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Same-Day Analysis

Iran to License Third Nationwide Cellular Operator

Published: 24 April 2006
The Information and Technology Ministry of Iran has begun the process of licensing a third nationwide GSM operator, according to Reuters.

Global Insight Perspective


Significance

Under its telecoms policy, the Iranian government is committed to increasing mobile-market competition against the incumbent MCI and second national GSM operator Irancell.

Implications

There are also three localised GSM operators in the cities of Tehran (the capital), Esfahan and on the island of Kish, which between them have several thousand subscribers.

Outlook

The government is planning for the third operator to launch services by November 2007, according to Reuters; no further details of the tender or timeframes regarding the licensing process have yet been released.

Currently, the sole operational national GSM operator in Iran is MCI (the mobile arm of state-owned Telecommunications Company of Iran - TCI). It launched services in June 1994 and had around four million subscribers at the beginning of 2005. After some 18 months of delay, the second national GSM licence was granted to Irancell in August 2005 (see Iran: 23 August 2005: Irancell Receives its Licence in Iran). South African operator MTN acquired a 49% stake in Irancell, ousting Turkey's Turkcell from the venture (see Iran: 20 October 2005: MTN Notifies Johannesburg Bourse of Award of 49% of Irancell). Under the terms of its operating licence, Irancell is committed to launching services by 22 September 2006.   

There are also three localised GSM operators: 

Rafsanjan Industrial Complex (RIC). RIC announced the launch of its pre-paid GSM network in greater Tehran at the end of May last year (see Iran: 8 June 2005: RIC Announces Iranian GSM Network Launch in Millicom Team-Up). RIC partnered with Millicom International Cellular (MIC) in 2004 on a build-operate-transfer (BOT) agreement, under which Millicom will manage the network and has an option to acquire a 47% stake in any operator that comes to fully own the network.

Mobile Telecommunications Company of Esfahan (MTCE). MTCE has been operational in the city of Esfahan since 1996, and is managed by TM-owned mobile operator Celcom.

Telecommunications Kish Company (TKC). TKC launched a GSM network on the island of Kish in 1995. It is run under a 15-year BOT contract, awarded in 2000. The owners of former Lebanese mobile operator LibanCell are partners in the venture.
  
Outlook and Implications 

The development will significantly increase competition in the Iranian mobile sector, with the prospect of a third national operator increasing pressure on the roll-out programmes of both MCI and Irancell. Under the government’s original plans, a third licence was due to be offered to the private sector two years into the duopoly period. The second national GSM operator, originally led by Turkcell, was provisionally licensed in February 2004, so the third national operator was therefore due to be operational before end- 2006. However, because licensing of the second operator was put back by some 18 months, the government now expects that the third operator will be licensed and ready to launch services in November 2007. 

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