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Iran: Privatization Ahmadinejad-style

With the sale, among other assets, of the state telecommunications firm, privatization in Iran seems to be accelerating. There is an apparent eagerness to attract foreign investors. But, some say, if capitalism in Iran is being let out of the pen, it is still being kept on a tight leash. Dominic O’Neill reports.

REFORM AND INCREASED foreign investment seem needed more than ever in Iran, as Euromoney frantically types in a dilapidated, shah-era hotel, desperate to save this story from another power blackout. But can privatization solve the country’s problems?

About 230 companies will be privatized in the Iranian year 1387 (March 2008 to March 2009) – compared with 167 companies the previous year, and just 40 the year before that.

"Last year France privatized the most companies in Europe but we privatized more," says Heidari Kord Zanganeh, chairman of the Iranian Privatization Organization, referring to 2007.

One of the biggest companies up for sale this year is the Telecommunications Company of Iran. This controls 90% of the mobile telephone market, and 100% of fixed lines in this country of 70 million people.

According to Kord Zanganeh, a number of foreign telecoms companies have expressed an interest in buying a 35% stake – the maximum permitted to foreign investors. These foreign firms apparently hail from various countries, both within and outside the Middle East.

"We welcome international investors in the privatization process," says Kord Zanganeh, who is also deputy minister for economic affairs and finance.

The first stage of the telecommunication company’s privatization was one of price discovery, which took place in early August.

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