MTN moves closer to Irancell stake

04 November 2005
South Africa's MTNsays it has secured a 49 per cent stake in the Irancellconsortium that is working to finalise its role as the licence holder for Iran's second GSM network by the 21 November deadline. MTN said in a 20 October statement that it had reached agreement with Irancell for its participation in the consortium and given a payment guarantee for the Eur 300 million ($365 million) licence fee. However, the second GSM licence will not come into effect for Irancell until a court action initiated by its original foreign partner, Turkcell, is resolved (Telecommunications, MEED Special Report, 7:10:05, page 50).

Irancell reached a provisional agreement with the Information & Communication Technology (ICT) Ministry in August, when it registered the company without a foreign partner and paid the Eur 300 million bid bond. Turkcell was given exclusive negotiating rights for the 49 per cent foreign stake until 4 September, when Irancell started to negotiate with MTN, previously the second-placed bidder in the licence tender.

Turkcell has long argued that it is illegal to switch its old share in Irancell to another company. In mid-October, it filed a suit with courts to stop Irancell bringing in another partner. ICT says it secured permission in June from the Supreme Economic Council to bring on board a different partner into Irancell after Turkcell wavered on finalising the project. Its stake had been forcibly reduced from 70 per cent by order of the Majlis (parliament) and watchdog Guardian Council.

The local shareholders in Irancell are Iran Electronic Development Company (IEDC), a consortium of the Industrial Development & Renovation Organisation, the Defence Ministry subsidiary Sa Iranand Bonyad Shahid. The consortium won the second GSM tender in February 2004.

If no agreement can be reached by 21 November, ICT will retender the project. For MTN, with rapidly maturing core markets, the need to break into the Middle East has become paramount. Shares jumped by 6 per cent when it announced that it would join Irancell. However, concerns remain over the deal. One reason Turkcell did not complete its agreement with Irancell was that it feared the local consortium members would not be able to secure the necessary finance for the project, which will require investment of up to $3,000 million.

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