Korek Telecom sues Zain for US$4.5 billion over Iraqna bid loss

Zain Group has confirmed that it is facing a US$4.5 billion lawsuit that stems from its 2007 acquisition of an Iraqi mobile network operator in 2007.

In a statement, Zain confirmed that it had received the lawsuit last August from Korek Telecom, which alleges that Zain’s purchase of Iraqna in 2007 blocked its own rival offer.

Back in 2007, Zain bought Iraqna for US$1.2 billion from Orascom Telecom after the Egyptian telco lost out in the auction to renew its mobile license.

Zain has been providing mobile telephony in Iraq since December 2003 (previously under the name of MTC-Atheer). In August 2007, the company acquired a 15-year nationwide licence for US$1.25 billion, followed by the acquisition of Iraqna.

In January 2008 Zain Group merged Atheer with Iraqna under the new brand name Zain.

As a consequence of the new lawsuit, an Iraqi court has ruled that that revenues from the Iraqna part of the merged company be put into a holding account and not released pending the outcome of the lawsuit.

"Zain Iraq believes its position in the case is strong as the claimant company has failed until now to produce any evidence to back its claim," Zain said in the statement.

Zain also noted that Korek Telecom is also suing the Iraqi government for a further US$1 billion.