Iran’s internet king has his head in the cloud

Iran’s internet king has his head in the cloud
Afranet was Iran’s first internet service provider.
By Liam Halligan in Tehran April 22, 2016

“Put money into Iran and your investment will fly,” says Iranian IT mogul Fereidoun Ghasemzadeh. “Along with smart people and good infrastructure, we’re a gateway – not just to 80mn Iranians, but over 200mn across the region as a whole.”

“I was optimistic about Iran during the dark era, when the political climate was very tough, and I’m much more optimistic now,” Ghasemzadeh continues. “So you need to hit the gas when others are hitting the brakes – that’s the essence of being an entrepreneur.”

Ghasemzadeh should know. Back in the 1990s, returning from his PhD studies in Canada, this native Iranian took the bold step of establishing Afranet, Iran’s first internet service provider. Listed on the Tehran stock exchange in 2011, this business-to-business outfit now boasts 15% of Iran’s booming broadband services market.

Talking with Ghasemzadeh in his Tehran office, it’s hard not to warm to his energy and infectious grin. “Over a third of all Iranians are aged between 20 and 40 – I want to see these youngsters build businesses and create jobs, so my country can grow,” he says.

Determined to improve his country’s trading links with the rest of the world, Ghasemzadeh urges foreign investors to “grasp the game-changing implications” of looser Western sanctions. “Years of isolation mean our relatively wealthy population is now under-served in so many areas,” he says. “Once a big threat, the removal of sanctions is an even bigger opportunity.”

Iran is no IT backwater. The country boasts 47mn regular internet users, easily the most of any Middle Eastern country. Bandwidth capacity has tripled from 66 gigabytes per second in 2012 to 202 Gbps in 2015. Over the same period, Iranian e-commerce has quadrupled to $21.6bn a year. Mobile phone penetration is 106%, with more than 40mn Iranians owning a smartphone.

“When I started Afranet 18 years ago, my goal was widespread internet use in Iran,” he says. “Now, as the first and only cloud data storage provider in this country, my vision is to build digital data centres, which have the same role as factories in the industrial age.”

Irreversible changes

Pointing to “high hopes for Iran’s coming generation of entrepreneurs”, Ghasemzadeh says the combination of President Hassan Rouhani’s mid-2013 accession and recent parliamentary elections has created a “new wave of liberalisation” in Iran.

Rouhani-supporters secured a third of seats in the national legislature in February’s vote. Together with moderate, pragmatic conservatives, the reformist bloc now has a majority in the 290-seat assembly, suggesting wide support for Western rapprochement and global engagement. While notable ultra-hardliners lost out, Rouhani himself secured election to the influential Assembly of Experts, which augurs well for his re-election in 2017.

“This new political climate is opening up Iran,” says Ghasemzadeh. “So I’m encouraging other cloud providers to join me in building a world-class digital platform here, so millions of highly-educated Iranian men and women can work hard, help create brands and build prosperity by selling their services across the globe.”

What about the government’s attitude to the internet and international social media, I ask, given that Twitter and Facebook are still officially banned – even if widely-accessed using proxy servers? “Our population is increasingly living through the internet,” Ghasemzadeh says reporting that 23mn Iranians regularly use the social media app, Telegram.

But isn’t there a danger of government hardliners closing down the net? “No, because the process is now irreversible,” Ghasemzadeh says. While Iran’s internet controls are “still tighter than they need to be”, the last elections were a “watershed” moment, he claims. “As the owner of the largest ISP in the country, I was expecting more controls during the vote – I know some people in government wanted them, but they didn’t get their way,” he says. “During elections six years ago, the internet and mobile phones were blocked. But this time we had relatively free and mature political expression.”

The February election, says Ghasemzadeh, “will liberalise parliament in the same way Rouhani has liberalised government”. This “phenomenal” result, on a high 76% turnout, stands “in stark contrast to more extremist tendencies elsewhere in the Middle East,” he says. “The implications of this result are now coursing through the political and economic veins of Iran – and that’s great for investors.”

Acknowledging business is “always risky”, Ghasemzadeh argues that “risk is now manageable in Iran”. Having travelled with Rouhani to the US and Europe, he reports “a big appetite” among strategic investors to engage. “I’ve had dozens of meetings with Europeans and North Americans over the past few months, including the big IT providers – they’re eager to come,” he says. “And we’re keen to welcome them, not just for the money, but for deep cooperation and co-investment.”

Not-so Swift

Amid the improving rhetoric between Tehran and Washington, are sanctions really over? Many Iranian businesses complain a US pledge to grant renewed access to the Swift system of cross-border financial transfers has yet to happen. “In truth, there are hard-liners on both sides who don’t want sanctions to end, both in Iran and the West – not least the US,” says Ghasemzadeh. “Even in our region, there are countries that are competitors to Iran, which don’t like Iran, that don’t want sanctions lifted.”

Ghasemzadeh thinks closer links with the West are “inevitable”, though. “This process won’t stop,” he believes. “The economic logic of much greater trade is compelling, given Iran’s oil and gas, and the size of our market, but the political motivations are now even stronger.”

Reporting that Rouhani was on his way to Paris last November, just before the jihadist terror attacks, Ghasemzadeh says the West is now looking to Iran to help contain extremism across the Middle East. “Given the growing influence of groups carrying out horrific acts, it’s important a strong, stable yet moderate country like Iran can help to manage the situation,” he says.

“The West now has clear geopolitical reasons to seriously engage with Iran – for the good of the US and Europe, as well as Iran and our broader region,” observes Ghasemzadeh. “Compared to those priorities, I believe the economic reasons for engagement, while still important, are relatively minor.”

So how does Ghasemzadeh view the future of Afranet, which is listed on the Tehran Stock Exchange and whose net income was $8.4mn in the 2014-15 financial year? “No Iranian company has ever listed in Dubai or London,” he says. “That is our aspiration – and I believe we have a good chance.”

And what would he say to those who think he’s too optimistic about the business outlook in Iran? “I could take my money and go back to live in Canada and have a very comfortable life,” he says. “But I want to live in Iran.”

Smiling widely, but with a steel in his voice, he lays it on the line: “There are hard-liners in Iran who still want to kill the internet, but they won’t succeed.”

“I choose to be here in Iran – I’m investing my money and my life,” he says, staring right at me. “So I fully believe what I am saying, and I’m doing what I believe.”