Iran to Sell 25% Stake in National Operator

The Iranian government is planning to sell off up to a quarter of the state owned telecoms operator, Telecommunications Company of Iran (TCI). The government will launch a standard floatation on the Tehran stock exchange for five percent next week and then seek an investor to take a twenty percent block in the company at a later date.

"It will sell a 20 per cent block of the company in an auction," Ramin Rabii, managing director of Tehran-based fund manager Turquoise Partners told the Middle East Business Intelligence. "It is really hard to say how long this will take the Iranian Privatisation Organisation. It will be at least five or six months."

The company has been valued at around US$20 billion - and the government is seeking to raise at least US$425 million for the 5 percent stake being sold next week. With a second GSM operator fast growing its customer base and a possible 3rd operator on the horizon, it is probable that the government is seeking to dilute its holding in the company before competition reduces the valuation.

Iran has two main networks, the incumbent state operator, TCI - which the Mobile World estimates ended last September with some 21.3 million customers and 74.7% of the market. Irancell ended the month with an impressive 6.01 million customers. There are also a few small regional operators with negligible subscriber bases.

TCI is also the country's dominant land line operator. 

There was controversy over the allocation of the country's second GSM license. Turkcell, though its 51% owned subsidiary - Irancell, originally signed an operator license with the Iranian government in 2004, but it fell foul of a clamp down on foreign investments by the conservative Parliament. The Parliament accused the company of having links with Israel - and after a year of battles, the license was reissued - this time to South Africa's MTN Group. MTN took a minority 49% stake, while 51% was allocated to the Iran Electronic Development Company (IEDC).

Both Vimplecom and Megafon, two of Russia's largest operators have recently said that they have been invited to bid for a third GSM license in the country.

On the web: Middle East Business Intelligence - Mobile World

Posted to the site on 6th August 2008