Orange has been expanding in the fast-growing countries in Africa and the Middle East. And now with the lifting of the sanctions Iran’s largest mobile operator is under Orange’s radar.
Orange has 108 million customers in Africa and the Middle East. In some countries such as Egypt, it has 33m customers which is a big market. It also has 20% share in Korek, a carrier in Iraq , and operations in Jordan. This company is based in France and 23% of it belongs to the French government.
With the recent rumors and now official news, Orange is now discussing a commercial and technical agreement as well as a share purchase. In telecommunications, French companies have good reputations and with the lifting of sanctions, companies have a good opportunity for partnerships and expansion in Iran. “Our negotiations haven’t been completed yet,” said Mr. Sadoughi, finally confirming the talks between the companies. “I think the talks will be done within the next three to four months.”
Many companies have been suffering from low growth in mature European economies and Iran’s largest and most profitable mobile operator can be a good solution for sustainable growth. As Orange executives mentioned in their talks, they are after the countries where they see demand for better cellular services from a growing middle class and rising populations. “All operators around the world are looking for a form of cooperation with Iran,” said Bruno Mettling, Orange’s deputy chief executive for the Middle East and Africa.
But Iran’s market has its own complexity and it’s not an easy task to purchase a stake at this scale from an Iranian company and it hasn’t been done yet since the sanctions got lifted. “We are conducting feasibility studies to understand and assess what’s possible in this complex environment, particularly with regards to certain economic sanctions that apply to Iran,” a spokesman for Orange said. Many western companies are worried sanctions might be reimposed after they move their operations to Iran. Keep in mind that the laws still prohibit U.S. and foreign banks from dealing in dollars with Iran, despite the nuclear agreement and it’s complicated the situation even more.
According to the recent report, Hamrah-e Aval (MCI), the first mobile operating network in Iran has the biggest share of the market with 44 million and 643 thousand active users with a penetration rate of 56.02% and a market share of 57% of the country’s cellular network. It has a market value of more than $4 billion on the Tehran stock exchange.
Orange has been planning to engage with Iran for many years. Orange’s consultancy company, Sofrecom, has provided technical assistance to TCI and advised its management since 2014, according to invoices reviewed by The Wall Street Journal. Orange could provide consultancy services in areas such as roaming connectivity and mobile virtual network operators (MVNOs) to MCI. This deal could make a big headline since it can be the first time a Western company has purchased a significant share in a major Iranian company since the nuclear agreement which happened last year.
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