to Kuwait's Mobile Telecommunications Co TELE.KW (MTC), AsiaCell and Iraq's Korek Telecom, the Iraqi Finance Minister Bayan Jabor said on Friday.

The three firms, which already run networks in the war-torn country, made the highest bids in an auction in the Jordanian capital that began on Thursday.

TurkCell (TCELL.IS) and Egypt's Orascom (ORTE.CA) had also bid for licences but dropped out of the race for one of the few sectors to thrive amid Iraq's instability and crumbling infrastructure.

The fixed-line network was hit by sanctions after Iraq's invasion of Kuwait in 1990 and by bombing during the U.S.-led invasion in 2003. Less than 4 percent of Iraqis have landlines.

"To get the best return from the auction in such circumstances is a great vote of confidence in the Iraqi economy," Jabor told reporters in Amman.

Orascom's withdrawal appeared to be a major upset as the operator was the first to provide a full mobile phone service in Baghdad after the 2003 invasion, through Iraqna.

"Since they were first to establish in Iraq, we were surprised by Iraqna's pullout from the auction after bidding reached $1.25 billion," Jabor said.

The 15-year licences replace three short-term contracts awarded soon after the invasion.

Iraqi mobile use rose to 8 million out of a population of 26 million at the end of 2006, from virtually nothing three years earlier, according to officials.