Despite the enormous and fundamental changes in political, social and economic bases, the communication and information technology (IT) industry has witnessed a dramatic increase in quantitative and qualitative and legal aspects during 160 years. Some of the most significant developments over the past three decades are as follow:
-Joining to internet (1991) -Iran officially joining to the World Wide Web (1993)
-National Data Network Plan in the Third Development Plan (2003)
-Internet Service Providers (ISP & ISDP) (2004)
-Internet services on the mobile phone (2007)
-Third Mobile Operator Licensing (2008) Broadband mobile service (2016 -Broadband mobile service (2016)
In the sixth development plan, the definition of communication and information technology by the OECD is considered as an appropriate model, which consists of four parts:
1. Electronic, optical and computer products
3. Software publishing
4. Information technology and applications and content
Estimated market volume in these four sectors in the year ended March 2017 was 11.5 bn USD. Currently, the share of the telecommunications market is 72%, information technology, applications and content market is 19% of the total ICT sector and the other two sectors have share 9% of the total market (8.5% of electronic, optical and computer products and about 0.5% of software publication) in information and communications technology.
-Increase in the capacity of inter-city fiber optic cable to 64,205 km
-750 mn USD optic fiber contract with MTN company
-Increasing cellphone penetration rate by 104%
-17.5% increase in the number of users having internet access
The capacity of inter-city optical fiber cable, international bandwidth and IP network capacity compared to year ended March 2016 grew by 9.7%, 35.8% and 70%, respectively in the year ended March 2017.
The United Nations Conference on Trade and Development (UNCTAD) has nominated Iran as one of the world’s top developing economies by B2C e-commerce index. Iran ranked 46 th in e-commerce index.
The ICT development average index in developed countries is 7.4 and for developing countries is 4.07, which indicates a very high distance between them.
The index for Iran is estimated at 4.99, which is 0.92% higher than the average in developing countries and has improved by 0.33% compared to the previous year. Iran is also ranked 89 th among 175 countries, upgrading to 1 st in 2015.
Operators, MPLS production and application soft wares have share 55%, 20% and 10% in the communications services value chain, respectively.
Iran with a score of 3.7 (score between 1 to7) in the 2016 network readiness index, ranked 92 (among 139 countries). This is not considered an acceptable rating compared to other middle-income countries. However, Iran’s score for 2015 is about 0.1 and has been upgraded by 4 ranks.
Iran has no remarkable ranking in the region. In 2016, Turkey scored 4.4 by ranking 48 th
in the Network Readiness Index and this position has not changed since 2015. Among the region countries, the UAE with a score of 5.3, the 26 th place in the 2016 network readiness index has the best position.
The penetration rate of access to fixed line reached 38.27% by June of 2017, so that by the end of this period, the Telecommunication Company has installed 29,428,000 telephone lines, of which more than 25,583,000 lines are in active or installed state. The number of fixed telephone lines installed in the villages amounts to 6,343,000 numbers, of which there are about 5,007,000 rural lines. In total, the number of fixed telephone lines installed by Iran Telecommunication Co. are 35,772,000, which more than 30,590,000 lines are active.
The price of each fixed line is currently 2 mn IRR. The fee of infra-provincial fixed telephone calls is 45 IRR and inter-provincial calls are 330 IRR per minute.
By June of 2017, roughly half of the SIM-cards sold by operators are disabled. Of the 156,011,283 sold numbers, 83,224,134 are active lines, with a mobile penetration rate of 104.13%. Meanwhile, in June of 2017, the penetration rate was 97.59% and the penetration rate increased by 7% compared to the same period of the year.
About 70% of the population over 6 years old own mobile phone, 72% of which are mobile users.
In the year ended March 2017, the penetration rate of active mobile subscribers was 104.14%, up from 8% compared to the previous year.
By the end of June 2017, of permanent, credit and data SIM-cards, the share of Hamrah-e Aval as the prime mobile operator was 49,591,731 SIMs, Irancell was 32,054,061 and the share of Rightel was 1,659,198 SIMs. Accordingly, Hamrah-e Aval operator has a penetration rate of 62.05%, Irancell 40.1% and RighTel 2.08%.
Most of permanent, credit and data lines are related to the Irancell, but Hamrah-e Aval has had the most active SIM cards as the first mobile operator. Accordingly, the market share of these operators is 38.47% and 59.53%, respectively and Rightel operator holds only 2% of the market share.
Iran is one of the first countries with access to internet in the region and 1% the world domains belong to IR. 1.5% of all internet content is allocated to Persian language, indicating the richness of Iranian culture. Alternatively, Iranian user’s presence on social networks in global scale is significant, as about 45,000,000 Iranians use the Web.
The increase of penetration rate of the Internet and mobile phones have had a huge impact on Internet usage and cyberspace, which has had a great deal of influence on political, social, cultural, scientific and economic arena. It can be said that life quality improvement has been the most important output of communication infrastructure development. The Internet usage is about 45%, which has had better condition than Asia and the Pacific and the developing countries (2016).
