Iraqi mobile operator AsiaCell has threatened to sue Kuwait-based telecoms provider Zain, after it allegedly distributed millions of unlicensed SIM cards, hitting AsiaCell's market share.
It has also disconnected several million Zain Iraq subscribers whose lines have not been fully licensed by the Communications and Media Commission (CMC).
AsiaCell, in which Qatar Telecommunications Co (Qtel) has a 30 percent stake, states that the CMC requested that all telecom companies immediately discontinue their interconnection with unlicensed lines under threat of litigation. Based on these directives, Asiacell has disconnected these lines to avoid legal ramifications.
Asiacell says it retains its legal right to demand compensation from Zain for distributing millions of unlicensed SIM cards, thus significantly damaging Asiacell’s market position by hindering its ability to supply the Iraqi market with the necessary amount of SIM cards and forcing Asiacell to reuse old lines for some of its offers.
Moreover, it claims Zain’s actions have resulted in limiting the number of lines available to Asiacell, which has stunted the company’s ability to launch new offers that benefit Iraqis in various provinces.
In February, the CMC fined Zain $262 million for putting 5 million SIM cards into the local market without permission, in breach of its licence. Zain said it would appeal against the fine.
Reuters reports that on Tuesday, Zain said in a statement that it was "seeking discussions with AsiaCell" on the issue. "Based on signed agreements and recognized international practices, we remain very confident of our legal position, and we hope that this matter will soon be resolved amicably, so that customers of both mobile operators are properly reconnected."
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 market value, competes with Korek, based in Iraqi Kurdistan, and AsiaCell.
Zain, which has around 53 percent market share in Iraq, 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 it began service in the semi-autonomous northern Kurdish region.
In June 2010, AsiaCell had 8 million subscribers or almost 38 percent of a market with 70 percent penetration.
(Sources: Reuters, AsiaCell)