France’s Orange SA has announced holding preliminary talks to buy a stake in Iran’s main telecoms network, Hamrah-e-Avval or Mobile Telecommunications Company of Iran (MCI), which is the first time a major European company has expressed interest in such a deal.
Iran’s major network has been rumored to be in talks with the French telecoms operator for well over a year, with several industry insiders saying the possible deal has been hampered by primary sanctions placed on Iran and lobbyists muddying the waters of foreign companies entering the country.
Orange said on September 1 there were several areas of mutual interest and cooperation for both operators that are still in discussions.
“We anticipate that these discussions will be finalized within a few months,” its spokesman said in a statement, Reuters reported.
The statement by the company did not elaborate on what those areas of cooperation could be.
The original report by the Wall Street Journal on August 31 stated that Orange had entered into preliminary talks to buy a stake in the largest Iranian operator with about 10 million subscribers in Tehran alone.
If it materializes, it would mark the biggest coup for the company in more than a decade after pulling out of other markets and merging its UK business with T-Mobile to create monolith network EE, subsequently bought out by British Telecommunications for £12.5 billion.
The statement by the French company, formally France Telecom, did confirm previous reports from Tehran that the company would likely buy a minority stake in the company next year.
Actually, the Orange merger/partnership deal originally reared its head in September 2015 when Iran’s Telecoms Minister Mahmoud Vaezi facilitated discussions between the French operator and an unnamed mobile telecom firm.
US a Cause for Concern
“We are conducting feasibility studies to understand and assess what is possible in this complex environment, particularly with regard to certain economic sanctions that continue to apply to Iran,” the spokesman of Orange was quoted as saying by Reuters.
The note of cautiousness in the company’s tone may be related to issues the company has had in dealing with Iran and making direct financial transactions between the two firms.
“Like many other international operators, Orange has been considering opportunities in the Iranian market subsequent to the implementation of JCPOA,” the spokesman said, referring to the Joint Comprehensive Plan of Action, the formal name of the nuclear deal Iran signed with world powers.
People familiar with the proposed partnership have cited several issues for the telecoms operator entering the market, such as the support of European and US regulators who could nip any deal in the bud.
One source, who wished not to be named, said the key logjam for the company entering the country was retaliatory measures by the US’ Office of Foreign Assets Control that has been keeping a keen eye on European entities entering the Iranian market.
Similarly, other European companies, most notably British Airways, had to postpone their rescheduling of flights to Iran to September 1 as one unnamed source to that deal said the company had to check with American regulators whether they might be hit by sanctions for conducting both American and Iranian direct flights from the United Kingdom.
Operational Realignment
With an annual revenue of €40.236 billion according to its 2015 annual report, Orange has key markets in over a dozen countries and is also listed on the New York, Italian and Euronext stock exchanges.
The company currently operates in France, Belgium, Luxembourg, Dominican Republic, Spain, Cameroon, Ivory Coast, Egypt, Jordan, Kenya and Tunisia to name a few. Earlier, it had operations in more established markets like the UK, Liechtenstein, Switzerland and lastly Armenia until December 2015 when it sold out to a local firm.
The news of the French firm’s interest in Iran follows the decision to pull entirely out of Israel’s telecom market in April 2015 citing the regime’s war crimes against the Palestinians and illegal settlement activities in the West Bank.
Iran Connect
The company’s statement of interest precedes Iran’s first internationally supported conference on mobile telecommunications called “Iran Connect”, which will be held from September 6-7 in Tehran.
The event, which will have keynote speeches from Iran’s Telecoms Minister Mahmoud Vaezi and Britain’s charge d’affaires, Nicholas Hopton, will cover the key areas of investment for the mobile telecommunications sector in the coming years.
Orange will also be a key sponsor of the event, according to Capacity Media’s conference website, along with other foreign telecoms operators. Market observers expect an announcement on the sidelines of the event, though the company has not stated whether they intend to elaborate on the proposed partnership with MCI or reveal a concrete deal.
