France Telecom’s Orange has offered $1.6bn to Kurdish mobile operator Korek for a 51 per cent controlling stake in the company, according to sources close to the deal.

Korek was approached after negotiations with Abu Dhabi’s Etisalat ended earlier this year. The operator was keen to maintain a majority stake in the firm with control over its Kurdish operations when negotiating with Etisalat. The negotiations lasted more than two years, but ended when Etisalat decided to acquire Kuwait’s Zain for $12bn earlier in 2010.

As yet, it is unclear whether Korek is making the same demands with Orange.

“Korek cannot afford to make such a demand, they will lose out if they do not agree to the offer,” says a senior ministry source.

The company is the smallest of the three national mobile operators with around three million subscribers. Asiacell, which is majority owned by Qatar Telecom, has 8 million subscribers and Zain Iraq has 12 million subscribers. Korek’s intended expansion and growth has been slow in comparison.

It has invested $900m in its infrastructure and network expansion. The operator recently signed a deal with Nokia Siemens Networks to build 300 new sites. Korek launched its commercial services in Baghdad earlier this month.

If the deal goes ahead, then France Telecom will withdraw its bid for Iraq’s fourth mobile licence. The company is keen to expand its presence in the region. It recently acquired a 40 per cent stake in Morocco’s Meditel for $856m. It has also placed a bid for Syria’s third mobile licence, due to be auctioned off in April 2011.

Iraq’s mobile sector is one of the most lucrative emerging markets in the region. The sector is set to become more competitive with the introduction of a part state-owned fourth telecoms provider. It will be the country’s first third-generation operator. The Ministry of Communications is due to choose its partner early next year.