Libya's LAP Green Networks is suing the Zambian government for $480 million over the seizure of its 75 percent stake in the country's only fixed line telephone operator, the company said on Monday.

“We are compelled to take this course of action as dictated by the procedure set out in Zambian law,” LAP Green said in a statement.

“The petition filed today outlines LAP Green's right to financial compensation for the value of the asset at the time of seizure should the shareholding not be restored to it, which is calculated to be $480 million,” it said.

Under its previous government, Zambia sold a majority stake in Zamtel to the Libyan operator for $257 million.

An inquiry in November ruled that 2010 transaction illegal, a move that has rattled investor confidence in the southern African country. It was cited by rating agency Fitch as one of the reasons behind its decision to downgrade Zambia's outlook to negative from stable.

Zambia's new government in January dissolved the board of Libya-controlled Zamtel and appointed a new chief executive. - Reuters