Iran Marching Toward Telecom Self-Sufficiency

Addressing a meeting held in Tehran late last week, Reza Rahmani added that within two years, infrastructures of information and communication technologies will mostly be localized, curbing an annual capital flight of over $10 billion, IRIB News reported.

"In line with strengthening domestic manufacturers and increasing the share of Iran-made products in the field, the import of more than 1,500 communication products has been stopped over the past several years, as they can be produced by local manufacturers using domestic equipment and technology," Rahmani said.

“The role of locally-made devices in the field is expected to expand, making the ICT sector independent of foreign sources,” Financial Tribune quoted him as saying.

Rahmani said localization will flourish further and boost exports.

In the last Iranian year (ended March 20, 2019), Iranian producers of ICT items earned $24 billion by exporting to over 15 regional countries. "The figure is expected to double by 2021," he added.

Drawing China as an example, Rahmani said Iran has the potential to sell communication products worth over $700 billion to the Chinese market. 

Majid Sadri, the head of Telecommunications Company of Iran, said a large part of the required infrastructures will be localized shortly.

"Iran is already self-sufficient in the production of modems, copper cables, data transfer equipment, ICT charging and maintenance services, wavelength-division multiplexing technologies and fiber-optic communications, which have been mainly imported so far," he said.

Sadri emphasized that adhering to standards is of high importance in the production of equipment in the field of communications.

"In line with the ultimate goal, we will increase the use of domestically-made devices in TCI and constantly encourage local makers to use the world's latest technologies to enhance the quality of their outputs," he said.

Speaking at the same meeting, Deputy Defense Minister Majid Hedayat said that in the telecom sector, the local potential is sufficient for meeting domestic demand and no imports are needed to develop the communication infrastructures of the country.

"The Defense Ministry is ready to cooperate with executive officials involved in the move," Hedayat added.

High Hurdles

Industry insiders are optimistic about localization plans, while the move will certainly face challenges and some resistance on its way.

Faramarz Rastgar, the head of Iranian Telecommunications Industries Syndicate, believes that the incentive to utilize locally-made equipment in ICT infrastructure is not strong enough.

Speaking of technology level, he said Iran's ICT industries can meet up to 50% of the need for landline telephony equipment and software, and up to 20% of mobile telecom products. 

"But this is more true in terms of theory since the relevant organizations are more willing to use a combination of foreign and local equipment," he added.

Highlighting low import tariffs in the ICT sphere as one of the major factors killing the motivation of companies to use local products, Rastgar suggested raising import tariffs to at least 30%.

"Higher import costs will compel the domestic ICT industry to resort to local potentials and curb capital flight," he added.

Confirming the points made by Rastgar, deputy ICT ministry for technology and innovation, Sattar Hashemi said a revision of import tariffs will motivate local producers to compete with foreign counterparts.

Tariffs for importing communication and technology tools and equipment reach 35% in many countries. In Iran, the figure is hardly 20%.

ICT Developments

The expansion of communication services and the promotion of telecom infrastructure investment have been high on President Hassan Rouhani’s agenda since he took office for the first time in 2013.

Data released by the Communications Regulatory Authority of Iran in October show that the sector has observed a significant growth over the past few years.

Internet penetration rate has reached 90.78% in the country. The mobile internet penetration rate is lower and stands at 78.14%. About two years ago, the rates stood at 53.53% and 41.72% respectively.

Iran has over 64 million mobile internet subscribers, in addition to the registration of 10.3 million landline internet subscriptions. The numbers are significantly higher compared to two years ago—33.2 million and 9.4 million respectively. The total number of internet subscriptions has reached 74.5 million.

Data show Iran's mobile communication network has grown fast over the past few years with the registration of 93 million mobile subscriptions. The number is significantly higher from 63 million registered five years ago.

Iran has 1,241 cities and a population of 83 million. The country’s mobile communications penetration rate has reached 113.34%.