Iraq hopes to auction a fourth mobile phone operator licence for around $2 billion by the end of the year and will spend $500 million on upgrading battered infrastructure, the communications minister has said.

Mohammed Allawi said Iraq aimed to boost fixed-line phone penetration and internet reach to 25 per cent within five years, according to our sister newspaper Gulf Daily News (GDN).

'What we have decided about the fourth licence is to divide it into three main shares,' Allawi said in his first interview with foreign media.

'Of the shares 40 per cent will go to the operator, 35 per cent to the public, and 25 per cent to the ministry.'

Iraq needs billions of dollars of foreign investment as it struggles to rebuild dilapidated infrastructure after decades of war and economic sanctions.

The mobile phone market, which did not exist in Iraq under Saddam Hussein, has boomed since the 2003 US-led invasion that toppled him, although its fixed-line network remains badly damaged.

Iraq held an auction in 2007 in which Kuwait's Zain, AsiaCell and Korek, which is based in the northern Kurdish region, bought 15-year licences for $1.25 billion each.

Allawi said he expected the fourth mobile phone licence to go for $2 billion at an auction. The licence would be approved and issued by Iraq's Communications and Media Commission.

He also said Iraq had allocated $500 million to spend on the telecoms industry this year, which included 37 per cent of last year's unspent budget allocation.

The minister said while network jamming by security forces was partly to blame for patchy mobile coverage, the operators' infrastructure had been unable to cope with growing demand.

Allawi said completing an extensive fibre optic infrastructure network to connect Iraq to the rest of the world would be one of his main aims for this year.