Vodafone Leaps Into Iran With Internet-Service Deal
October 18 2016 - 5:58AM
Dow Jones News
By Stu Woo
LONDON-- Vodafone Group PLC is partnering with an Iranian
internet-service provider to help improve its networks in the
country, making it the latest, big Western company to dive into the
fast-opening Islamic Republic.
The world's second-biggest mobile carrier by subscribers,
U.K.-based Vodafone said it wouldn't take an equity stake with its
new partner, Iran's HiWEB. Instead, Vodafone plans to assist HiWEB
in modernizing the country's infrastructure and expanding landline
and mobile internet services for the Iranian company's personal and
business customers. No specific deal terms were released, and it is
unclear how much Vodafone will invest in the venture.
Vodafone isn't the first--or even biggest--Western firm to jump
into Iran after world powers lifted international sanctions
following Iran's agreement to curb its nuclear program. But it
comes just a little over a week after the U.S. moved to ease
regulatory hurdles that have kept many Western firms, especially
American ones, at bay for now.
Earlier this month, the U.S. Treasury loosened its restrictions
on how Iran could use the U.S. dollar, and widened the potential
business partners in Iran for non-American investors. In a
controversial move, Washington ruled that non-American investors
could partner up with Iranian entities even if those entities are
still on the U.S. sanction list, as long as those entities weren't
controlling shareholders in the new venture.
That potentially opens the door for a host of new deal making.
Many big firms have worried they might accidentally run afoul of
existing U.S. sanctions amid a lack of transparency in Iran's
long-closed business community and its state-dominated economy.
Iran's Revolutionary Guard Corps, a paramilitary organization still
under U.S. sanctions, for instance, holds controlling and
noncontrolling stakes in many of Iran's biggest businesses.
Many major Western companies have looked into working in the
country since sanctions first started lifting earlier this year.
Iran has a population of 80 million. Both Boeing Co. and Airbus
Group SE recently agreed to sell jetliners to Iran Air. The U.S.
government last month gave both plane makers the all-clear to
deliver the airplanes.
Vodafone's deal offers another big vote of confidence.
The Wall Street Journal reported in August that France's largest
telecommunications company, Orange SA, was in preliminary talks to
buy a piece of Iran's biggest telecommunications company. Orange
already has a technical-assistance contract with the Iranian
company.
"Iran is clearly in a new perspective after the agreement with
the international authorities," Bruno Mettling, Orange's deputy
chief executive for the Middle East and Africa, said in an
interview in London in July. "That's the first element. The second
element is it's a big country. All operators around the world are
looking for a form of cooperation with Iran."
A Vodafone spokesman said "the deal was made possible because of
the easing of sanctions." The agreement with HiWEB fits into the
carrier's strategy of focusing on fast-growing emerging markets,
which also include India, Turkey and South Africa.
"We get a partner in what is an interesting and developing
market," the Vodafone spokesman said. "It enables us to have on the
ground a partner that can serve our multinational corporate
clients, and from HiWEB's side of it, they get access to an our
expertise....We're always looking for opportunities in new and
exciting markets, and in this case, a partnership was the best
fit."
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
October 18, 2016 05:43 ET (09:43 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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