Iran: Ready for a telecom leapfrog
by Thomas Kuruvilla, Sander Koch, Rohit Sethi, Dimitar Stefanov
With growth factors aligned, Iran might be on the verge of a digital transformation

Globally the telecom industry has undergone rapid change, driven by an increasing share of data and ICT revenues for operators. Even though Iran still lags in fixed and mobile broadband development, there has been rapid growth in recent years.

We believe there is a sizable opportunity for both existing service providers and potential new entrants into one of the largest markets in the Middle East. Given the global technological inclusion and improving local conditions, Iran might be on the verge of a dramatic digital transformation with a significant potential upside in the ICT contribution to GDP.


1. Iran in the global telecom industry


Until recently, Iran was largely isolated from the global trends within the telecom industry, but this has started to change. We believe there is a big opportunity for existing service providers and potential new entrants into one of the largest markets in the Middle East.

In developed markets data is king – charging for minutes and text messages is largely a thing of the past, with bundled packages priced on data allowance size. Average data usage per subscriber reaches gigabytes per month, and video takes the lion’s share. The rise of OTT services initially brought disruption and a wave of consolidation, including fixed-mobile convergence.

While this is still ongoing, some markets have already turned the corner, with data revenues contributing to overall growth in spite of shrinking voice and text revenues. At the same time, operators have increased their focus on optimization, including virtualization of networks and IT. The Internet of Things (IoT) is shaping up as a huge opportunity, and 5G is around the corner as a major enabler of industry modernization.

Finally, many telecom providers have become full-blown ICT providers with strong cloud, data center and managed-services Iran Leapfrog offerings. Fast and ever-expanding fiber and 4G infrastructure underpins most of these developments.



In Iran, mobile broadband was introduced with significant delay in 2012 by third-largest operator RighTel. MTN Irancell and MCI followed later, and the uptake of their mobile broadband offerings exceeded expectations, proving pent-up demand.

Nevertheless, smartphone penetration and the accompanying mobile-broadband usage are still low compared to those in other markets. Most data users subscribe to 2G and 3G, with only a small minority using 4G. Fixed and mobile networks have improved significantly in the last year, although they are still slow compared to networks in other markets. This hinders video consumption and the broader app economy.

As a result of low take-up of 4G and fiber, average data consumption is still negligible compared to that in developed markets. The B2B market is largely untapped, and historically the segment was non-existent in players’ offerings. After decades of sanctions and years of currency devaluation, infrastructure quality and quantity are insufficient.