TBY talks to Saber Faizi, Managing Director and Member of the Board of the Telecommunications Company of Iran (TCI).
TBY When was the TCI’s monopoly on telecommunications ended, and how has the competitive environment evolved ever since?
SABER FAIZI Seven years ago, according to legislation passed by the Parliament, other companies were permitted to engage in telecommunications activities. The largest of these is MTN Irancell. Since four years ago, according to the orders of the Supreme Leader, the privatization of TCI was put on the agenda. And so three years ago TCI launched an IPO on the stock exchange.
And this was the biggest privatization known in the history of the country?
I think so. Until nine months ago, just 10% of that was on the exchange and the remainder belonged to the government. In the last nine months, a 50% managing share has been sold off. The company is managed privately at present. Some 51% belongs to one private shareholder, another 30% is listed on the stock exchange, and the remaining 20% is still owned by the state, but the government does not have any say in the company's management.
What has changed since the privatization of the company?
The government laws were removed. Now we do not face any limits on providing services to people. We can now engage freely in the expansion of our services.
Fixed-line penetration levels have increased in the last four years from 22 to 34%. Is there still room for growth?
Yes, there is. There is room for growth all over the country. As the country is moving forward, there are more buildings, new companies, and new houses that need new subscriptions.
Does the government have any plans to open up fixed-line services to competition?
Currently, there are another six companies that provide fixed-line services. These are all regional companies, not national companies, and they are private. However, we still provide 90% of fixed-line services in Iran.
How many people currently use mobile phones in Iran?
According to the Ministry of Information and Communications Technology, 72% of people use mobile phones. We think that the market is not completely saturated and there is still room for growth. The market is very competitive. There is already a high level of competition between us and MTN Irancell, and there will be a third operator soon called Tamin Telecom.
Do you provide both pre-paid and postpaid services for mobile phones?
Yes, both of them are provided. We cannot talk about a specific trend in the sector, it is 50-50. We have a market share of more than 60% of the mobile phone segment.
Is there room for new mobile competitors?
Yes, there will be. Even though the competition is tough, new service providers would be interested in the market as it is open and free. Any foreign company can come in and participate.
Are you going to utilize 3G technology?
Currently, only Tamin Telecom, which is the third operator, has a license to provide 3G services in Iran. We will have permission to activate our 3G services two years after the third operator comes into the market, and we are preparing for these investments.
Are there plans to build new infrastructure so you can provide improved regional coverage? Can you currently provide mobile internet all over the country?
We can currently provide mobile services in all parts of the country. However, because of continuous technological advances we always need more infrastructure, but for the current technologies we do not have any worries. About the quality of services, the network is on the verge of renovation and improvement. We are working on providing better services for our clients. We mostly contract with foreign companies that cooperate with domestic Iranian companies to improve our service quality.
Does TCI also manufacture the materials it uses in its infrastructure, like fiber cables?
In Iran, we have six factories that manufacture fiber optics and related equipment. The companies are private, and they do not belong to us. Six companies provide us with such cables and equipment. Before privatization they were sold to personal owners.
What about the prices of communication services in Iran, how do they compare internationally?
In some countries, like in Turkey, people pay very high taxes to receive telecommunication services. If you omit the taxes in Turkey, the prices in Iran would be equal to those in Turkey. The tax ratio is only 5% in Iran. So, we have very competitive prices by international comparison.
And you also began to export technical and engineering services as TCI to other countries. How are you engaged in these services?
Most neighboring countries and their companies are allied with our engineers, who have been there. You can find experts from Iran in Afghanistan, Iraq, Pakistan, and Turkey—in all the neighboring countries.
What are the challenges to increase the quality and quantity of telecommunications services in Iran?
Before privatization we only had government limitations, but afterwards we were free and could provide a greater variety of services. In another year service quality will reach a good point for subscribers.
© The Business Year