IPhone 4 always searching for Network even if there is NO SIM inserted

I am facing trouble in activating my iPhone after restore. I am trying all possible reason to find out few things:
1. After restore my iPhone 4 is asking to connect iTune and when I am connecting it fails and says "There is some prblem with your iPhone". I think I can activate the phone over WIFI network but it never reach till that page. It goes to Language>Country>Connect to iTune and then it fails.
2. Even if I remove my SIM from iPhone, it is still searching the Network and doesn't understand and notify that "NO SIM".
My iPhone fell once and it was all fine but it asked me to reset the phone and I did...since that time I nevet been able to activate my iPhone but rest of everything is just fine and there is no physical hardware damage to the phone.
Also, I am based at Saudi Arabia and we dond't have Apple Store / Genius Bars to visit.

I do have an avtive SIM and it is Post Paid Connection which is activated and no problem with SIM.
I have to try only activating only by connecting to iTune as my iPhone asked so and it doesn't leave any option for me. Once I do that it is showing me the error attached to this post.

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