Trading looks set to become more difficult in Iran for SA-based emerging markets cellular network operator MTN. The telecommunications group is about to face a spirited new competitor in the Islamic republic in the form of Etisalat.
United Arab Emirates-based Etisalat, which claims it has 74m customers, mainly in the Middle East, plans to invest billions of dollars in the next few years building a network to rival Irancell. MTN holds a 49% stake of Irancell (the remaining 51% is held by the Iran Electronic Development Company).
MTN Irancell had signed up 11,6m customers by mid-2008, in a country with an estimated population of 73m. Its June 2008 market share was 32% — up from 23% in December 2007 — with the rest controlled by state-owned Iran Telecom.
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It is worrying news for MTN investors that the Etisalat consortium is the only one in Iran licensed to provide high-speed Internet access using 3G. This exclusivity lasts until 2011. MTN and Iran Telecom have built mobile networks using the older and more expensive 2G technology. 3G networks not only offer high-speed Internet access, they make better use of radio frequency spectrum and can carry voice calls at a lower cost to the operator, giving it greater pricing flexibility.