Iran - growth of mobile

Irancell Maintains its Extraordinary Growth

Iran had the fifth fastest growing mobile market in the MEA region in 2007, with the number of subscribers almost doubling year on year from 14.33m at the end of 2006 to 28.51m at the end of 2007. In absolute terms, no market in the region gained more new connections than Iran in 2007.

This extraordinary growth (a 98.9% annual increase) can be attributed to the launch of Irancell in the final quarter of 2006. Having added 0.15m customers in its first two months of operation, Irancell surpassed the 1m barrier during Q1 07, and during Q4 it went through 5m to finish the year on 6.01m customers. This represents a phenomenal annual growth rate of 3800%. On a quarterly basis, the 61.5% growth of Q4 was the lowest rate seen so far, but this was still higher than the year-on-year increase recorded by market leader Telecommunications Company of Iran (TCI).

Until the launch of Irancell, TCI completely dominated the Iranian market.

Although its monopoly was broken in 2001, tight restrictions were imposed on the other operators: Mobile Telecommunications Company of Esfahan and Telecommunication Kish Co. have highly specific local licences with limits of 20k and 35k customers respectively, while Rafsanjan Industrial Complex (Taliya) is a BOT (Build, Operate, Transfer) business which has a cap of 2m customers. This ensured that TCI’s market share never dropped below 94%. However, since the end of 2006, TCI’s market share has fallen from 95.3% to 74.7%, with Irancell claiming 21.1% of the market at the end of 2007.

Nevertheless, in real terms TCI gained more new customers in 2007 - 7.64m compared to Irancell’s 5.85m - and it remains over 15m customers ahead of its rival with a year-end base of 21.30m.

Looking ahead, Irancell will almost certainly continue to eat into TCI’s market share, but it is unlikely that it will be in a position to challenge its lead in 2008. However, in both Q3 and Q4, Irancell recorded higher figures for net additions than TCI with 1.74m in Q3 and 2.29m in Q4 (compared to 1.71m and 1.80m for TCI) and should this trend continue, we could see some very close competition indeed by the end of 2009. With penetration at 40.8% at the end of the year, there is certainly plenty of potential for growth.