Reuters reports that Iraq has fined Kuwait-based telecoms provider Zain $262 million for putting 5 million Sim cards in the local market without permission, contravening its licence. The company has three months to pay.
Zain's Iraq unit will appeal the fine, its chief executive, Emad Makiya, said.
"They have no right to issue such a penalty," Makiya told Reuters.
The Iraqi government has criticised Zain and other providers for patchy coverage. Zain has blamed reception problems on military jamming as U.S. and Iraqi security forces try to prevent militants from detonating bombs.
Zain, the Gulf region's third-biggest telecoms firm by value, competes with Korek, based in Iraqi Kurdistan, and AsiaCell, part-owned by Qatar Telecommunications.
Zain, which has around 53 percent market share, won a 15-year licence for $1.25 billion in 2007. It was fined $18.6 million by Iraq for poor cellphone service in 2009.
It had more than 12 million subscribers at the end of 2010 and expects to add up to 18,000 a month after launching services in the Kurdish region, Makiya told Reuters.
Iraq had no mobile phone market under the rule of Saddam Hussein but market growth has been rapid since the 2003 U.S.-led invasion that ousted him.
Zain Iraq said it was surprised by the penalty and was preparing a formal legal challenge.
Makiya said the license fee Zain paid Iraq allowed it to build a network, use the spectrum and issue a range of SIM card numbers. "This is the price. We've already paid the price," he said.