Following the introduction of 3G forecasts in our report for the first time last quarter, we continue to emphasize the considerable impact we believe Rightel's service has had on the mobile market since launching in late 2011. Our estimates and forecasts therefore highlight BMI's belief that there is pent up demand in the market for 3G services. However, we believe there are considerable downside risks to the service's outlook, with international sanctions making network infrastructure expensive and Rightel's monopoly limiting network expansion and price competition. The government holds a tight control on all areas of the market, and as such, network development lacks investment. That said, there is considerable potential for growth, if sanctions are lifted, in both mobile and wireline technology.
- BMI estimates for 2012 fixed lines was in line with ITU official data (latest available data). Forecasts have been left unchanged seeing growth slowing in 2013 and almost 40% penetration by the end of our five-year forecast period to 2017.
- MTN's ARPU rose above US$4 for the first time in the last three quarters in Q313. This indicates a slight improvement in the difficulties with exchange rates, devaluations and inflation in the country. We expect these challenges to remain in the short term, however.
- BMI estimates around 2mn 3G subscriptions at the end of 2012 and sees rapid growth in 2013 and 2014. However, 3G subscriptions have yet to impact the broadband market.
Key Trends And Developments
Data on Tamin Telecoms' Rightel service remain unavailable, but BMI estimates the company has begun to make an impact on the mobile market in Iran. In February 2013, the government granted Rightel exclusive rights to 3G network services until 2014, extending the current agreement for one year. We continue to believe this decision will hold back investment in the data market, where we believe there is considerable pent-up demand for mobile data.
The Europe-Persia Express Gateway (EPEG) fibre optic cable system, a 10,000km cable running from Frankfurt, Germany, through eastern Europe, Russia, Azerbaijan, Iran, the Persian Gulf and finishing in Oman, finally went live in September 2013. The cable system, which was originally meant to be launched in March 2013, brought Iran's international bandwidth capacity up from 72Gbps to 82Gbps. In October 2013, Iran's Communications Minister announced the country's goal to further increase its international bandwidth capacity to 100Gbps by December 4 2013.
After four years of censorship internet users in Iran were allowed to access social networking sites Twitter and Facebook on September 16 2013. Industry analysts originally believed the relaxed restrictions were due to the government's implementation of a smart software that would allow the it to filter sites rather than block them completely, referred to by police chief Esmaeil Ahmadi Moghadam in January 2013. However, access to Facebook and Twitter was promptly blocked again by September 17 2013. The secretary of the Iranian state committee responsible for filtering web content wrote the incident was written off as a technical problem and denied any government intention to lift the ban on the social networking sites.