Telecom Italia eyeing Iranian market
Relations between Iran and Italy have been growing closer lately. Only last week, Italian Prime Minister Giuliano Amato and the Italian minister of industry were on an official visit to Tehran, following the interior minister’s visit in January.
Italy has long been Iran's leading western European trading partner, with commerce between the two estimated at around $2.5 billion. However it may well be that this recent Italian interest has to do with the crystallizing plans of the Iranian government to increase domestic and foreign private-sector investments, particularly in the local telecom market.
Foremost among the challenges facing the Iranian parliament toady is the liberalization of investment laws, which continue to obstruct foreign outlays in the country's non-oil industries. The current Iranian five-year economic development plan, stresses the need to moderate Iran’s dependency on oil revenues, in part by privatizing of the railways, and the tobacco, tea and sugar industries, as well as the post and telecommunications services.
According to Iranian President Mohammad Khatami, in order to achieve the six percent annual economic growth rate outlined in the five-year plan, an 8.5 percent annual investment rise in the private sector must be attained, matched by a five percent rise in the government sector.
To this aim, the Iranian government would probably follow the path of encouraging non-governmental investments in the telecom sector while maintaining government control over the fixed-line network. According to a report by Pyramid Research, it is likely that build-operate-transfer (BOT) schemes would therefore be used.
The Pyramid Reserach notes in the context that the Iranian PTT Ministry has already expressed interest in attracting foreign investments through the issuance of new tenders in the telecom sector, while the CEO of Telecom Italia SpA has stated that the company is examining Iranian opportunities, specifically in the mobile sector, Internet and satellite communications.
Telecom Italia, whose interest usually lies in the markets of Latin America and the Mediterranean basin, has recently been eyeing investments in Iran. The company's attention was shifted to Iran having considered the enormous growth potential of the 69-million strong market, who’s mobile penetration rates are still lowest in the region, as well as an Italian company’s own competitive edge upon entering this politically high risk market.
Due to the warm political relations and soaring trade between the two countries, Italian industries—particularly in the oil sector—have seen preferential treatment in receiving contracts in Iran. Pyramid Research foresees Telecom Italia capitalizing on this unique relationship in future tenders and investment opportunities in Iran.
The use of GSM mobile phones is still relatively low in Iran. However a number of foreign companies have already managed to put their foot in the door.
The Iranian government insists that mobile phone manufacturers maintain a local presence before being allowed to sell their brands. It was therefore that until recently, France's Sagem, which was early to establish an assembly plant in Iran, claimed the primary market share.
In April 2000, the Swedish Ericsson company announced that it has been awarded a contract by the Telecommunications Company of Iran (TCI) to supply equipment for the expansion of a nationwide GSM wireless network. Under the terms of the agreement, Ericsson will help TCI expand the digital mobile phone network to support one million subscribers, up from its current capacity of 600,000.
In July, Sony was reportedly negotiating with Iranian state authorities the introduction of its GSM mobile phones on the Iranian market and most recently, in August, it was announced that Nokia had signed an agreement with TCI to expand its GSM mobile network in Tehran. — (Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)