South Africa’s MTN to invest $350mn in Iranian broadband

By bne IntelliNews May 8, 2017

South Africa’s MTN said it has agreed, on a non-binding and preliminary basis, to invest an initial $350mn into Iranian fixed broadband provider Iranian Net. The investment will give it a minority 49% stake in the recently launched firm, NewsCentral Media reported on May 8.

MTN currently owns 49% of MTN-Irancell, the second biggest Iranian mobile network market player. The enterprise offers both 3G and 4G wireless internet, messaging and calls. The South African company also has a 49% stake in Iran Internet Group (IIG) in partnership with Germany’s Rocket Internet. This venture runs the most successful ride-hailing app in Iran.   

The initial $350mn investment will trigger a $400mn loan from the Iranian government to MTN-Irancell, according to a report put out by Iran’s telecommunications news agency CITNA.

Telecommunications experts based in Tehran noted that the decision to work with the South African firm would likely complicate matters for smaller independent network operators.

A foreign contractor in Tehran who spoke to bne INTELLINEWS about the tie-up remarked: “This does not bode well for the Iranian market; the predator will get even hungrier as it moves up the food chain.”

It is likely that further Iranian Net investments in Iran will take place over the next five years as the broadband company rolls out infrastructure across the Islamic Republic.

MTN added in a statement on its South African website: “The preliminary agreement remains subject to finalising suitable transaction agreements.”

“Iranian Net has a national licence for the construction and operation of an optical data transmission network and fibre-optic access network across Iran,” it noted, adding: “This investment, should it be completed, represents an opportunity to capitalise on the continued strong growth expected in the Iranian broadband market, with an initial focus on eight of the leading cities.”

Meanwhile, China’s Huawei and Finland’s Nokia have signed agreements to roll out Fibre-to-the-home (FTTH) in several other cities across Iran. The deals became available as part of a rush by the Rouhani administration to achieve super-fast home internet for the country after years of trailing nations more advanced in the field.

Mobile 3G and 4G internet services have surpassed fixed line broadband connections in recent years with speeds of up to 40Mbps.

FTTH, also known as "Fibre-to-the-premises" (FTTP), means the installation and use of optical fibre from a central point directly linked to individual buildings such as residences, apartment buildings and businesses to provide unprecedentedly fast internet access.

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