Samsung, the dominant cellphone brand in Iran’s market, has been exempted from the mandatory Mobile Registry Scheme until the end of the Norouz (Iranian New Year) holidays that ends in April. The scheme bars local mobile operators from offering services to contraband handsets.
The Telecoms minister took to Twitter on Monday to announce that for now Samsung has been exempted from the government’s policy to put the huge cellphone market, which is flooded with contraband, in order and curb rampant smuggling.
Mohammad Javad Azari Jahromi wrote, “Considering the 50% share of Samsung in the market, and to avoid the negative impact [of enforcing the scheme on Samsung], this brand has been exempted from the scheme until after the Norouz Holidays [March 21-April 2].”
The necessity for “a stable market” and “preventing negative impact on consumers” were among the reasons the minister claimed for the strange and unexpected announcement exempting the South Korean company from the tough rules all other companies are compelled to uphold.
The Tweet resulted in a heated exchange between the minister and Twitter users who accused the relevant authorities of being acquiesced by Samsung’s purportedly strong lobby in Tehran.
Twitter user Kheyzaran deplored the decision as outright favoritism and “helping Samsung make good use of the holiday market frenzy.”
As is customary in Iran, demand for goods from food to electronics spike as the year comes to an end and families prepare for the annual New Year holidays. The current fiscal ends on March 21 and market observers expect that just like every other year, demand for mobile phones will increase sharply in the coming weeks.
Some observers say that Samsung is strong in the domestic market and apparently wants to profit as much as it can from the two-week holiday season and before the Registry Scheme’s effect inevitably undermines demand.
In response to Kheyzaran’s protestation, the minister said obliging Samsung to comply “requires strict supervision and it is hard to control the market during a time of year when workplaces are closed.”
Shahram Sharif a reporter with Financial Tribune’s sister Persian-language newspaper Donya-e- Eqtesad asked the minister on Twitter if the exemption is related to the release of Samsung latest flagship Galaxy S9 expected in the domestic market in March.
Jahromi retorted, that in order to thwart doubts and claims about favoritism “new models will be subjected to the registry scheme.”
Many on social media went further in rebuking the authorities over their indirectly professed shortsightedness asking why the ministry failed to prepare for all contingencies and did not notice that the extended Norouz holidays were around the corner.
>Change of Heart
Over the months since the registry scheme came into effect cellphone prices have been rising and expected to go up further. Jahromi has been regularly quoted by the local media as saying that “The scheme has had no impact on the market and increase in prices are largely due to volatility in the foreign exchange rate.”
Earlier this week he Twitted, “Mobile prices have declined by up to 8% in recent weeks due to the decrease in foreign exchange rates;” a claim which was strongly dismissed by market observers.
The rial was trading at 44,700 to the dollar on Tuesday, strengthening from 49,000 two weeks ago. The relative stability in the forex market led to the expectation that mobile phone prices would also descend, but the people say prices of most handsets remain high.
Industry experts and retailers insist that the implementation of the scheme is the main reason pushing up cellphone prices. It is widely reported that the scheme has pushed up prices by up to 20%.
Officials deny the negative impact of the mandatory registration on price inflation and as usual love to blame all that goes wrong on the chaotic foreign exchange market.
>Upcoming Phases
Launched in October, the registry scheme that bars local operators from offering services to contraband phones has been phased to avoid a shock to the cellphone market.
Hossein Fallah, head of the Communication Regulatory Authority, made an announcement on Sunday specifying the dates for the implementation of the next phases of the scheme for Nokia, Huawei, Sony and Tecno phones.
The scheme will be implemented for Nokia and Huawei brands as of March 10 and Sony and Tecno phones from March 17.
An estimated 7 million phones are sold in Iran every year with the average price of 14 million rials ($300). According to market insiders, contraband cellphones had a 95% share of the market prior to the launch of the registry rules. Importers on cellphones must pay 18% tariff.
Apple, Motorola, Blackberry, Google Pixel and LG have already been subject to the scheme.
Fallah says all mobile phone salesmen have been instructed to inform customers of the registry and activation processes through brochures and flyers in their stores.
