Banks in talks for second licence mandate

19 April 2002

The Posts, Telephones & Telegraphs (PTT) Ministry is holding talks with several international banks about the financial advisory mandate for the sale of a second GSM licence, Cyrus Nasseri, adviser to the PTT minister, said on 16 April. The contract to bid for operation of the second licence is expected to be issued within months. The award of an additional licence is required if the government is to achieve its self-declared goal of increasing the number of GSM subscribers to 10 million by 2004 from the present level of 1.2 million (MEED 8:3:02).

It is understood that several major banks are involved in talks with the ministry, including BNP Paribas and HSBC Investment Bank, both of which have a strong record of advising on privatisation issues in the region. HSBC is advising the Lebanese government on the sale of two cellular licences, while BNP Paribas last year advised the Algerian government on the sale of the country's first private GSM licence (MEED 22:3:02; 19:10:01).

'The existing mobile phone service is unsatisfactory,' Nasseri said on 16 April at a London conference organised by IBC Global Conferences. 'Therefore a second carrier - or maybe more - will be required.' According to Nasseri, the licence will cover the installation and operation of 4 million new cellular lines.

The award of a second licence is expected to be preceded by the establishment of an independent regulatory authority, which will oversee the IT and telecoms sector. 'The ministry will be turned into a regulator and we intend to have a strong regulator,' says Nasseri. 'We are now looking for a person to head the authority. We will be very careful in this selection process.'

The operator of Iran's existing mobile phone network, PTT ministry affiliate Telecommunications Company of Iran (TCI), is also gearing up to invite international telecoms operators before mid 2002 to bid for the installation of 2 million mobile phone lines to launch the company's first pre-paid services.

Industry sources say the project will be carried out on a build-operate-transfer (BOT) basis for a period of 10-15 years. Interested carriers are expected to include major international and regional players.

Additional plans entail the expansion of Tehran's mobile network by 3 million lines this year.

Nasseri said that reforms will also include the TCI-operated fixed network, where lines are to double to 20 million by 2004. While the privatisation of TCI in the nearer future is unlikely, private sector participation in expanding fixed telephony will be encouraged.

First steps towards privatising parts of the fixed-line network were taken in February, when TCI subsidiary Khorassan Telecommunications Company invited local and international companies to bid for the establishment of an independent fixed-line network in Khorassan province (MEED 8:3:02).

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