Zain takes on MTN in Iran

Middle East/Africa mobile operator Zain is likely to gain Iran’s third mobile license, as it continues its expansion across the region, in competition with MTN, France Telecom and Orascom

Kuwaiti-based Zain seems to have won the franchise after a consortium comprising Etisalat and local operator Taameen Telecom was reportedly stripped of the license. Etisalat/Taameen won in January but comments from Iran’s Communications Regulatory Authority today suggest that its winning bid has been scrapped because the consortium has failed to meet its obligations. “The Taameen Etisalat consortium has gone out of the tendering process because it has neither given the necessary guarantees nor paid the license fee in time,” said Iran’s Telecommunications Minister Mohammad Soleymani.

Iran is a high growth mobile market. According to Wireless Intelligence data, it was the second fastest growing market in the Middle Eastern region (after Afghanistan) by the end of 2008, and is already the second largest market in the region (after Turkey) even though mobile penetration is still only 65%.

The two existing cellcos are state-owned Telecommunication Company of Iran , and MTN Irancell, a joint venture between South Africa’s MTN – Zain’s arch-rival – and the Iran Electronic Development Company.

MTN and Zain may be head-to-head in many markets but they are taking different approaches to expansion. MTN Group recorded 98.2m customers as of March 31, an 8% increase on the fourth quarter of 2008. The company has seen strong subscriber growth in almost all its territories, but currency volatility has sometimes hit ARPU.

The group now gets 26% of its subscriber base from south and east Africa, including its homeland of South Africa itself; 45% from west and central Africa; and 29% from the Middle East and north Africa. Iran, Uganda, Nigeria, Ghana, Cameroon and Cote d’Ivoire were particularly strong.

MTN is also rumored to be considering an investment in Zimbabwe, probably the 60% stake in Telecel in that country, currently owned by Egypt’s Orascom. The company said it had “taken risks” on far poorer countries and was confident the Zimbabwean economy was starting to rebuild.

Zain recently reported a 3.3% rise in first quarter profits to KWD75.7m ($260.5m), and a 25% leap in revenues to KWD567.2m ($1.96bn). Customer numbers were up 41% year-on-year to 64.7m.

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