The Iranian government is to float the country’s monopoly fixed-line telecoms operator, Telecommunications Company of Iran (TCI), on the stock market by mid-August in what will be the government’s largest privatisation to date.
The Iranian Privatisation Organisation will first sell 3-5 per cent of TCI to gauge a market value for the company. If that is successful, a further 20 per cent stake will be sold to a single investor or a group of investors.
“It will sell a 20 per cent block of the company in an auction,” says Ramin Rabii, managing dir-ector of Tehran-based fund manager Turquoise Partners. “It is really hard to say how long this will take the Iranian Privatisation Organisation. It will be at least five or six months.”
The Iranian Privatisation Organisation has yet to say how many shares will be issued in the initial public offering (IPO), or how much they will cost.
Iranian brokers have valued the company at $12-30bn. “I think the government will be happy if it is worth $20bn,” says Rabii.
At that valuation, the government could earn up to $1bn from the IPO, depending on the size of the stake floated.
The Tehran Stock Exchange will have difficulty absorbing such a large number of new shares.
The total value of shares listed on the exchange is $8.5-11bn.
TCI is likely to be attractive to foreign investors. Two of the largest telecoms operators in the region have already expressed an interest in buying the 20 per cent stake.
In September 2007, Saad al-Barak, chief executive officer of Kuwaiti telecoms operator Zain, said his company would be interested in acquiring TCI (MEED 14:9:07).
Mohammad Hassan Omran, chairman of UAE-based operator Etisalat, also says he wants to enter the Iranian market, either by taking a stake in TCI or winning the upcoming third licence (MEED 6:6:08).
Under the Iranian system for arranging IPOs, the Iranian Privatisation Organisation will distribute the stake in TCI equally between the 90 brokerages in the country. No bank will act as the arranger for the IPO.
TCI had 23.2 million mobile phone customers at the end of March. Its only competitor in the mobile market is Irancell, a subsidiary of South African telecoms giant MTN.
TCI has never disclosed details of its financial performance.