In recent years, the pace of development and improvements in the country’s telecommunication sector has continued in all aspects. The country has managed to domestically manufacture a high percentage of its required telecom equipment.

Due to recent achievements, Iran has managed to rank first in the Middle East in terms of growth in the development of telecommunication network and has received UNESCO’s award for expansion of telecommunication in poor rural areas.

Presently, there are more than 52 thousand rural offices, providing Telecom services to the villages across the country. The number of fixed telephone lines is above 24 million, with penetration factor of 33.66%. Besides, there are 18 million internet users in Iran, making the country first in the Middle East, in terms of number.

The mobile phone network has witnessed a very sharp growth during the last 2-3 years, in a way that the penetration factor of mobile phones increased from 10.29% in September 2005 to 38.10% in August 2008. One reason for this was the emergence of two operators, which are mostly run by the private sector. This made the government sector, which used to have no competitors, try to secure a very large share of the market.

Currently, the government sector through the Telecommunication Company of Iran, has above 27.7 million mobile phone subscribers, while the private sector operators offer services to 4.38 million subscribers. There are now two private operators active in Iran: Taliya and Irancell. Moreover, the ICT Ministry is scheduled to put a third national license up for bid by the end of 2008.

Until recently the government sector has had exclusive control of all the telecommunications activities in Iran. As of 2001, in line with the privatization move, there has been plans to give the government a smaller role in the telecommunications industry, beginning with the transferring of the maintenance of networks, buildings, and operations of inter-city lines and call centers to the private sector. However, the government is still the main player in Iran’s telecommunication sector through the Ministry of Information and Communications Technology and its affiliates, accounting for about 90% of investment in Telecom projects.

The Fourth Five Year Economic Development Plan has proposed the following key benchmarks for 2010: 36 million fixed lines; 50% penetration rate for mobile phones; establishment of reliable rural ICT connections and 30 million internet users. Given the recent developments of the industry, the objectives are very likely to be achieved.

All in all, the Iranian telecommunications market shows tremendous potential for growth. The penetration rate for mobile phones in Iran currently hovers just over 30%, much lower than that of Iran’s Gulf neighbors in the United Arab Emirates (129.9%) or Saudi Arabia (83.6%). Iran’s demographics also provide a promising context for the expansion of the telecommunications industry: over 70 million people, nearly 70% of whom are under the age of 30. As network quality and coverage improves, the Iranian consumer will develop a greater brand and product awareness, demanding greater mobile offerings and innovative service packages.