In the year ended March 2017, the ratio of Internet users grew by 17.5% compared to year ended March 2016.
The largest share of Internet connections is owned by GPRS, accounting for more than 40.5% of all Internet communications. Dial Up and Optical Fiber are up 28.6% and 22.7%, respectively.
Currently, despite investments in broadband penetration, Iran still has one of the lowest penetration rates in broadband. Among Middle Eastern countries with the relatively high static bandwidth, mobile broadband is gaining growth, since 2013, mobile penetration has grown from 1.2% to 20% in the third quarter of 2016 which is deemed a very high growth. The major growth in mobile broadband is shown below.
In spite of the slow internet access, Iran, is one of the most inexpensive countries in the broadband market and is the world 14 th rank. The fixed broadband service price is estimated at 0.6% of the income per capita. Iran owns 35 th place in permanent mobile broadband service in the world. In terms of mobile phone cost, Iran is ranked 3 rd in low-cost mobile phone services in the Asia-Pacific region.
The Iranian postal network today far exceeds the mere interpersonal messages and is involved in correspondence culture for public and private organizations which deal with people, thus focusing on building postal activity throughout the entire society.
Sanctions & post-sanctions
Sanctions against Iran have had a significant impact on ICTs, like other industries. Since the start of the sanctions pressure, activists have challenged difficulties at all ICT levels, including IT equipment import and subcategories such as hardware, software, internet, network and telecommunication equipment. During the sanctions era there was not an easy access possible to the latest software and Web environments, open sources and developers thus leaving a negative impact on ICT business.
The lifting of sanctions in technology was effective. In the field of ICT, proper infrastructures have been created and in fact it is like a country where railways are well-built, but wagons are not mounted yet, so lifting of sanctions could accelerate the development.
By signing a contract after 2 years, the 750 mn USD investment of MTN in optical fiber was finalized. According to the agreement, the establishment of a fiber optic network in 8 metropolitan areas is accomplished to create access for universities, businesses and homes and cultural centers. Thus, 300 mn USD direct and 450 mn USD indirect is invested in this area. Through this agreement, a competitor document for Iran Telecommunication Company was created, which provides the users a free choice, speeds up development and gives more mobility to Iran Telecommunication Company.
Iranian-Net Co. along with a foreign investor establishes a company of optic fiber network in 8 big cities, 49% of which belongs to foreign investors and 51% to Iranian-Net.
- High penetration rate of mobile phones
- Operators growth and innovation due to competition
- High penetration rate of fixed phone line
- Various Internet service providers
- Telecommunication Co. monopoly on fixed phone line
- Traditional view upon the software market
- Lack of proper pricing on software products
- Copyright infringement
- Lack of variety in software products
- International relations after JCPOA
- Exponential growth of the digital revolution
- Young potential for cyberspace development
- The geopolitics location as a safe and stable country
- Government distinguished consideration to ICT
- Increasing demand to use ICT services
- Educational and skill system incompatibility with the needs of the present and future
- Low level of domestic technology relative to the world average
- Lack of legal and regulatory framework for observing intellectual property in cyberspace
- Lack of transparent market and legal regulations for the private sector and new businesses, especially in IT applications development and local content
Investment incentives & advantages
-Growing ICT Market in Iran up to 11.5 bn USD, which is targeted to be tripled, reaching 28.7 bn USD at the end of the 6 th development plan. However, according to 1% share of Iran’s population, at least 1% of the world economy of ICT should be equal to 63.7 bn USD, which is targeted at 28.7 bn USD in 2020.
-Five-year tax exemption for software companies.
-Capacity boosting in fixed, mobile phone and data
-Moving to new markets and establishing super cloud data centers and broadband service development for organizations and home and business subscribers
-Moving toward synergy in mobile and fixed networks to reduce current costs and increase productivity
-Upgrading and innovating IP network
-Improving communication infrastructure and helping to develop business and economic and social growth
-Staying up-to-date and using new technologies
-Developing ICT application in the society
-Investing in Telecommunications new sectors
-Launching and strengthening research and development (R & D)
-Increasing capacity of ICT manufacturing companies
-Attention to high export potential
-Moving towards new markets
-Moving towards synergy in ICT manufacturing companies
-Helping businesses development
-Modernization and upgrading IT industry and the use of new technologies
-Investing in new IT industry sectors
-Capacity improving for software and computer games companies
-Moving towards synergy in software and computer games companies
-Promoting software engines and computer games and helping with businesses growth
-Staying up-to-date and using new technologies
-Development of software applications
-Investment in new software sectors
-Launching and strengthening research and development (R & D)
-Digital content production and delivery
-Producing and providing proper content in various areas and topics
-Launching OTT and local social networks
-Investment and launching of Iranian Content Distribution Networks (CDN)
ICT industry in Capital Market
With P / E ratio of 5.15, the telecommunication group with a market value of 9,055 mn USD accounted for almost a share of 8.8% of Iran capital market value.