IRGC’s Involvement and Stake in the Iranian Telecommunications sector

# Brief History

Despite the fact that are quite a few players in the Iranian telecommunications market, it is still dominated by one Company – Telecommunications Company of Iran (TCI). The Company that was established in by the Iranian 1971 as a state monopoly government as the main body responsible for the administration of the entire country’s telecommunications. In late 2008, it was, the Company was partially privatized but still remains under the firm control of the Iranian regime, including the IRGC. The Company holds a monopoly over Iran’s fixed line monopoly, which places it in a commanding position over the entire Iranian telecommunications market.

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# Internet

There are over 600 ISP (Internet Service Providers) companies in Iran that provide internet access using various technologies. Telecommunications Company of Iran (TCI) is the official custodian of internet providing in Iran, meaning that any ISP company in the country needs also to be approved by Telecommunications Company of Iran (TCI). In addition, Telecommunications Company of Iran (TCI) itself is an ISP provider. In addition, there are 12 companies in Iran that hold a 10 year data transfer license providing broadband internet service. Telecommunications Company of Iran (TCI) is one of those companies and controls roughly 50% of this market. Telecommunications Company of Iran (TCI) hold over the ISP market was the subject of criticism on part of non-governmental ISP providers. In May 2014, several non-governmental ISP complained about the high tariffs Telecommunications Company of Iran (TCI) demands of them to gain internet access. In an attempt to weaken TCI’s hold over the internet market, “the Committee for Competition” issued a directive according to which TCI’s share of users in each province, should not be more than 10%. This directive, however, was not supervised and in truth, Telecommunications Company of Iran (TCI) holds 50% of the users.

# Mobile Telecommunications

According to a 2015 report of the “Financial Times”, Iran is the largest mobile phone market in the Middle East with more than 103 million mobile connections and 47 milion smartphones (mostly Samsung and Huawei models). Naturally, Telecommunications Company of Iran (TCI) through its subsidiary Hamrah-e Aval (aka MCI, Mobile Telecommunications Company of Iran), is a major competitor in this market. In addition, in May 2012, Telecommunications Company of Iran (TCI) bought Talya, a company which controls a pre-paid mobile network in Iran (which utilizes software as well as hardware products made, among others, by Siemens, Alcatel and Ericsson).

Market Share of Cell Phone operators February/March 2017
(Hamrah Aval – 59%; Irancell – 38.70%; Rightel – 2.30%)

[easy_chart chart_id=’42738′]
# IRGC Control

In September 2009, 50% plus one share of the shares of Telecommunications Company of Iran (TCI) (TCI, in Persian – Sherkat Mokhaberat Iran) were offered to the public. The shares worth about 7.8 Billion dollars were bought in the space of a half an hour (in what was the largest transaction ever to take place in the Iranian stock exchange), by a consortium called Tose’e-ye E’temad-e Mobin. The consortium was comprised of three companies: Tose’e-ye E’temad Investment Company, Shaharyar Mahestan and Iran Mobin (Gostaresh Electronic Mobin Iran). The shareholding was divided between the three companies in following manner: Tose’e-ye E’temad Investment Company – 46%, Shaharyar Mahestan – 8% and Iran Mobin controlled the remaining 46% shares of the consortium. At first, the consortium denied any involvement by the government and in particular denied any links to the IRGC. In the years following the purchase, once attempts to deny government involvement in the purchase of Telecommunications Company of Iran (TCI) failed, the narrative changed and the company claimed that while government entities were on control of the company, this has no bearing on its activity. True to June 2017, Sharyar Mahestan’s holding in the consortium grew to 27% and another Company, also affiliated with the IRGC, Mehr Pars E’etemad Group, holds 24% of the shares. While Iran Mobin, according to various media reports, is in fact affiliated with the “Executive Headquarters of Imam’s Directive” (EIKO), the affiliation of the rest of the members of the consortium is harder to track. According to financial reports from December 2007, the Bahman Group, affiliated with the IRGC’s Bonyad, owned 59.9% of Tose’e-ye E’temad Investment Company’s shares. In addition, at the time the consortium purchased TCI’s controlling shares, Tose’e-ye E’temad Investment Company’s board of directors was comprised of companies which are subsidiaries of the Bahman Group. As for Shaharyar Mahestan, whose shareholding grew over the years to 27%, is also affiliated with both the Bahman Group and Bonyad Sepah. Both Tose’e-ye E’temad Investment Company and Sharyar Mahestan were members of the Bahman Group’s board of directors in 2011 and 2012.

On August 15, 2015 Fars news agency, considered to be the semi-official news agency of the Iranian Government, referred to both companies as subsidiaries of Bonyad Sepah. Moreover, in both 2011 and 2012, Sharyar Mahestan’s representative in the Bahman Group’s board was Masoud Mehrdadi, considered by many to be the key figure behind the IRGC’s economic empire. While Mehrdadi’s presence in the consortium’s member companies has lessened over the years, he still remained a major influence. Up until his reported arrest by the IRGC on suspicions of embezzlement, in late May 2017, was a member of Hamrah Aval’s board of directors and was reportedly, the real decision maker in the Company behind the scenes. Finally, Sharyar Mahestan, Ganjineh-ye Shayastegan Investment Company, Hamrah Aval and Tose’e E’etemad are all shareholders of Bank Ansar, a known and designated IRGC Entity. Combined, these four companies hold roughly 35% of the bank’s shares.

