Funding gap delays launch of Tamin Telecom services

10 October 2011

Lack of finance stalls the launch of services

Iran’s third mobile operator Tamin Telecom has delayed the launch of it services because it is having trouble financing its operations. The firm secured a licence with exclusive rights to third-generation (3G) technology in April 2010 and intended to launch its services by the end of that year.

“The company needs about $400m-500m in capital expenditure for its infrastructure and IT costs and it seems like Huawei may have to pay it,” says a source at Chinese supplier Huawei, that is supplying equipment to the operator.

Earlier this year the Communications Ministry threatened to revoke Tamin’s licence if it had not launched its services by June 2011, but has since softened its position.

“Tamin Telecom needs financing and the best way to solve this problem is to bring in vendors who can finance the whole project. Huawei is one of the best options, but it will not be the only provider, they are looking for multi-vendor options,” says Ali Saghaeian, chief analyst at Iran-based Teyf Research and Consultancy Group.

Other suppliers that could help finance Tamin’s operations include China’s ZTE and South Korea’s Samsung.

The operator is now aiming to launch its services commercially by the first quarter of 2012, but this is unlikely according to Saghaeian.

Tamin Telecom, a subsidiary of government-owned entity Shams Tamin High Tech Investment, paid $401m for the licence with a 23.6 per cent revenue share with the government.

Tamin had initially secured the licence in 2008 as part of a consortium with the Emirates Telecommunications Corporation (Etisalat) but negotiations failed as both parties were unable to decide on the size of Etisalat’s stake in the company. Tamin then enlisted Kuwait’s Zain in the consortium, but the tender was later cancelled by the Iranian government with claims that Zain had not fulfilled its obligations.

Iran’s telecommunications market has big potential. Mobile penetration rates have yet to reach saturation and with a population of about 70 million, there is room for growth. There are currently two operators in the market, MCI, a subsidiary of state-owned Telecommunications Company of Iran (TCI) and South Africa’s MTN Irancell, which is majority-owned by the Iran Electronic Development Company (IEDC).

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