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Tue 4 Sep 2012 05:33 PM

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Zain's Iraq unit sees bank accounts frozen

Telecom operator vows to continue to fight against $262m fine despite banking blow

Zain's Iraq unit sees bank accounts frozen
GCC telecoms

Kuwaiti telecom operator Zain will continue its fight against a $262m 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 hit with the fine in February 2011 for putting 5 million SIM cards in the local market without permission.

At the time, Zain said it would appeal the 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 disclose 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."

Ahmed Alomary, CMC commissioner, confirmed the agency is studying whether to revise the decision to make the seizure to include only the fine amount. He said the current decision was also hurting the CMC as it could not get paid its share of Zain Iraq's revenues.

"We are studying (the decision) as there are discussions between the CMC and the company (Zain) to make the seizure only cover (the) fine sum, not on all the amount in the banks," Alomary told Reuters.

He said he believed the decision would be taken in two weeks.

Alomary said Zain had presented an appeal to an appeals body affiliated to the Iraqi Judiciary council which made a decision to reconsider the fine 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 $1.25bn licences in Iraq, but all have missed the listing deadline of August 2011.

In July, the CMC said it would fine Zain Iraq $12,864 a day from September 2011 for failing to list on the Iraqi bourse and also imposed fines on the other operators.

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