Mehr Pars E’etemad Group, that now holds 24% of the consortium’s shares, is also reportedly linked to the IRGC’s bonyad. Moreover, an examination of the ownership patterns of both Sharyar Mahestan and Mehr Pars E’etemad, show a circular ownership pattern which, in the present and past, links both companies.

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# Conclusions

Seemingly, the Iranian telecommunications market is dominated by one formidable, entity – Telecommunications Company of Iran (TCI). This choke hold that the Company maintains over the telecommunications market effectively guarantees the state’s control over it in the long run. In particular, that of the IRGC and the supreme leader. The Company, not only dominates every sector in the telecommunications industry, but holds an uneven advantage when it comes to its control over fixed line communications, its role as an internet custodian and its control over the bandwidth in the country. Telecommunications Company of Iran (TCI) does not hesitate to take advantage of its advantages even if it means that Internet prices are high because they sell bandwidth access to internet service providers (ISPs) at a considerable markup. High mark up prices also allow the state to limit access of Iranians to the internet which in turn allows the regime to better control the content its citizens are exposed to. In addition, in Iran, the Telecommunications Infrastructure Company (TIC), a state-owned enterprise under the ICT ministry, retains a monopoly on internet traffic flowing in and out of Iran. This allows the Iranian authorities with total control over the internet backbone, as well as the ability to limit access or throttle speeds during sensitive political moments. Telecommunications Company of Iran (TCI) dominance over the market further allows the security apparatus, particularly the IRGC, the ability to control third-party ISPs and to monitor online activities, limit, block, remove and filter content, detect and prosecute anti-regime activists for their online activities and more.

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The mobile phone market is under similar state influence. TCI’s Hamrah Aval controls the lion’s share of the market while MTN IranCell, the second largest mobile operator behind the Telecommunications Company of Iran (TCI), is owned by Bonyad Mostazafan which is controlled by the supreme leader and is also affiliated with the IRGC. The third Company, RighTel, which holds less than 3% of the mobile phone market, while not directly controlled by the supreme leader or the IRGC is still state owned since it is a subsidiary of the Iranian Ministry of Cooperatives Labor and Social Welfare. Thus, any foreign Company entering the Iranian telecommunications scene, will, almost by default, cooperate with the IRGC and its affiliates. Moreover, given TCI’s control over the internet and fixed lines communications, effectively means that any Company whether it uses an Iranian ISP provider or even if it invests money in an internet-based startup is these Companies will in fact be complicit in the IRGC’s violations of human rights in Iran.
Finally, while examining the circular hold and always convoluted hold the IRGC maintains over its economic empire, we must take increasing notice to those that de-facto maintain this intricate web of holdings. Those running the IRGC’s economic holdings are often not IRGC card carrying members (excluding Khatam al-Anbiya and those directly employed by Bonyad Sepah) or former IRGC members. They are in many cases professional technocrats. These professional managers seem to move from one Company’s board to another, regardless of the industry the Company deals in. The only thing in common is the fact that all of these companies are controlled or affiliated to the IRGC or the Basij. It is perhaps an attempt to lend a “clean” and professional image to the IRGC’s empire, allowing it to create the illusion that its commercial entities are independent companies. At least according to open source material available, many of these technocrats have no link to the IRGC or other “bad” elements in terms of membership or past service. For example, Mohammad Reza Modarres Khiyabani, currently a member of TCI’s board of directors and vice chairman of Hamrah Aval board of directors and CEO of Khuzestan Steel Company. Khiyabani, who holds a bachelor’s degree in metallurgy engineering and a Master’s degree in Public Administration Systems and has no visible direct link to the IRGC or the Basij.
When the link between the IRGC and the purchase between the controlling shares of Telecommunications Company of Iran (TCI) needed to be refuted, Khiyabani, then Sharyar Mahestan’s CEO stepped to the fore to deny it, claiming that: ‘since some of the consortium’s member companies were founded by the Bahman Group [referring to the fact that Sharyar Mahestan was founded by the Group which is affiliated with Bonyad Sepah], a false notion came to be that the IRGC is true buyer of the stock’.

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Telecommunication industry in Iran will always be controlled by the IRGC mob and the mullahs, one way or another IRGC and Regime will find a way to install themselves in the telecommunications sector, to control the networks and information spreading. Regime fears the free flow of information of freedom as a threat to their political survival, and fear that Iranian people will find out the truth for Regime power abuses.

It is important to remember that we may not always find IRGC members in commercial entities that will act as a “smoking gun” for IRGC involvement or control. IRGC influence often will be hidden behind third entity names, who serve IRGC agenda. On end, IRGC and Regime will find a way to control all industries in Iran.