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Last Updated: Thursday, 23 September, 2004, 11:27 GMT 12:27 UK
Turkcell signs Iran mobile deal
Iranian woman talking on a telephone
Iran's existing mobile network is creaking at the seams
Turkey's biggest private mobile phone operator has signed a controversial contract to build a network in Iran.

The deal, which Turkcell announced on Thursday, could be worth as much as $3bn (1.7bn).

But it could fall foul of a law backed this week by Iran's conservative parliament, which demands a veto over projects with foreign majority control.

Airports and telecoms, areas in which Turkish consortia have interests, could be affected by the law.


Hardliners in the Majlis, or parliament, accuse two Turkish firms, Turkcell and TAV, a Turkish-Austrian consortium which built and was then ejected from Tehran's new airport earlier this year, of doing business in Israel.

That, they say, makes the firms a security threat.

The new law has attracted an angry response from President Mohammad Khatami, whose economic reforms are now being rolled back.

If implemented, it would "paralyse the work of the government" and cost Iran billions, he said.


Turkcell - which has more than 20 million subscribers in its home market - refused to comment beyond a short statement confirming the signing of the deal by Irancell, its 51%-owned subsidiary.

President Mohammad Khatami
President Khatami is fuming at the new law
The majority ownership puts it within the reach of the proposed law, which as currently written backdates the parliamentary veto over firms with more than 49% control by foreigners to 20 March this year.

The firm's spokesman said it wanted to consider the implications of the week's events first.

It also refused to comment on whether it has business dealings in Israel, although like almost all GSM operators worldwide it has an interconnection deal with Israeli networks so that its customers can use their phones there.

The two countries have strengthened ties in both defence and economic issues in recent months.

Israeli industry minister Ehud Olmert was reported in June to have attended a meeting between Ruhi Dogusoy, Turkcell's chief operating officer, and executives from Israeli telecoms firms.


Turkcell has yet to finalise the deal with a 300m euro ($370m; 205m) payment which will put the mobile licence in Irancell's hands.

Assuming the project remains on the rails, the firm has said that it expects a massive take-up.

Iran's 70 million people currently have access to just one, state-owned network.

About 3.4 million people are signed up to Iran Mobile, and there are long waiting lists and prices of more than $500.

Turkcell is planning to price its lines at about $178 each.

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24 Oct 02  |  Business
Analysis: What now for Iran?
23 Feb 04  |  Middle East
Country profile: Iran
15 Jan 04  |  Country profiles

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