Monday, September 28, 2009

We've got your number: IRGC buys controlling stake in Iran telecom

The Islamic Revolutionary Guards Corps (IRGC) bought a controlling stake in the Telecommunications Company of Iran (TCI or Sherkat Mokhaberat Iran) on Sunday in a half-hour operation whose outcome was known in advance.

Late the previous day, Pishgaman Kavir Group had been disqualified in the 11th hour from competing for the telecom shares for 'security reasons' by the Iranian Privatization Organization (IPO). The two remaining rival bids came from groups controlled by the IRGC: the Moaseseyeh Mehr Eghtesadi Iranian (Mehr Iranians' Economic Organization) and the Tosse'eh Etemad Mobin (Mobin Development of Trust) consortium.

The Tosse'eh Etemad Mobin consortium, linked to the IRGC's social affairs mutual fund, bought 50% plus one stock in the state telecom for 340.9 toumans a share which brought the amount of the deal to 7.8 trillion toumans (about $8 billion), the largest transaction in the history of the Tehran stock exchange.

The consortium is made up of three companies: Tosse'eh Etemad, Shahriar Mahestan, and Iran Mobin Electronics Development Company, according to Masoumeh Taherkhani writing in Donyayeh Eghtesad. Tosse'eh Etemad and Shahriar Mahestan investment companies are directly run by the IRGC's social affairs mutual fund. Mobin Electronics belongs to the Setadeh Ejraieh Farman Emam (The Staff for the Enforcement of the Imam's Decree), a labyrinthine foundation directly under the authority of Supreme Leader Ali Khamenei's office. The foundation is headed by Mohammad Mokhber, named by Khamenei in 2007. The chairman of Iran Mobin Electronics is Seyed Mostafa Seyed Hashemi, a former four-term conservative Majlis representative.

The sale of TCI was scheduled for September 9 (for a previous article go here), but was inexplicably postponed. At the time, it had been predicted that the price tag would be $7-$8 billion, though experts had said that the company's real value, considering its large mobile phone operations, assets, and the fact that it is a monopoly, was at least double that. The winner of the bid was announced yesterday, but the actual transaction will take place on Wednesday.

Moaseseyeh Mehr Eghtesadi Iranian lost its bid to purchase TCI, but the group can take comfort in the fact that the Iranian telecom will now be in the hands of a brother organization. According to its managing director Alireza Baghani in an interview with Iran Tejarat, Moaseseyeh Mehr Eghtesadi Iranian is a subsidiary of the Mehr Finance and Credit Institution, formerly known as the Mehr Fund, which is linked to the Basij and ultimately the IRGC. Though the Moaseseyeh Mehr Eghtesadi Iranian investment group was considered by the Privatization Organization to be a valid bidder, its web page is still under construction.

Privatization Organization head Gholamreza Heidari Kord Zangeneh claimed in an interview with Fars News that Pishgaman Kavir Group had pulled out of the bidding, but the group's president Mohammad Reza Rezainejad said in a statement on the company's web site, 'On Saturday September 26, at 3:39 PM, we received a letter from the Privatization Organization informing us that our company was not qualified to participate in the bid. But both the Privatization Organization and the telecom had approved our company.' Rezaipour told Fars News that Pishgaman Kavir Group had spent over 15 billion toumans (about $15 million) on its failed bid and that someone had to be held accountable for this sum.

According to Ayandeh News, Pishgaman Kavir Group received a fax from the Privatization Organization on Saturday afternoon, disqualifying the company for 'security reasons.' The group's spokesman Mostafa Sajjadi told Ayandeh News, 'It is up to legal bodies to determine who can participate in a historical bid of this nature, but why didn't they tell us from the beginning?' Sajjadi said that his group would pursue the matter in court.

Seyed Mehdi Tabai Aghdaie, member of the governing board of the Privatization Organization, told a televised press conference, 'Our organization could only look into the financial and technical validity of the bidders. Bodies outside the Privatization Organization had to look into the security qualifications.'

Opposition and human rights groups fear that the IRGC will now be able to tighten control over telephone and Internet communications in Iran. Though voicing concern over the acquisition, Mohsen Sazegara, a founder of the IRGC who is now a dissident in Washington DC, said that it would ultimately turn out to be a mistake on the part of the Revolutionary Guards. 'The struggle against the IRGC has entered a new phase in which an easily accessible entity like the telecom can be targeted,' Sazegara said.

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