Kuwait-headquartered operator Zain revealed on Sunday that an unnamed party is suing it for $4.5 billion (€3.2 billion) in loss of earnings over the 2007 acquisition of Iraq operator Iraqna, but said it is confident it will see off the legal challenge.
The mystery company claims that Zain's takeover prevented it from acquiring Iraqna, which was owned by Egyptian operator Orascom, Reuters reported.
In a stock exchange statement, Zain said the claimant has failed to produce fresh evidence to support its claim of being shut-out of the transaction. The company added that it decided to reveal the lawsuit--which was filed in August 2013--in response to legal advice, Reuters added.
The lawsuit relates to the 2007 acquisition of Iraqna by Zain's local business MTC Atheer for $1.2 billion, which created Iraq's largest mobile operator by subscriber numbers.
Zain quickly rebranded the business Zain Iraq, and has more than doubled subscriber numbers from 7 million at end-2007--comprising around 3 million Iraqna users, and 4 million MTC Atheer--to 15.8 million at end-2013.
Despite Zain's confidence over the lawsuit, the company in January lost an appeal against an Iraqi court decision requiring it to put Zain Iraq revenues under legal protection and deposit the cash in a domestic bank until the legal action is concluded.
Iraq is Zain's largest market, accounting for 34 per cent of its total subscriber base at end-2013, and contributing 41 per cent of the company's revenues.
The unit's net income fell from 369 million dinars in 2012 to 361 million in 2013, as earnings before interest, depreciation, and amortisation (EBITDA) fell from 766 million dinars to 714 million in 2013. EBITDA margin fell from 44.2 per cent in 2012, to 41 per cent in 2013.
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