Home > General > Iranian Telecommunications Report Q1 ’09

Iranian Telecommunications Report Q1 ’09

In the first three months of 2009, the number of Iranian cellular subscribers grew by an estimated 22.6 percent to reach 35.049 million; which helped to increase mobile penetration to 49.4 percent.

According to the Business Monitor International (BMI), much of the growth can be attributed to the continued expansion of MTN Irancell, which is owned by South Africa’s MTN Group.
MTN Irancell ended 2007-08 with an even larger mobile customer base than Iranian officials had predicted (6.006 million). Furthermore, in Q1 2009, MTN Irancell’s customer base expanded by over 50 percent to reach 9.025 million at the end of March. This allowed MTN Irancell to raise its market share to almost 28 percent, up from 21 percent in December 2007 and 6.4 percent in March 2008. There is a lot of investment interest in IranÕs mobile phone market.

Due to the stronger than expected subscriber growth, the sector will grow by 60 percent in 2009, enabling penetration to rise to over 64 percent by the end of the year. Meanwhile, it was reported in May 2008 that Russian cellco MegaFon had declared its intention to bid for Iran’s fourth national mobile licence when it becomes available. However, this week it rejected the report.

Iran’s Ministry of ICT has suggested that, once issued, Iran’s new mobile licence will include access to the spectrum necessary to provide 3G services. The ministry has also said foreign operators will only be able to have a 49 percent stake in the new mobile operation and that Iranian companies will be able to participate in the tender in the form of a consortium.

There has been no real progress with plans to privatize Iranian fixed-line incumbent, TCI. In September 2007, the Ministry of ICT announced that 51 percent of TCI would be privatized before the end of the Iranian calendar year on 20 March 2008. As a forerunner to the sale of a controlling stake in TCI, a 5 percent stake in the operator was to float on the Tehran Stock Exchange before the end of December 2007. The floatation of this minority stake did not take place as planned, and in January 2008 it was reported that TCI would first have to be established as a fully-licensed telecoms service provider.

In April 2008, Iran Telecom Chairman Saber Feizi reported that the various companies which constitute Iran Telecom were interconnected in such a way as to make it impossible to separate them when the company is eventually offered for sale on the Stock Exchange. Feizi therefore stressed that Iran Telecom would be sold along with all its subsidiaries, including mobile business unit Mobile Communications Company of Iran (MCI).

Iran continues to sit at the bottom of the BMI Business Environment Rankings for the Middle East, although the country now sits in tenth rather than eleventh place, due to inclusion of Iraq in the latest set of figures.

Iran’s own score has fallen in the current update, and this is the result of the lower score which the country receives in the telecoms market category. The reduced score in the telecoms market category largely reflects the perceived impact of a number of recent moves by the Iranian authorities in favor of imposing stricter controls on the use of internet and mobile data services.

In addition to the increased competition, the launch of commercial operations could stimulate growth in Iran’s mobile data services market. At the end of January 2009, Etisalat stated that it planned to offer HSDPA-based services from the outset of its commercial launch in H2 2009. Etisalat, however, failed to secure the right to be Iran’s exclusive 3G operator for two years. Iran’s government has still to unveil a schedule for issuing 3G licences to the country’s other wireless operators.

The two national operators, Mobile Company of Iran (MCI) and MTN Irancell both offer GPRS-based data services. Meanwhile, Taliya, which is gradually increasing the reach of its network, already offers WAP-based data services and, in January 2009, announced plans to begin testing GPRS.

Unsurprisingly, there is a lot of investment interest in Iran’s mobile market. The biggest upcoming opportunities to invest in the market will be the auctioning of a new national mobile licence, which will possibly include Iran’s first 3G concession, and the selling of a stake in the state-owned incumbent fixed-line operator TCI, which also owns MCI and the leading internet services provider DCI.

Both of these sales were originally supposed to take place during 2008. Numerous delays have taken place, and no official date has been given for either. Both, however, are expected to take place this year.

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