Iran Cancels 3rd Mobile Phone License

­The Iranian government has reportedly cancelled the award of the country's 3rd mobile phone license to an Etisalat lead consortium, saying the company had failed “to give necessary guarantees and license fees on time”.

The company confirmed in January that it had won the license with a €300 million (US$402 million) payment and a promise of a US$5 billion investment over five years. The new license includes GSM and 3G with a two year exclusivity for offering 3G services. Etisalat won the license in consortium with Taameen Telecom, a company owned by the Iranian Social Security Organization (SSO) that serves more than 30 million Iranians through pension funds. Etisalat has a 49% stake in the joint venture.

Mohammad Reza Farnaghi-Zadeh, a spokesman at the Iranian Regulations and Radio Communications Organisation, told the Iranian state news agency that Etisalat would be replaced by a consortium led by Zain.

However, Zain said it had only been invited to renew its negotiations as the leader of the consortium that came second in the original bid process.

“It’s an interesting opportunity and something we will evaluate but we will evaluate it in the context of the changes as the bids were submitted well over a year ago, and the world has changed,” Ibrahim Adel, a spokesman for Zain told the Financial Times. “I’m certain we will visit them to get more clarity.”

There was also controversy over the previous allocation of the country's second GSM license. Turkcell, though its 51% owned subsidiary - Irancell, originally signed an operator license with the Iranian government in 2004, but it fell foul of a clamp down on foreign investments by the conservative Parliament. The Parliament accused the company of having links with Israel - and after a year of battles, the license was reissued - this time to South Africa's MTN Group. MTN took a minority 49% stake, while 51% was allocated to the Iran Electronic Development Company (IEDC).

Last year, the  Iranian government announced plans to sell off a second stake in the state owned telecoms operator, the Telecommunication Company of Iran (TCI). The government floated a five percent stake on the local stock market and is seeking an external investor. Ali Rahmani, managing director of the Tehran Stock Exchange said that a 49% stake will be sold to a single investor, with a foreign party being invited to take up to 35% of the company.

On the web: Financial Times