Major ISP Merger in Limbo

EghtesadOnline: The merger between two of the largest local internet service providers, HiWEB and Pars Online has been called into question, as HiWEB’s director says the deal can be called off.

News ID: ۷۴۵۴۴۰

11 June 2018

HiWEB CEO Iman Miri says the situation will be clarified by June 21, adding, “Either we reach a conclusion or cancel the deal altogether.”

Providing reasons, Miri told the reporters with the local electronic magazine Peivast that the circumstances in the Internet market have changed drastically compared to eight months ago when the merging process was initiated.

With the introduction and growth of third and fourth generation mobile telecommunications technologies in recent years, Iranian ISPs have observed a noticeable decline in revenues as users in growing numbers are turning to mobile services to surf the web, Financial Tribune reported.

Furthermore, Miri says the Communications Regulatory Authority’s scheme which lowered Internet tariffs following the introduction of a mandatory landline Internet Fair Usage Policy, has constrained ISPs’ revenues even further.

“Many users who need lower bandwidth caps have terminated their landline Internet subscriptions and turned to mobile services, resulting in a 20-25% decline in ISPs’ incomes, which has complicated the merger.”

Through the new pricing rules, each landline ISP is required to announce a bandwidth cap for different Internet speeds. A bandwidth cap, also known as a band cap or a data cap, is a limit imposed on the transfer of data over a network. Although often referred to as a “bandwidth cap”, it is not the actual bandwidth (bits transferred per second) that is limited, but the amount of data downloaded per month.

HiWEB and Pars Online have Fiber Channel Protocol (FCP) permits, allowing the companies to offer services in the areas of landline and Internet telephony services.

The merger was aimed at challenging the state-backed Telecommunication Company of Iran, which has had an unchallenged monopoly over the market with enormous resources.

Another factor contributing to the cancellation is Pars Online’s failure to submit certain financial documents to the Securities and Exchange Organization.

Vodafone Deal Falls Through

Vodafone, the world’s second-largest mobile firm that operates across Europe, Africa, Australia and Egypt, has decided to leave Iran in the face of the upcoming sanctions which the hawkish US President Donald Trump is set to impose on Iran.

The company signed a non-equity partner-market agreement with HiWEB in October 2016 to modernize the Iranian company’s network and information technology infrastructure.

The deal had created a win-win situation for both HiWEB and the UK telecoms company, with Vodafone’s corporate customers enjoying the benefit of quality network services and HiWEB gaining access to the telecom giant’s cutting-edge expertise.

According to Peivast, HiWEB and Vodafone have agreed to terminate their collaborations.