The fine was imposed on Jan 11 and Zain had three months to pay, Iraq’s Communications and Media Commission (CMC) said on its website on Tuesday.

Zain’s Iraq unit will appeal the fine, its chief executive, Emad Makiya, said.

“They have no right to issue such a penalty,” Makiya said.

Zain’s share price slumped to an 11-week low on Tuesday, finishing down 2.8 percent.

The Iraqi government has criticized Zain and other providers for patchy coverage. Zain has blamed reception problems on military jamming as US and Iraqi security forces try to prevent militants from detonating bombs.

Zain 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 it began services in the semi-autonomous northern Kurdish region, Makiya said.

Iraq had no mobile phone market under the rule of Saddam Hussein but market growth has been rapid since the 2003 US-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.