Mobile Phone Prices Likely to Leap Again

EghtesadOnline: Another wave of price surge is expected in Iran’s smartphone market, as the government is set to revise its mobile phone import regulations.

News ID: ۷۴۷۲۹۱

11 May 2019

As per the Mobile Registry Scheme, local telecom operators are barred from offering services to contraband handsets.

Import regulations allow one handset into the country with each passenger, who pay an 18% import duty and register their devices with the customs, according to Financial Tribune.

However, by using the loophole, profiteers are now bringing large numbers of handsets into Iran. While they are paying the import duty, they do not offer after-sales services to customers and more often than not sell fake products, Digiato news website reports.

Ebrahim Dorosti, the head of Iran Electronics and Mobile Phone Importers Guild, said suitcase trade has an 85% share in Iran’s mobile phone market.

“As of May 22, mobile phone imports via suitcase trade will be banned,” says an official at Iran’s Headquarters for Combating the Smuggling of Commodities and Foreign Exchange, Hamid Reza Dehqaninia.

According to the official, each traveler who can authenticate the foreign visit by showing the ticket and visa would be allowed to bring a single handset into the country.

Market insiders have cautioned that the move will restrict supply and lead to a new jump in prices.

In response to the planned move, Dorosti said, “It is a welcome move that authorities are set to curb the suitcase import of handsets. However, mobile phone imports should also be facilitated at the same time, otherwise prices would once again rise.”

He added that the main issue blighting legal cellphone imports is the lack of allocation of foreign currencies.

The guild official believes that mobile phone importers’ access to foreign currencies should be eased.

“Companies should either be allowed to purchase foreign currencies from the open market or through the Forex Deals Integrated System, locally known as Nima—a state-regulated platform for businesses to buy and sell foreign currency in bulk,” he said.

Dorosti said guild representatives are to meet with Interior Minister Abdolreza Rahmani-Fazli and officials from the Prosecutor General’s Office in the coming days to devise a solution for regulating the market.

Prohibitive Prices

Following the imposition of harsh US sanctions against Tehran last summer, the Iranian national currency has lost 70% of its value.

A year ago, $1 fetched 37,000 rials in Tehran. On May 10, the USD exchange rate was 156,500 rials.

Over the past few months, prices of all goods, including mobile phones, have jumped to unprecedented highs.

Apple and Samsung’s latest models are still available in Iran, albeit at prohibitive prices. For instance, an iPhone XS Max costs 270 million rials ($1,730). The same handset goes for $1,449 in most other countries.

The latest Samsung Galaxy phone, S10 Plus, has a price tag of 170 million rials ($1,030). The same device sells at $999 in the global market. A Samsung Galaxy A7 costs 42 million rials ($250) in Tehran.

Mobile Registry Scheme

To curb smuggling, ICT Ministry, the Islamic Republic of Iran Customs Administration, Communications Regulatory Authority and Industries Ministry established the Mobile Registry Scheme that bars local operators from offering services to contraband gadgets.

For implementing the scheme, authorities use an online database of IMEI, or the International Mobile Equipment Identity, the number of a functioning handset. IMEI is a unique number—like fingerprint for electronic devices—that helps identify a mobile phone.

The IMEI number is used to identify valid devices. Therefore, cellphones that have entered the country legally can be identified.

Prior to the introduction of the scheme, smugglers had a 90% share in Iran’s mobile phone market.