The latest update on Iran’s telecommunications market contains new data on the size of Iran’s fixedline, mobile and internet markets at the end of 2008. It also includes an assessment of how the Iranian mobile subscriber market developed in the first half of 2009.

We estimate that, by the end of June 2009, Iran had a total of 52.3mn mobile subscribers, up from just over 47mn at the end of 2008. These figures include the subscribers of Iran’s mobile market leader, the government-owned Mobile Communications Company of Iran (MCI), as well as MTN Irancell, which is owned by South Africa’s MTN Group, and the three smaller operators. Looking ahead, we predict that Iran’s mobile subscriber base will expand by 31% in 2009. By the end of the year, we anticipate a market of almost 62mn customers and a penetration rate in excess of 84%.

In our previous report on Iran’s telecoms sector, we published a cautious forecast on the development of the country’s 3G subscriber market. However, this quarter we have decided to avoid making predictions about the specific number of 3G customers. Our previous set of forecast figures was based on the expectation that UAE operator Etisalat would launch HSDPA-based data services as part of its official service launch in the latter part of 2009. However, in May, it is reported that Etisalat had been stripped of its licence to provide mobile services in Iran. This development makes it extremely unlikely that 3G services will be introduced anytime soon.

After cancelling the award of Iran’s third national mobile licence to Etisalat, the government transferred the licence to Kuwait’s Zain Group (Zain had come in second in the original auction). However, in July, the new concession was also withdrawn from Zain with the government suggesting that Zain had failed to fulfil its obligations. As a result of these developments, uncertainty now hangs over the award of the country’s third national mobile network licence. In August, media reports hinted that the licence had been offered to Russian mobile operator Megafon. However, Megafon has denied being offered the licence.

Both Megafon and fellow Russian cellco VimpelCom were linked to the licence during the original bidding process.

This quarter sees Iran receive a slightly lower overall score in the Business Environment Rankings for the Middle East. The lower score reflects a weaker rating for Iran in the Telecoms Market category. The lower Telecoms Market score reflects the recent decision to withhold the country’s third mobile network licence first from Etisalat and, subsequently, from Zain.