Etisalat plans to make one of the UAE's largest investments into Iran, confirming that it is the highest bidder on a third mobile licence.
Etisalat's Iran bid trumps competitors
Etisalat is set to make one of the UAE's largest investments in Iran, confirming that it is the highest bidder for the country's third mobile licence. Reports in the Iranian media say a consortium led by Etisalat in partnership with an Iranian government-controlled partner has won the tender, with a formal government announcement due next month. The company yesterday confirmed that the government had ranked its bid "first among others in terms of financial offer". Kamal Mohamedpour, Iran's deputy minister for information and communication technology, was quoted in the Iranian press yesterday as saying no official decision had been made, and that the tender committee would present its report to the ministry later this week. He warned that reports published prior to an official announcement should not be relied on. Officials at Etisalat declined to comment on the process, but a disclosure to the Abu Dhabi Securities Exchange confirmed the company was the highest bidder. 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. The new network will mean Etisalat has a presence to the four largest economies in the Middle East: Saudi Arabia, Iran, the UAE and Egypt. Previous statements by Iranian officials have suggested the licence would be valued in the range of US$300 million (Dh1.1 billion) to $800m, although current market conditions are likely to have pushed the price to the low end of the scale. The licence will include exclusive rights to use the new high-speed 3G standard; it is likely that Etisalat will invest at least $1bn in rolling out a national network. 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 - which flies three times a week to the Iranian capital - 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. At least 300,000 Iranians live and work in the UAE, with billions of dollars worth of Iranian assets and thousands of Iranian-run businesses based here. 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 is present in a number of 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 in the UAE, 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 new 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. firstname.lastname@example.org