Mobile phone use in Iran has long been an area of interest for the world’s mobile phone manufacturers and for tech industry experts alike. The country has one of the most tech savvy populations anywhere in the entire Middle East region and that trend isn’t slowing down anytime soon. Also, with a possible nuclear deal on the cards, the dropping of US executive sanctions on technology exports to Iran, the situation may change rapidly in the coming year.
The latest statistics from Iran’s telecommunications authority earlier in 2014 put cellular telephone line subscriptions nationwide at 83.2 million – the current population of Iran is 77.45 million (2013 census). This suggests that at a good percentage of the population own at least two mobile phones, or have a dual-sim phone.
The ‘Mobile Phone by Country’ report (2014) states that mobile phone penetration stands at 110% - 139.5% as of this year. The report also adds that that proportion of people with more than one phone is likely to expand further; numbers like this make mobile phone manufacturers salivate at entering the Iranian market.
Understanding the Market
To understand the Iranian market, one must understand the dynamics of its mobile phone system. Currently, there are officially four national networks running in the country, with other smaller ones running in places like Kish Free Trade Zone.
Hamrah-e-Aval (The First Network) or MCI is Iran’s largest mobile phone network provider; this is the country’s oldest provider of cellular telecoms and currently holds a 70 percent market share of 2G subscribers. The second largest company by share is MTN-Irancell with a 28 percent share and third is Taliya with 2 percent.
Lastly comes RighTel, Iran’s first “3G” mobile contract provider who only recently lost their sole exclusive two-year lead start on the Iranian third generation market to the other two major market operators. One report by Analysis Mason suggests that RighTel’s penetration stands 0.1% of the total mobile market (March 2014), as most people are either using their sim cards as a secondary provider or as a data-only provider.
No Contracts
The Iranian mobile market provides subscribers with only the sim card and telephone line, and there is currently no company in the country which offers a telephone contract and mobile phone in a bundle. This unique and somewhat undeveloped situation occurs when competition between the networks is non-aggressive.
Hence if one wants to buy their new smart phone they have to pay the cost of the phone outright, something which may come as a shock to people from countries with more established phone subscription markets. Considering this, the penetration rate of Iran’s mobile phone market is quite astonishing.
Samsung No.1
Nokia (Microsoft), Apple and Blackberry are currently absent in the market, nor do they have sister representative companies in the country.
One company that did stick it out and who wasn’t afraid of the US-backed sanctions was one East Asian company; Samsung to be precise. The Korean company – even during sanctions – saw a considerable jump in their sales of devices, especially the Galaxy range over the past four years.
This company has felt no issue with spending millions of dollars on marketing and advertising, even sending Korean representatives to set up their respective offices in Iran.
The company has reportedly spent large sums of money in the customer relations and servicing department, being the one of the very foreign mobile manufacturers who offers national 12 month guarantees on legally imported phones.
Samsung in recent years though has begun to lose its edge in the market. Like any other country, Samsung is beginning to lose its pole position in the country to cheaper Chinese newcomers like Huawei.
Apple Still Raking It In
Apple has chosen over the last few years to have no official representation in Iran - and last month stated it wasn’t looking for local partners and didn’t want to buy a flagship store in Tehran.
However the American brand still makes a killing in terms of market share, the very absence has in fact helped its marketing position in the country.
People will pay an average 20% more for the iPhone 6 than say neighboring markets (illegally imported ones), as a sign of wealth. Cultural situations like these are a dream for any company and especially ones that have never been present in the Iranian market.
3G/4G Problems
Since the introduction of 3G through RighTel a couple years back, penetration of the sector has been sluggish at best, mostly due to weakness in mobile broadcasting infrastructure and general confusion over the offering.
As the region’s most populous country, Iran currently has less than 1% of its connections running on mobile broadband networks. RighTel, although a minor market player, currently has the largest share in this market, and is the only network properly set up for mobile data services.
MCI and Irancell recently announced that they too have 3G/4G services; however reports from the ground have lambasted the network operators for their bad management of the new operator standards.
One technology industry professional, who asked not to be named, stated that although MCI states it is offering a 3G signal in Tehran, he was hard pressed to actually receive it.
Moreover, he went on to say that if it really was 3G then the speeds they’re offering would be as fast as those of RighTel – they’re not.
Issues like the bad management in the adoption of 3G, and the fact that consumers still have to fork out the full price for the phone, suggest there is now a gap in the market for another operator, or one that already exists, to seize the opportunity to offer bundle packages and thus increase their market share substantially.
