Executive summary
The telecoms market in Iran is, as one might expect, one of the least liberalised in the region. Serious competition exists only in the mobile market following the launch of services by a second national mobile operator backed by international mobile operator MTN. Entering 2011 the competing operator held an estimated 40% market share.
Liberalisation initiatives in the fixed-line market include privatisation of incumbent Telecommunication Company of Iran (TCI). However the lack of effective competition in the fixed line market coupled with the increasing significance of the mobile market means future growth of Iran’s telecoms market in the medium term looks likely to focus on the mobile space.
Entering 2011 Iran’s mobile market will receive another boost of competition following the launch of services by Tamin Telecom. The new market entrant was awarded its licence following a difficult tender process, echoing a similar experience for the tender of the second licence and highlighting the political and regulatory challenges of doing business in Iran.
With mobile penetration reaching levels indicative of saturation, future revenue growth opportunities will largely centre on raising ARPU levels. Initiatives include encouraging prepaid users to migrate to post paid services and promoting take up of mobile data services. Tamin Telecom holds a distinct advantage given its exclusive window for offering 3G services.
Although fixed broadband services are available, take up has been low despite a number of ISPs offering services and a number of competing WiMAX operators deploying alternative access networks. Offered download speeds are low relative to international standards. Despite this the number of Internet users is relatively high, indicating pent up demand for subscriptions. It is this current state of the broadband market which offers a significant opportunity for mobile operators to eventually deploy and launch competing mobile broadband services.
Understanding the importance of the Internet and socio-economic advantages it can afford, Iran’s government has set a number of targets related to online services for its Fifth economic development plan for the period 2010 – 2015, which asks all government bodies to prepare for the launch of e-government services. As is most often the case, the business sector is already online; credit cards can be used for online purchases and Iran’s first online supermarket commenced operations in 2010. The government is eager to facilitate e-commerce development through its Irancode initiative, a products and services codification system designed to facilitate tax collection.
