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Consortium buys US$8 billion majority stake in Iranian Telecommunications Company

Iran has witnessed the privatisation of its state-monopoly Iranian Telecommunications Company. US$8 billion passed hands as a consortium dominated by Iran’s Revolutionary Guard makes its presence felt in the country’s telecoms sector...

Control of Iran’s monopoly Telecommunications Company has passed from the Government of Iran to a consortium strongly influenced by the country’s Revolutionary Guard. Reports in the State-owned media and relayed via Associated Press suggest that the sum of US$7.8 billion was paid by the Etemad-e-Mobin consortium to the government. In return 50% of the company plus one “golden share” was handed over in what has been the largest privatisation deal ever in Iran.

Placed in a national and political context, it would seem that the Revolutionary Guard is consolidating its power-base within Iran. President of Iran Mahmoud Ahmadinejad was himself a Revolutionary Guard and this almost certainly had a part to play in the shift in ownership; similar changes have been seen in the construction, oil and gas sectors, Associated Press quoting a total of 750 contracts being placed with companies linked to the Guard.

Two other consortia did try to gain control of the Telecommunications Company but one of these was eliminated because its security credentials were not up to acceptable standards. This in turn is leading to speculation that the privatisation programme is not geared to the open market but rather to the Islamic establishment in Iran maintaining control of the country’s economy at arm’s length while accepting the need for government inefficiency to end.

At present, a typical privatisation will break down into 20% of the stake being handed out to Iran’s poor - referred to as justice shares - with 20% retained by the Iranian government, 5% given to the company’s employees and 5% offered in a minority privatisation to help establish the price at which the main shares are sold. Telecommunication Company of Iran is no exception.
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