Will MTN take on Middle East market?

Johannesburg, 22 Jun 2005

The Middle East market is a lucrative one for cellular operators, so it is no surprise that MTN is still seeking entry into Iran, says a telecoms analyst.

MTN last year lost out to Turkish operator Turkcell in its bid to be awarded Iran`s second cellular licence, but recent reports have suggested the local operator has been invited back into talks with the Iranian government.

This follows the news that Turkcell has objected to the reduced shareholding it has been allowed, after the Iranian government said it would only be allowed a 49% shareholding, rather than the 70% it was originally awarded.

Reuters also reported yesterday that shares in MTN jumped more than 4% after the Iranian government stated it was in talks with the group to replace Turkcell.

While no comment has been forthcoming from the South African company, Andre Wills, a telecoms analyst at Africa Analysis, says the Middle East is obviously a lucrative market for cell operators, since the average revenue per user (ARPU) in this region remains steady.

"ARPU in the Middle East environment is still very healthy, whereas in the African market it appears to be dropping off slightly," he says.

"MTN obviously had an inkling that something might change in the Iranian situation, since it recently set up an office in the capital, Teheran, even though it had lost out on its bid for the second licence."

Iran has around five million cellphone users in a country with a population of approximately 70 million, many of whom are affluent, meaning the country could be a lucrative market in which to work.

"While the Middle East is undoubtedly a rich market segment and one that would appeal to a strong operator like MTN, one has to ask whether the company will be able to fit into the culture of the market," says Wills.

"One has to remember that MTN`s experience is in the African markets, which are a far cry culturally from those of the Middle East, whereas an operator like Turkcell has some experience in similar regions."