Updated June 5, 2008

   Representative of Iran’s Ministry of Information and Communications Technology Said Makhdioun declared three largest Russia’s mobile companies – MTS, VimpelCom and MegaFon – are interested in receiving Iran’s nationwide license. Analysts name MegaFon as the most prospective odds-on favorite in a tender that will be held in early July.

   Iran plans to hold a competition in early July to grant the third nationwide license to render mobile services, as declared the representative of Iran’s Ministry of Information and Communications Technology Said Makhdioun. According to him, a tender will be held within six months. Mr. Makhdioun was quoted as saying that all Russia’s Top Three providers will consult Iran’s moderator concerning tender. According to him, VimpelCom and MegaFon took grater interest in competition participation. It is planned that a foreign investor will own 49% stocks of a consortium that owns a license, and other stocks should belong to the local partners. A license will permit rendering GSM and 3G connection services. An operator should pay the state at least 25% of its earnings. Within five years its communication network has to cover all cities with more than 20 000 people population.

   MegaFon representatives have several times confirmed their interest to the Iranian market. In early year MegaFon has registered a subsidiary joint-stock company MegaFon International to develop outside the CIS. Then the directors’ board of the operator approved MegaFon participation in a competition to receive a license in Iran. In case MegaFon wins in a tender it is ready to invest in network development around € 3 billion. VimpelCom director general Alexander Izosimov declared his company was invited to take part in a tender, however, it did not take decision yet about participation. MTS PR department director Elena Kokhanovskaya refused to comment, but marked that at the current moment MTS priority was the CIS markets.

   According to the data of Iran’s Ministry of Information and Communications Technology, the amount of mobile communication users in the country totals 35,5 million people, penetration level – 50%. In 2011 penetration level reaches 99,6% at around 73,08 million users base, as forecast in the ministry.

   "Iran is quite a difficult country from political risks viewpoint, and the USA officially consider the country "an axis of evil". Moreover, reports about a possible military operation appear regularly", says Veles Capital analyst Ilya Fedotov. "On the other hand, Russia, unlike Europe and USA, has not yet marred relations with this country, and therefore the Russian companies have more chances to receive a mobile license". MegaFon is the most prospective candidate to receive a license in Iran, as considers Mr. Fedotov. "Sistema Corporation is already participating in a project on operator establishment in India. Moreover, the company representative has recently declared the Corporation is working on a license receipt in China. Regarding VimpelCom, the operator has just recently spent many facilities to buy Golden Telecom".

   "Now the stockholders of the Russian mobile operators pay attention to almost all Asian markets, and is it quite obvious, as potential for growth has left here yet", says Dresdner Kleinwort analytical department director Julij Matevosov. "The thing is that none of the Russian telecommunication companies has great experience in Asia, therefore any project started there is quite risky".