HiWeb Acquires 23% Stake in Iranian Net

EghtesadOnline: Iranian Internet service provider HiWeb has acquired a 23% share in the country’s fourth communications operator Iranian Net.

News ID: ۷۴۷۲۲۷

04 May 2019

Iranian Net, along with landline and mobile operators Telecommunications Company of Iran (TCI), Mobile Telecommunications Company of Iran (MCI) and MTN-Irancell are the country’s main communication operators.

According to permits issued by the Communications Regulatory Authority, Iranian Net has been charged with establishing the country’s fiber-optic network, a lucrative business in the fast-growing market.

HiWeb has acquired the shares from the ICT arm of Etemad-e-Mobin (Mobin Trust Consortium), news website Peivast reported.

Other major Iranian Net stakeholders are Telecommunications Infrastructure Company of Iran with a 20% share, Ahdaf Investment Company (11.42%) and Sina ICT Group (share undisclosed), according to Financial Tribune.

The leading ISPs in Iran market are HiWeb, Shatel and AsiaTech in terms of subscriptions and number of cities they offer services in.

Acquisition Spree

Earlier in March, following long-drawn negotiations and after overcoming regulatory hurdles, HiWeb had acquired another Iranian ISP, Pars Online.

HiWeb’s push for acquiring Pars Online was initially reported in October 2017. At the time, HiWeb announced that it has signed a “merger agreement” with Pars Online.

According to a statement from HiWeb seen by Financial Tribune, the two companies were to operate under the HiWeb brand.

Lack of financial details about the HiWeb-Pars Online deal prompted stock market regulators to suspend HiWeb’s trading ticker at the time. In a letter to the Securities and Exchange Organization, HiWeb explained that although the agreement was signed by the two parties, its fate depends on CRA approval and that the process could take up to months. It said financial details “will be made public as soon as possible”.

In the following months, regulatory questions about the agreement have been seemingly addressed and HiWeb has received the telecom ombudsman’s approval for legally sealing the deal.

However, the deal’s nature evolved from being a merger into an acquisition.

Market Impact

With the introduction and growth of third and fourth generation mobile telecommunications technologies in recent years, ISPs have observed a noticeable decline in revenues as users in increasing numbers rely on mobile services to surf the net.

From what is known, none of the ISPs has the funds to compete with Iran’s largest fixed landline service provider, as the state-backed TCI has emerged as an unchallenged monopoly.

On several occasions, ICT Minister Mohammad Javad Azari-Jahromi has said, “Mergers and acquisitions between local ISPs will enable private businesses to cut cost, raise funds and compete with TCI.”

HiWeb’s acquisition of Pars Online and foray into the field of optic fiber services are certain to give Iran’s landline telecom sector a boost.

Market Overview

Iran’s total population is estimated at 82.4 million, with nearly 70% living in urban areas. Iran has 72.94 million users and an Internet penetration rate of 89%.

CRA reports that 10.3 million landline Internet subscriptions have been registered in Iran.

The number of Iranian Internet users shot up by 29% in 2018. In other words, 16 million people linked up to the web for the first time last year.

An estimated 123.7 million SIM cards have been sold in the country. The number of active mobile SIMs registered a year-on-year increase of 3 million (2.4%).

Average mobile Internet speed was 30.58 Mbps in 2018, 75% higher than a year earlier, while average fixed Internet speed was 12.82 Mbps, indicating a 36% improvement.

Close to 74% of mobile subscribers use prepaid services and 26% are post-paid. Over 59% of the mobile SIMs support broadband Internet (3G and/or 4G).