* Q1 profit 41.0 mln dinars vs 55.9 mln dinars a yr ago

* Q1 revenue 279 mln dinars vs 311 mln dinars a yr ago

DUBAI, May 12 (Reuters) - Zain ZAIN.KW , Kuwait's No.1 telecom operator by subscribers, reported a 26.7 percent fall in first-quarter profit on Tuesday, extending a sustained earnings slump as its Iraq business suffered from political instability and intense competition.

The former monopoly, which operates in eight countries in the Middle East and Africa, made a net profit of 41 million dinars in the three months to March 31, down from 55.9 million dinars in the year-earlier period.

SICO Bahrain forecast Zain would make a quarterly profit of 41.1 million dinars. ID:nL6N0X41Q1

"The continued political instability in Iraq and heightened levels of competition, severely impacted Zain Iraq's and consequently the Group's overall key financial metrics," Zain said in a statement. "We recognize the exceptional circumstances in one key market over the past nine months that has impacted us significantly."

The firm had posted falling profits in eight of the preceding 10 quarters as tougher domestic competition, service interruptions in war-torn Iraq and foreign exchange volatility weighed on the bottom line.

First-quarter revenue was 279 million dinars. This compares with 311 million dinars a year ago.

In Kuwait, Zain competes with Ooredoo Kuwait OORE.KW , a unit of Qatar's Ooredoo QTEL.QA , and Viva, an affiliate of Saudi Telecom Co 7010.SE (STC).

(Reporting by Hadeel Al Sayegh; Editing by Olzhas Auyezov) ((olzhas.auyezov@thomsonreuters.com; +971 56 225 4871; Reuters Messaging: olzhas.auyezov.thomsonreuters.com@reuters.net))

Keywords: ZAIN RESULTS