By John Irish
UPDATE2: Consortium including Etisalat wins tender for Iran's third mobile phone licence.
A consortium led by Emirates Telecommunications Corp (Etisalat) will invest at least $1 billion into building its network in Iran, a company official said on Tuesday, adding the firm is also in talks to acquire an Iraqi operator.
Iran confirmed on Monday that Etisalat, the Arab world's second-largest telecommunications company by market value, has won an international tender for its third mobile phone licence.
The Abu Dhabi-based firm will pay 300 million euros ($402.1 million) for the licence as it looks to tap growth potential in the Islamic republic, Jamil al-Jarwan, chief executive of Etisalat International Investments told Reuters in an interview.
The consortium intends to begin operations within nine months, possibly earlier, and may tap markets for some financing, he said.
"(Investment) will not be less than $1 billion... It should be up and operating within nine months and we might do it earlier like in Saudi Arabia and Egypt."
Jarwan said the group would also pay 23.6 percent of revenues to the government under the 15-year licence deal.
Iran has a mobile penetration rate of less than 60 percent in a market where about half of its 70 million population are under 25 years of age.
Etisalat hopes to get at least 1 million subscribers in the first year of operations, Jarwan said.
Iran's nuclear row with the West has made foreign companies more wary of investing in the country, but analysts say the size of the market and its energy riches still make it an attractive investment prospect.
The consortium also includes Iran's Tamin Telecom. Iranian state radio said last month the non-Iranian company would have a 49 percent stake in the project.
Etisalat, which operates in 18 countries including Pakistan, is part of a wave of Gulf Arab telecom operators that have launched overseas operations after losing their monopolies at home.
Etisalat Chief Financial Officer Salem Ali al-Sharhan told Reuters the operator, which opted not to bid for an Iraqi mobile phone licence in 2007, was still in discussions to acquire an existing operator in the country.
"It was supposed to be end of 2008," he said. "They are in advanced discussions ... Iraq is an opportunity and will not always be like this."
Iraq sold three licences for $3.75 billion to Kuwait's Mobile Telecommunications (Zain) - a regional competitor of Etisalat - Asiacell and Korek, which all had existing networks in the country.
Asiacell is an affiliate of Qatar Telecommunications Co, another regional competitor of Etisalat.
In December, Zain agreed to pay $1.2 billion for Orascom Telecom's Iraqi mobile telephone unit.
Etisalat shares are down 1.87 percent in Abu Dhabi in line with a market decline of 1.88 percent. ($1=.7461 euro) (Reuters)For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.