Iran Telecommunications Report Q4 2011

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Iran Telecommunications Report Q4 2011 Published on September 2011

Report Summary BMI's Q411 update on Iran's telecommunications market contains revised forecasts for the development of mobile telephony, internet usage and fixed-line connectivity through to 2015. Since our last update, some new data has become available for the end of 2010. Meanwhile, the country's second-largest mobile operator, MTN Irancell, published new operational data for the period ended March 2011. MTN reported almost 31.4mn mobile subscribers at the end of March 2011. This figure was up by 5.5% compared with the previous quarter and by 23.7% against the previous year. Our new mobile subscriber forecast for Iran expects the mobile sector expanding by about 21.5% in 2011, with the mobile customer base predicted to grow to more than 82mn by the end of the year. If achieved, our prediction will mean Iran's mobile market penetration rate will cross the 100% threshold sometime in 2011. However, it should be remembered that the bulk of mobile subscriptions in Iran are made up of prepaid users. Many of these are understood to be inactive and this means actual penetration rates are almost certainly much lower than our forecast suggests. In addition to our regular mobile subscriber forecast, we are introducing a new forecast for mobile ARPU levels in Iran. Our forecast is calculated in Iran's local currency, the Rial and is based on ARPU figures published by MTN Irancell, the only operator which publishes ARPU rates on any regular basis. Expressed in the local currency, MTN had an average blended ARPU of IRR83,311 (US$8) for 2010. This was up by 8.7% compared to the previous year. The growth of MTN's ARPU, in local currency terms, occurred in spite of the promotions which the operator introduced in a bid to capture market share from mobile market leader MCI. This suggests ARPU growth was driven by other factors, including an increase in the general level of service usage and a trend towards the use of more lucrative data services. During the next five years, we forecast ARPU levels in Iran's mobile sector will come under increasing downward pressure as competition intensifies. In addition to new competition from Iran's third-largest mobile operator Taliya, which is continuing to deploy a national network infrastructure, we are optimistic that a new national mobile operator will enter the market. One possibility is that a new entrant will enter the market through the acquisition of regional operator MTCE. MTCE is 49%-owned by Malaysian operator Axiata, the latter of which announced in July 2010 it was possibly looking to sell its stake in MTCE. The company is licensed to operate a GSM 900MHz mobile service with a capacity of 35,000 customers in Esfahan. Its 15-year licence expires in May 2016. A revised forecast for Iran's fixed-line telephony sector depicts average annual growth of 2.3% in the five years to 2015. Although the annual growth rates are expected to fall in the latter years of our forecast, we expect there will be more than 30mn fixed lines in service by the end of 2015, resulting in a penetration rate of about 38%. Although there are further changes to our forecast for Iran's internet user market this quarter, our forecast for the number of broadband subscribers remains unchanged. We estimate Iran had more than 25.4mn internet users at the end of 2010; resulting in penetration of 34.4%. Despite strong internet usage growth in recent years, there are signs a major slowdown in growth is under way. This could suggest that the limit of the country's addressable market of potential internet users is already being reached. Iran continues to sit at the bottom of BMI's Business Environment Ratings for Middle East and North Africa (MENA). Iran's individual category and composite scores remain unchanged this quarter. Although Iran has a low score in all of the categories surveyed by BMI, in none of the categories does it have the lowest score in the MENA region.

Table of Content Executive Summary . 5

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>> Get this Report Now by email! SWOT Analysis 7 Iran Mobile SWOT ... 7 Iran Wireline SWOT 8 Iran Political SWOT 9 Iran Economic SWOT ..... 10 Iran Business Environment SWOT .... 11 Business Environment Ratings ........ 12 Middle East and Africa ... 12 Middle East And North Africa Q411 Telecoms Business Environment Ratings 16 Iran .. 16 Industry Forecast Scenario ...... 19 Mobile .. 19 Table: Telecoms Sector ' Mobile ' Historical Data & Forecasts ... 19 ARPU ........ 21 Table: Telecoms Sector ' ARPU ' Historical Data & Forecasts .... 21 Fixed Line . 23 Table: Telecoms Sector ' Fixed-Line ' Historical Data & Forecasts ..... 23 Internet ..... 24 Table: Telecoms Sector ' Internet ' Historical Data & Forecasts . 24 Market Data Analysis ...... 26 Mobile ....... 26 Table: Iran ' Mobile Market, 2010 ... 28 ARPU ... 29 3G ........ 30 Mobile Contract Wins ..... 32 Table: Mobile Contract Wins ... 32 Mobile Content .. 33 Regional Outlook ... 33 Country Outlook .... 37 Mobile Banking ...... 39 Value-Added Services Timeline 40 Table: Selected VAS Services ... 40 Table: Iran Mobile Market Overview ........ 41 MTN Irancell 41 Table: Hamrahe Aval (Mobile Communications Company of Iran) 42 Taliya (Rafsanjan Industrial Complex) ...... 42 TCI Privatisation ........ 44 Internet ..... 46 Broadband 48 Regulatory Environment & Industry Developments .. 51 Table: Iran's Regulatory Bodies And Their Responsibilities . 51 Legislation And Market Liberalisation ...... 51 Privatisation Of TCI ....... 52 Competition .. 53 Regulation..... 53 Licensing And Spectrum . 54 Industry Developments ... 55 Competitive Landscape .. 56

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>> Get this Report Now by email! Key Players ........ 56 Table ' Key Players: Iranian Telecoms Market .. 56 Company Monitor ... 57 Huawei Technologies - Key Financial Data (US$mn) . 58 Huawei - Recent Contract Wins/Developments In Middle East & North Africa ........ 61 Operator Profiles .... 62 Telecommunications Company Of Iran (TCI) ..... 62 MTN Irancell 66 Regional Telecommunications Penetration Overview ....... 70 Fixed Line . 70 Table: Regional Fixed-Line Penetration Overview ...... 70 Mobile .. 71 Table: Regional Mobile Penetration Overview ... 72 Broadband .... 73 Table: Regional Broadband Penetration Overview ..... 74 Country Snapshot: Iran Demographic Data ...... 75 Section 1: Population .. 75 Table: Demographic Indicators, 2005-2030 ....... 75 Table: Rural/Urban Breakdown, 2005-2030 ...... 75 Section 2: Education And Healthcare .... 76 Table: Education, 2002-2005 .. 76 Table: Vital Statistics, 2005-2030 ..... 76 Section 3: Labour Market And Spending Power . 77 Table: Employment Indicators, 1996-2005 77 Table: Consumer Expenditure, 2000-2012 (US$) ........ 77 Table: Average Annual Manufacturing Wages, 2000-2012 .. 78 Glossary Of Terms . 79 Table: Glossary Of Terms ........ 79 BMI Methodology ... 80 How We Generate Our Industry Forecasts ..... 80 Table: Key Indicators For Telecommunications Industry Forecasts ........ 80 Telecoms Business Environment Ratings ........ 82 Table: Ratings Indicators ........ 83 Weighting .. 84 Table: Weighting Of Indicators ........ 84 Sources 84

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