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Mobile phone fever sweeps Iran

By Guy Dinmore in Tehran
Financial Times
May 18, 2000

Iran is in the grips of mobile fever. Thousands of people are queueing at post offices across Tehran to make a downpayment of IR5m (about $600) to acquire a mobile telephone connection in a year's time.

For many, a mobile is a sound investment. With demand far outstripping current supply, a connection on the open market costs more than $1,100. With bank deposits offering less than the rate of inflation, now at more than 20 per cent, only the downpayment on an Iranian-made car, which takes 14 months to deliver, can challenge the return on a mobile.

"Its better to buy a SIM-card than put your money in the bank," explained Atra, one of about 100 women waiting in two queues segregated by sex. "My money will double in one year. That woman in front is registering for 90 lines," she added.

When the state-owned Telecommunications Company of Iran (TCI) announced it was open to new subscriptions for a 10-day period, Iran's financial markets felt the impact. The price of gold, the dollar and stocks on the Tehran Stock Exchange have fallen as Tehranis take their rials to TCI, which will use the money to invest in new connections. On the first day some people camped overnight to make sure of getting a subscription.

TCI last month chose Ericsson, the Swedish company, to install 400,000 GSM connections by the end of the year in a contract worth $35m. With a population of more than 60m and an established middle class, Iran's undeveloped telecoms sector is an attractive market.

Philippe Durand, Ericsson's general manager in Tehran, said the Swedish company was delighted to have entered the Iranian market and the company would also compete for a tender to install 1m fixed lines. Ericsson also expects TCI to announce a tender for a further 500,000 GSM lines later this year.

As Iranians flocked to make their payments, local and foreign companies this week opened their exhibits at Iran's first telecommunications fair since the 1979 Islamic revolution.

Mohammad Safavi, deputy post and telecommunications minister, said the government's current five-year plan, which started in March, allocated IR50,000bn (about $6bn at open market rates) to the development of telecommunications and information technology.

Mr Safavi said parliament had removed "legal obstacles" - a reference to constitutional provisions for the private sector to participate in the telecoms sector.

Iranian companies would be given priority in purchasing equipment, he added. The deputy minister made no reference to the privatisation of TCI, which is also in the five-year plan.


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