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Kuwait’s Zain is being sued for $4.5 billion over its Iraqi deal

Kuwait’s Zain is being sued for $4.5 billion over its Iraqi deal
Zain, the Kuwaiti firm stated in a bourse statement that it is being sued for $4.5 billion over its 2007 acquisition of an Iraqi telecom operator.
Zain bought Iraqna for $1.2 billion from Orascom Telecom in December 2007 after the Egyptian firm dropped out of the running for a long-term mobile license in Iraq. The Kuwaiti firm then merged its Iraqi unit, Atheer, with Iraqna and renamed the entity Zain Iraq, which today is the country's biggest operator by subscribers.
In a statement, Zain stated that it declined to identify filed a lawsuit last August. This claims Zain's takeover had stopped the firm buying Iraqna, causing it losses of $4.5 billion.
The statement added, "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." The anonymous company is also suing Zain and Iraq's telecom regulator, the Communications and Media Commission (CMC), jointly for a further $1 billion, the statement said.
An Iraqi court in January ruled that all Zain Iraq's revenue from its subscriber base transferred to the company as a result of the Iraqna acquisition should be placed under a legal guardian and in an Iraqi bank until the case is resolved, the statement said, adding the Kuwaiti company unsuccessfully appealed this decision.
Iraqna had about 3 million subscribers at the time of Zain's acquisition and the statement did not explain whether the money to be placed under the legal guardian's jurisdiction would be back-dated to 2007 or how such a sum could be calculated.
Zain Iraq had 15.9 million customers as of 2013-end, generating an annual profit of $360.9 million. Orascom and Kurdistan-based Korek agreed to set up a $2.2 billion joint venture after Korek, which later became a unit of France's Orange, acquired a $1.25 billion, 15-year national telecom license.
The Egyptian firm would have owned 70 percent of the venture and Korek 30 percent, allowing the latter to use Orascom unit Iraqna's infrastructure. The partnership was not formalized and Korek entered talks to buy Iraqna outright, taking over the unit's assets until 2007-end.
Updated 22 Apr 2014 | Soruce: Arabian Business | By S.Seal
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