UAE telecom Etisalat wins rights to Iran network

DUBAI, United Arab Emirates - The United Arab Emirates' biggest telecommunications provider said Tuesday its team has won a potentially lucrative deal to enter the Iranian mobile phone market.

Emirates Telecommunications Corp., known as Etisalat, said it received Iran's third nationwide mobile license as part of a consortium with Iran-based Taameen Telecom. Taameen is owned by state pension provider Iranian Social Security Organization.

Etisalat has a 49 percent stake in the consortium. The Abu Dhabi-based company said it beat other bidders because of its technical qualifications and the share of revenue it offered Tehran.
"We were of course the highest bidder. Our technical submission was first class," Jamal al-Jarwan, Etisalat's chief executive for international investments, said in an interview. "But the financial (aspect) ... was the key factor."

Etisalat's bid beat competing proposals from teams that included Kuwait-based Zain Group, Oman's Omantel, Telecom Malaysia Bhd. and Bharti Enterprises of India, al-Jarwan said.

Acquiring the license will cost an upfront fee of euro300 million, or $402 million. Al-Jarwan said the consortium will also share 23.6 percent of revenue with the government.

In exchange, Etisalat will be able to operate its network for a minimum of 15 years. It will also have the exclusive right to provide third-generation, or 3G, data-heavy services for the first two years.

Etisalat is hoping for considerable growth in Iran because of the country's large, young population and relatively low levels of cell phone use. The 3G rights could also be an important selling point among affluent Iranians willing to pay for the ability to browse the Web on their phones.

Etisalat has more than 74 million subscribers in 17 countries. Al-Jarwan said the company, which late last year said it had over $3 billion in available cash, will continue to seek out investments that support a growth strategy focused on Asia, Africa and the Middle East.