MTN goes live in Iran

Johannesburg, 24 Oct 2006

Mobile network operator MTN has launched commercially in Iran, with its services going live at the weekend - contrary to earlier media reports, which stated the service would only go up at the end of the year.

In a statement issued yesterday, the company says MTN Irancell would provide coverage in Tehran, Mashhad and Tabriz. Coverage in Sari and Karaj is expected to be available within the next two weeks. The network is scheduled to expand to more than 70 cities by March 2007.

Phuthuma Nhleko, president and CEO, says MTN is "pleased to be able to provide a quality cellular network service to the people of Iran. Economic fundamentals support Iranian mobile market potential and we are confident we will reach our subscriber target by the end of this financial year."

The operator is currently connecting only postpaid customers and has released 350 000 SIM cards into the market. It expects to have a million subscribers by the end of the year.

Its commercial launch follows the successful purchase of a 49% interest in Irancell.

MTN says the service is available as soon as a SIM card is purchased at a connection fee of about $160, or R1 228.80 at an exchange rate of R7.68.

Analysts had previously indicated that, while MTN may have overrated the market, there is pent-up demand in the country. However, one analyst - who spoke on condition of anonymity - said in August that starter packs in Iran were $160, which MTN has not undercut.

Another analyst - who also asked not to be named at the time - suggested the investment would prove to be worthwhile in the longer-term. He was unconcerned about delays in getting off the ground, saying this is typical in the industry.

He noted that while riskier than other countries, the 28% revenue-sharing agreement means government shares some of the risk. It was also the reason behind the licence costing 300 million euros, instead of the usual $2 billion.

In addition, he says a market characterised by bad service would welcome a new entrant and competition.

MTN has made its offerings available through a network of over 200 stores in Tehran, Tabriz and Mashhad. This distribution chain is expected to increase to 7 000 outlets in most of Iran`s major cities by the end of the year.

The launch was preceded by a pilot phase, which the company says ran smoothly and saw its systems undergoing testing. The company was awarded the second Iranian cellular licence in November 2005 and has operations in another 21 countries in Africa and the Middle East.

MTN, which previously stated it aimed to establish Iranian operations in mid- to end-September, made its first test calls on 24 August.