Etisalat wins Iran mobile licence

A consortium including Etisalat has won an international tender for Iran's third mobile telephone licence.

TEHRAN // A consortium including Emirates Telecommunications (Etisalat) has won an international tender for Iran's third mobile telephone licence, the ISNA news agency reported yesterday. The licence includes exclusive rights to use the new high-speed 3G standard; it is likely that Etisalat will invest at least US$1bn (Dh3.67bn) in developing a national network. The new investment will mean Etisalat has a presence to the four largest economies in the Middle East- Saudi Arabia, Iran, the Emirates and Egypt.

Etisalat, which bid for the licence in partnership with an Iranian government-controlled partner, said last month it had made the highest financial offer for the licence. The company was unavailable to comment on the ISNA report yesterday. It has been in discussions with the Iranian government since earlier this year regarding entering the country, where less than 60 per cent of its 73 million people own a mobile phone.

Previous statements by Iranian officials have suggested the licence would be valued about US$300 million to $800m, although market conditions are likely to have pushed the price to the low end of the scale. The Iranian mobile market is split between the state-owned Telecommunications Company of Iran and Irancell, 49 per cent owned by the South African regional operator MTN. MTN operates in several high-growth emerging markets, including Nigeria and Sudan. But more than a quarter of its new customers in the past year have been in Iran, where its subscriber base has more than doubled to 13.1 million. While not as lucrative as Etisalat's home base, the Iranian mobile market is relatively high-spending, with MTN reporting a monthly average revenue per user of $9, double that of other emerging economies such as India and Nigeria, where Etisalat is also expanding.

The company has at least $3bn in cash to invest in international expansion and is looking to take advantage of the financial crisis by acquiring undervalued assets. Like other state-owned operators in the GCC, the company is keen to tap high-growth emerging economies as domestic markets mature and become increasingly competitive. In the past 12 months it has launched a network in Nigeria and acquired a stake in one of Indonesia's largest operators. It also acquired a minority stake in Swan Telecom, one of India's newly licensed national networks. An agreement to acquire the Iraqi operator Korek, based in the country's Kurdish region, is expected in the coming months.

A number of deals in recent years have underscored the opportunities - and risks - for UAE companies in Iran. An aviation agreement signed between the two countries earlier in the month means local carriers will make hundreds of new flights each week to major Iranian cities. By 2012, Etihad will operate 43 weekly flights to six major cities. Crescent Petroleum, based in Sharjah, invested an estimated $1bn building a pipeline connectBut the facility sits unused as the Iranian government attempts to agree on a higher price for the gas, which has increased in value substantially since the contracts were negotiated in 2005.

The close ties between the two countries mean that the UAE is already Iran's largest trading partner, despite a long-standing territorial dispute over three islands in the Strait of Hormuz. * with Reuters @Email:[e-mail]