Iran’s telecommunications market presents some of the greatest potential among the Middle East and Africa. With a population of 74.2 million in 2009, Iran has a domestic market similar in size to Egypt, but Iran’s GDP per capita of US$4,557 is almost twice that of Egypt. Iran presents more growth opportunities for telecommunications companies if the government increases competition by committing to market liberalisation.
- Although Iran is ranked 3rd of 67 countries in the Middle East and Africa with 348.2 telephone lines per thousand people in 2009, the Iranian mobile phone market is underdeveloped, with 68.9% of households owning a mobile phone in 2009, compared to 95.1% and 98.0% in Saudi Arabia and the UAE respectively;
- Tight government control over licensing of mobile phone operators has prevented significant competition. Currently there are two operators in Iran: the state-owned Iran Telecommunication Company (TCI) and Irancell, which is 49% owned by South Africa’s MTN group. In January 2009, UAE-based Etisalat was awarded a license to be the third national operator, but this was revoked by the Iranian government in May 2009. Kuwait’s Zain Group was then given the license before it was rejected in July 2009. These delays highlight the difficulties in penetrating the Iranian market;
- Mobile phone penetration is set to increase to 87.5% of households by 2014, which will increase the number of subscribers to mobile phone networks.
Source: Euromonitor International from national statistics.
- Mobile phone subscriptions in Iran have grown from 5.1 million in 2004 to 55.8 million in 2009. By 2014 Iran is forecast to have 84.3 million subscriptions compared to 56.0 million for Saudi Arabia. Better access to mobile telecommunications will help consumers and improve the overall business environment;
- Much of this growth will come from Iran’s relatively young population, which had a mean age of 28.5 years in 2009. Iran’s youth are technology-savvy and are expected to buy into 3G and 3.5G mobile phone services once available;
- These premium services will help to boost consumer expenditure on telecommunications services, which is forecast to rise from US$4.3 billion in 2009 to US$6.4 billion (constant terms) in 2015;
|US$ billion at 2009 fixed exchange rates, constant 2009 prices|
Source: Euromonitor International from national statistical offices/OECD/Eurostat/Euromonitor International.
- Iranian consumers are forecast to spend US$7.1 per capita on telecommunications equipment in 2015 (in constant terms), compared to US$10.2 in Egypt and US$18.4 in Saudi Arabia. This suggests room for growth if government controls were relaxed and greater competition took place;
- Growth in the telecommunications market has been hampered by a lack of foreign investment caused by US-led sanctions. Sanctions have tightened since 2007 over Iran’s nuclear program, and the Obama administration is pushing for a new UN Security Council sanctions resolution that would further inhibit Iran’s ability to attract investment.
- Iran’s large population provides strong demand for telecommunications services and technology. Real annual growth in Iranian disposable income is forecast to average 3.1% from 2009-2015, helping to increase expenditure but failing to match the 5.9% and 7.4% forecast for Saudi Arabia and Egypt respectively;
- In April 2010, the Iranian government granted the third mobile license to state-owned Tamin Telecom – who was a partner in the Etisalat bid – in conjunction with an unnamed consortium of partners. In light of the government’s previous revoking of licenses there is uncertainty over whether they will allow a third national mobile service to operate. However, if this is accomplished, the competition will help to develop the telecommunications market;
- There is a voracious appetite for mobile technology and services, partially because of government control of other media. During the protests over the disputed election in June 2009, mobile telephones were extensively used to capture and transmit information through photos, videos and Twitter messages.