Telecommunications Company of Iran’s annual profits are forecast to drop 18.4% this financial year even though the company is growing rapidly, say analysts in Tehran.
TCI, the country’s former monopoly mobile phone operator, will generate US$980m in the…
Telecommunications Company of Iran’s annual profits are forecast to drop 18.4% this financial year even though the company is growing rapidly, say analysts in Tehran.
TCI, the country’s former monopoly mobile phone operator, will generate US$980m in the financial year to the end of 20 March 2011, compared with estimated profits of US$1.2bn in its last financial year due to the intervention of the Iranian government.
Following the privatisation of a majority stake in TCI last September, Iran’s government decided to take over TCI’s network and charge the operator for using the infrastructure that it built under state ownership.
TCI will pay US$640m to Iran’s Ministry of Information & Communications Technology this financial year for using its former network, said Ali Mashayekhi, head of investment research at Tehran-based Turquoise Partners. In December last year, the ministry forced TCI to transfer its network free-of-charge to a shell company owned by the ministry.
Although TCI is forecast to generate US$6.2bn of revenues this year, US$500m more than it generated last year, the company’s profits will still drop because of the unexpected US$640m charge.
“This is just a hiccup,” said Mashayekhi. “We do expect the growth to continue because TCI has an expansion plan. It is planning to add another 6.5 million customers within three years.”
TCI had 31 million mobile phone customers at the end of last year; in May, it will reveal how many customers it had at the end of March.
“We expect the profit to keep going up in subsequent years, but that’s mainly because of TCI’s expansion plans,” said Mashayekhi.
TCI declined to comment.
The Iranian government sold a 50%-plus-one-share controlling stake in TCI to Etemad Mobin – an Iranian company allegedly controlled by the Revolutionary Guard Corp – for US$7.9bn on 27 September last year. The transaction is the second-largest telecoms M&A deal in Africa and the Middle East in recent history.
