According to an order by Iran’s Ministry of ICT in 2006, Irancell had to go public with 21% of its total shares. Yet, years after the first announcement the IPO has not taken place.
MTN Irancell is a fast growing Telecommunications Service Company providing 2G-3G-4G-4.5G mobile broadband, WiMAX and TD-LTE in Iran. Irancell’s earning results in 2016 show a total revenue increase of 12.8%, driven by increased data revenue growth. The data revenue of Irancell increased by 58.8%, underpinned by the optimization of data bundles, modernization of 2G and 3G sites and expansion of the LTE network according to Bloomberg. The company was founded in 2005 and is based in Tehran.
With a set deadline and the announcement of CRA (Communications Regulatory Authority of I.R. Iran) regarding Irancell entering Tehran Stock Exchange (TSE), it was expected that the company would finally be listed on the stock exchange. Yet, years after the first announcement the IPO has not taken place.
TSE (Tehran Stock Exchange) with a market cap of about $90 billion is the fifth largest stock market in the Middle East. In addition, with the sanctions being lifted, TSE can allow the country to compete for investors with countries such as Saudi Arabia.
Irancell to Enter Tehran Stock Exchange
In December 2010, 5.5% of the MCI shares were offered on the Iranian over-the-counter market (Farabourse), at a value of $396 million. MCI currently holds a market share of 58% and is considered to be the largest IPO-to-date in the Iranian OTC market. In August 2013, the company moved from OTC to Tehran Stock Exchange. With MCI entering TSE, now everyone is looking into Irancell to do the same.
According to an order by Iran’s Ministry of ICT in 2006, Irancell had to go public with 21% of its total shares in 3 years. 9 years later, in 2014, the General Inspection Office required the Communications Regulatory Authority (CRA) of I.R. Iran to fulfill the obligations in its license. In addition, the company was fined over the number of years (2008-2015) that it had failed to meet its obligations to go public with 21% of its total shares. Even after the General Inspection Office’s directions, the CRA decided to give Irancell 6 months to propose their terms and conditions for entering the stock market. Yet again, no such thing happened and no charges were applied.
According to Irancell’s reports in the last quarter of 2014 to the Communications Regulatory Authority (CRA), the IPO should have started from August 2015 but again, it didn’t take place.
In 2015, Alireza Ghalambor Dezfouli, the Chairman, and CEO of Irancell mentioned that 40% of Irancell’s income is paid to the government. Later the Minister of Communication and Information Technology, Mahmoud Vaezi said: “Putting obstacles in front of a company that hasn’t stopped investing in Iran even during the years of sanctions, is probably not in our best interest.” Vaezi added: “Now that investors from different countries are looking forward to investing in Iran especially now that the sanctions are lifted, we have to be flexible regarding a company with 49% of its shares owned by a South African partner.”
In 2016, Ruhollah Hosseini Moghadam, Deputy of publishers and members of the Stock Exchange said that Irancell has finally filed for stock exchange listing but for that to happen there should be a meeting with the South African partner of Irancell. Even 9 months later, no such meeting took place. The stock exchange office later proposed to hold the IPO in Johannesburg Stock Exchange Limited (JSE) and Tehran Stock Exchange (TSE) simultaneously to “Make the deal more appealing for both the Iranian and the South African sides” as the Director of Admissions at Tehran Stock Exchange mentioned. According to the Director of Admissions at Tehran Stock Exchange, the main reason hindering the process of Irancell’s IPO is the combination of Iranian and south African shareholders. The Ministry of ICT, CRA, General Inspection Office and Irancell have not made any comments on TSE’s proposal. Yet, the company which 40% of its income is paid to the government, according to its CEO, has not yet gone public years after the first announcement.
“As a requirement for being listed on the TSE, the company should first be converted from private limited company (Pvt. Ltd.) to limited liability partnership (LLP),” said Irancell’s CEO in his last comment.
With the Iranian elections ahead, we must wait and see what the next government would decide about Irancell’s IPO considering its fast growing revenue and the fact that MTN owns 49% of its shares.