Friday, November 14, 2008

Iran - a possible Reliance bid

$1bn Iran telecom licence

India’s Reliance Communications Ltd (RCom) may be considering bidding for Iran’s third mobile phone service licence, estimated to cost around $1 billion (Rs4,880 crore).

“Reliance has shown interest to bid for the tender and will compete with firms from Russia, Turkey and Malaysia for the tender, the bids for which will be called within a month,” claimed an Iranian government official who didn’t want to be identified as he is not authorized to speak to the media.
It will cover 5mn customers in the first phase, 10mn in the second and 15mn in the third phase

Other prospective bidders for the third licence include Qatar Telecom.

RCom is part of the Reliance-Anil Dhirubhai Ambani Group. A spokesman for the phone company declined to comment specifically on a potential bid for the Iran licence. Reliance Communications “has substantial international operations and continuously evaluates various growth opportunities globally, both organic and inorganic, on an ongoing basis”, he added.

“Going into Iran means more cash going out but no one knows when an operation in Iran will become cash positive,” said Kevin Trindad, who tracks telecom companies for KR Choksey Shares and Securities Pvt. Ltd.

Iran recently invited firms to take part in the tender, which envisages covering five million customers in the first phase, followed by 10 million and 15 million in the second and third phases, respectively.

It was not immediately clear how long the phases would run.

The two existing operators in Iran are state-owned Telecommunication Co. of Iran and MTN Irancell, which is 49% owned by MTN Group Ltd, Africa’s biggest phone firm.
RCom, through alliances and firms it has acquired, has a significant data and voice presence in various parts of the world.

It has a telecom licence in Uganda, and in April this year acquired eWave World, a UK-based operator of so-called Wimax or high-speed wireless data services, with plans to launch what is called fourth generation phone services in 50 countries by 2012.

The company, through its acquired unit Flag Telecom, owns and operates the world’s largest Internet protocol-enabled undersea cable infrastructure, spanning 150,000km of fibre optic cable systems and connecting India, the US, Europe, West Asia and the Asia-Pacific region.

RCom and Alcatel-Lucent recently formed a joint venture to offer managed network services to telecom companies across the globe.

Several Indian firms, such as the country’s largest power generation firm, NTPC Ltd, are planning infrastructure projects in Iran, which is facing economic sanctions by the US and its allies over its nuclear programme, which Washington suspects is aimed at developing nuclear weapons and Tehran says is designed to produce electric power.
“A lot of Indian companies are interested in getting a share of our privatization drive,” claimed the Iranian government official.
“We are allowing substantial stake to be taken by the overseas companies. There is an absence of Western companies in Iran, which can be used by the Indian firms to their advantage.”

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