Etisalat to offer 3G services in Iran

Etisalat will use a two-year period of exclusivity in offering advanced 3G mobile services to capture new customers in Iran.

Etisalat will use a two-year period of exclusivity in offering advanced 3G mobile services to capture new, high-spending customers in Iran, where it has won the licence to become the country's third mobile operator. As in Egypt, where it launched in mid-2007 as the country's first 3G operator, Etisalat will enter Iran offering a new generation of high-speed mobile services. But while its Egyptian competitors launched their own 3G services within months, Etisalat's US$400 million (Dh1.46 billion) licence guarantees two years of exclusive service. "Iran will be a unique launch for us. We are the third entrant, but at the same time we will be in many ways the first," said Jamal Jarwan, the chief executive of Etisalat's international unit. "We will be the first and only to offer 3G services, which are very attractive to a young and growing population. Mobile broadband will be a killer application there." The new network could be launched within six months, Mr Jarwan said. Third generation, or 3G, mobile networks can transmit higher volumes of data at a faster speed. While the UAE is covered by a national 3G network, Iran, like many countries, still uses the older second-generation (2G) standard. The later technology enables the use of new services such as broadband internet, streaming video and music downloads over mobile networks. It also lets mobile base stations support a larger number of users, allowing networks to add more customers, particularly in densely populated urban areas. Etisalat is entering Iran in a joint venture with the government-owned Taameen Telecom, a unit of the Iranian Social Security Organisation, the national pension fund. It owns 49 per cent of the venture, which will pay 23.6 per cent of its annual revenues as a royalty to the Iranian government. The company was attracted to Iran by its relatively wealthy population, proximity to the UAE and the long-running commercial and social ties between the two nations. A high number of Iranian mobile users roam on Etisalat's network when visiting the UAE, Mr Jarwan said, which represents significant opportunities for synergies between the two networks. The company will invest at least $1bn rolling out a national 3G network in Iran. Combined with the licence fee, the venture will represent one of the UAE's largest investments into its much larger neighbour. Etisalat's growth strategy will continue to incorporate acquisitions and new licences this year, even as the company builds start-up networks in major emerging markets such as India, Iran, Nigeria and Iraq, where it is expected to acquire the operator, Korek, within weeks. The company's Nigerian network has added hundreds of thousands of new customers since its launch late last year, which was delayed by almost six months due to technical challenges. Mr Jarwan said that speeding up the expansion of the network would be the priority for Steven Evans, Etisalat Nigeria's newly appointed chief executive and a 20-year veteran of the global mobile industry. The company will launch its network in India this year in a move that will double the number of potential customers the company is reaching. It would launch simultaneously in all regions of the country, Mr Jarwan said, rather than the staggered roll-out being attempted by other operators. While Etisalat remains on the lookout for new opportunities, it is beginning to narrow its focus. "There are some opportunities that don't make sense to us, but might make a lot of sense for another company," Mr Jarwan said in response to a question regarding the sale of Bahrain's third mobile licence, for which Etisalat is not bidding. On Monday, it was announced that only one company, Saudi Telecom, had applied for the licence. Etisalat remains interested in Lebanon, where one-year contracts to manage the two state-owned networks were awarded on Monday. The long-awaited privatisation of the Lebanese mobile industry has been postponed due to political instability in the country and the global economic crisis. Egypt's Orascom Telecom and Kuwait's Zain were awarded the contracts to manage Lebanon's two networks and both companies said they hoped to make longer-term investments there when the system is privatised. "The whole telecom market is very dynamic right now, and we will not slow down, we have a growth strategy," Mr Jarwan said. "Another opportunity might come at any moment." [e-mail]