Asiacell holds the licence to operate a mobile phone network in the north of Iraq, one of three mobile phone licences issued in 2004 by the Communications & Media Commission (CMC).

Despite contributing about 25 per cent to Wataniya's total revenues in 2006 and 27 per cent to its net profits, Wataniya closed its Asiacell business at the beginning of the year, although it retained the assets on its balance sheet.

On 1 April, it reclassified its Asiacell assets as 'assets held for sale'. MEED understands that these assets have now been taken over by the company's Kurdish partners. 'Wataniya was pushed out by the Kurds,' said an industry source.

A condition of winning the three mobile licences offered by the CMC in 2003 and 2004, when the country was run by the US-led Coalition Provisional Authority, was that telecoms operators had to partner with Iraqi companies.

Wataniya won the licence for the north of the country and formed a partnership with a group of Kurdish investors.Egypt's Orascom Telecom won a licence for central Iraq and Kuwait's MTC won the third licence for the south of the country.

Although the three licences were to be extended nationwide in a year, the winning operators retained their regional partners.

MTC and Orascom have yet to extend their networks nationwide because the Kurdish Regional Government insists that they pay additional licence fees to operate in the autonomous Kurdish northern region.

The KRG does permit two independent Kurdish-owned mobile operators, Sanatel and Korek, to operate networks in the north, although they have no licence from the Iraqi central government to do so.