Regulatory framework key to Iranian telecoms market success

Regulatory framework key to Iranian telecoms market success

Sparkle and Interoute representatives have both agreed that clearer regulatory rules are needed to boost foreign direct investment (FDI) into Iran and grow the telecoms market.

Is it still early days and is the region waiting to see real activity before investing in the new market? This was just one topic discussed in the “Providing Connectivity in Iran: The Telecoms Hub of the Future?” panel at yesterday’s Capacity Eurasia event in Athens, Greece.

As a result of sanctions being dropped there is naturally an increasing demand for wholesale providers to partner up with local players to not only enter the Iranian market, but to do so smoothly utilising existing infrastructure in the country which has invested heavily in landline models.

Capacity panellist Alessandro Talotta, chairman and CEO of Sparkle, said to delegates: “When we were in Iran two weeks ago, we had the opportunity to speak with private enterprises willing to invest and we are in favour of partnering as it creates better opportunities for consumers and enterprises.”

Telecom Italia’s Sparkle signed a deal with the Telecommunication Infrastructure Company (TIC) of Iran earlier this month in Tehran to expand its Seabone global backbone to Iran and provide a point of presence (PoP) in the Iranian capital.

“Finalising our agreement took more than one year to negotiate and understand. The reality is we’re going to launch a PoP in Tehran, but that’s just the first phase of the project,” he said. “The next stage only comes after successfully executing what has been agreed and gaining the partnering firm’s trust.”

Talotta added that although reaching an international agreement was tough, “the Iranian government has a clear vision in terms of broadband and ICT investment, and the population is gaining much better access to internet and ICT as a result”. However, he stressed that the onus on authorities to formulate “clear regulation” is “huge”.

This is needed to create a platform in which companies like Sparkle feel that they can increase FDI into the country knowing their investment is safe and they’ll attain a good ROI. Sparkle started investing in the Middle East eight years ago and Talotta said that as more competition enters the Iranian market over the next 1-2 years, “we still need to be careful with our investment despite becoming stronger in the region”.

Renzo Ravaglia, EVP service provider at Interoute, also attended the aforementioned Tehran conference. He told Capacity delegates the Iranian telecommunications minister had stated: "International capacity in the country, which stands at 5TB today, will need to be 20TB by 2020."

Ravaglia agreed with Sparkle’s chief that as the country has just opened up it is still difficult to understand and define the Iranian market. He believes that the country, which he predicts will become one of the top three telecoms markets in the future, needs clear rules and legal system. “The entire business community will benefit too not just the telecoms sector," he added.

The Interoute executive stated: “Liberalisation of the market and getting better access to the existing infrastructure will help the market’s growth. We’ll look to use our Turkish open market model. Congratulations to the Sparkle for entering the market, Interoute hopes to be the second one before the end of this year.” 

“Since 2012, we have been on a significant campaign of acquisitions. Our next step is to find a partner to work with in Iran, who’ll become part of the Interoute family.