Telecoms Progress Report

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The number of Iranian cellphone subscribers grew by 22.6 percent to reach over 35 million in the first three months of 2008, which helped to increase mobile penetration to 49.4 percent.

According to ISNA, much of the growth can be attributed to the continued expansion of MTN IrancellMTN Irancell, which is owned by South Africa's MTN GroupMTN Group.

MTN IrancellMTN Irancell ended 2007 with an even larger mobile customer base than predicted namely 6.006 million.

During this period, MTN IrancellMTN Irancell's customer base expanded by over 50 percent to reach 9.025 million in April. This allowed it to raise market share to almost 28 percent, up from 21 percent in December 2007 and 6.4 percent in March 2007.

Due to the stronger than expected subscriber growth in the period, the previous mobile forecast has been revised. It is predicted that the Iranian telecoms sector will grow by 60 percent by March 2009, enabling penetration to rise to over 64 percent by the end of the year.

New Mobile License
In May 2008, Russia's MegaFon had declared its intention to bid for Iran's fourth national mobile license when it becomes available.

The Iranian government is expected to offer the new mobile license later in 2008, with the new licensee competing with established operators Telecommunications Company of Iran (TCI), MTN IrancellMTN Irancell and Taliya.

MegaFon has said that it is prepared to invest around $4.6 billion in the construction of a GSM network in Iran.

Iran's Ministry of Information and Communications Technology (ICT) has suggested that, once issued, the new mobile license will include access to the spectrum necessary to provide 3G services.

It has also said that 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 the fixed-line incumbent, TCI.

In September 2007, the Ministry of ICT had announced that 51 percent of TCI would be privatized before March 2008.

Privatization Delayed
As a forerunner to the sale of a controlling stake in TCI, a 5-percent stake in the operator was scheduled be floated on the Tehran Stock Exchange before the end of December 2007. The flotation 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, TCI Chairman Saber Feizi said that the various affiliated companies 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 TCI 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 Business Environment Rankings for the Middle East, although the country now sits in 10th rather than 11th place.

Iran's own score has fallen in the current update, and this is the result of the lower score received by its telecoms market.

The reduced score largely reflects the perceived impact of a number of recent moves by the government in favor of imposing stricter controls on the use of Internet and mobile data services.

In March 2007, TCI and its provincial affiliated companies received the government's permission to be privatized. TCI's Infrastructure Telecom Company will be detached from it and would continue its activities as a part of the ICT Ministry. Close to 33 companies in the telecom sector are expected to be privatized.

Compiled by Ghanbar Naderi

© Iran Daily 2008