Vodafone Leaps Into Iran With Internet-Service Deal

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 [e-mail]

(END) Dow Jones Newswires

October 18, 2016 05:43 ET (09:43 GMT)

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