As bidders prepare to submit their pre-qualification documents for Iran's second GSM license on December 15, 2003, the country's true GSM potential is revealed.
Expected duopoly competition and full competition after 2006, are projected to increase Iran's GSM penetration to over 23 percent by 2007, up from 4.3 percent in 2003, states the Arab Advisors Group in a newly released report. Total GSM revenues generated between 2004 and 2007 are projected to exceed $ 8.6 billion. The potential presents massive opportunities for international and regional operators and vendors.
Iran's ongoing third five year economic plan has grand ambitions for the Iranian telecom sector that are about to be unleashed. The plan created an Independent Regulatory Body and calls for the removal of Government monopoly in telecommunication industries in addition to attracting international and regional investors in the sector.
“On the cellular front, Iran's current mobile subscriber base stands at approximately 2.9 million, with recent contracts awarded to expand the GSM capacity to 3.5 million,” Arab Advisors analyst, Yaman Al-Jundi wrote in the report. “Even with the expansion, the waiting period for subscribers to acquire an effective connection is one year, with an upfront payment of $525. The demand for mobile services far exceeds the current supply available.” He added.
The Iranian Ministry of Post, Telegraph and Telephone is undergoing a process of issuing a tender for a nationwide GSM license and aims at raising the GSM penetration rate to 30 percent by 2006. The Arab Advisors Group, however, projects the fixed line penetration to only reach 22 percent by end of 2007, and the mobile penetration to only reach 23 percent by end of 2007. This is because the new mobile entrants will have paid substantial amounts in upfront license fees.
The need to recoup the massive investments in network and license fees will hinder unreasonable price reductions. Still, the Arab Advisors Group expects the number of cellular subscribers to exceed that of mainlines in 2007 and the Total GSM revenues generated between 2004 and 2007 to exceed $8.6 billion.
This upcoming massive growth presents major opportunities for equipment vendors. Currently, Siemens, Ericsson and Nokia are well entrenched in the GSM infrastructure equipment landscape in Iran. Other vendors are surely keenly interested in securing a foothold in what promises to be the largest Middle Eastern GSM market west of the Suez Canal. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
