State-owned Telecommunication Company of Iran (TCI) is still reviewing its first initial public offering (IPO) before it launches a second round of shares to investors.

The telecoms provider floated 5.5 per cent of its shares in MCI, the mobile subsidiary, on 19 December 2010 on the Tehran Stock Exchange. Each share was priced at $3.5 and the company raised $396m in under five seconds, valuing the firm at $9.5bn.

The second offering to float 4.5 per cent is unlikely to happen soon, according to Ali Saghaeian, founder of Teyf Group, an Iranian-based consultancy that advises TCI and the Information and Communications Technology Ministry.  

Parent company TCI was privatised in 2009 when a consortium affiliated with Iran’s Revolutionary Guard bought a 51 per cent stake for $7.8bn.

The funds raised will be used to develop its network, but according to Slim Saidi, director at law firm Arthur D Little: “The company is floating its shares not for money, but as a way to legitimise it.”

MCI accounts for more than 70 per cent of TCI profits. “Although MCI forecasted $4bn of revenue and $800m of profit for 2011, last year’s results show that profits could easily exceed $1bn,” says Saghaeian.

MCI will face stiffer competition this year with the arrival of third-generation (3G) operator Tamin Telecom which has two-year 3G exclusivity. The company had set February 2011 as its launch date, but this has not happened due to changes in management. The firm must launch by its new deadline in June 2011 if it is to keep its licence.

MCI has been in operation since June 1994 under the Hamrah e-Avval brand. It has more than 37 million mobile subscribers. Current mobile penetration is 83 per cent and is set to reach 132 per cent by 2014.