December 19, 2016
The Iranian Privatization Organization (IPO) recently cancelled a contract with Mobin Trust Consortium which had bought 50 percent plus one shares of Telecommunication Company of Iran (TCI) for $2.5 bn in 2009. The contract called for a twenty percent cash down payment with the balance to be paid in 16 installments of $151,000 every six months. Mobin Trust Consortium incorporates three subsidiary businesses; Shahriar Mahestan Company, Towse’e E’temad Investments, and Mobin Electronics Development Company, all with close links to the Islamic Revolutionary Guards Corps (IRGC), and the Execution of Imam Khomeini’s Order ( EIKO).
Ali-Ashraf Abdollah Pourihosseini, the head of IPO, said, “ In addition to falling behind on its payments, Mobin has also written bad checks for a total of over $300m. IPO has therefore decided to cancel the deal in accordance with the terms of the contract.”
Davoud Zareian, the spokesman for TCI, described the government’s action as strange. He argued that, “The contract was cancelled as the consequence of stockholders not being paid. Nevertheless, IPO did not have the authority to cancel the deal.”
A conservative website claimed that “The government has snatched TCI out of IRGC’s hands,
even though it was a dodgy deal to begin with. A year after the government of former President Mahmoud Ahmadinejad and the IRGC signed the contract, a special investigative committee of the Majlis (Iranian Parliament) found the deal to be in violation of Article 44 of the Constitution. The committee’s report also described the exclusion of Pishgaman-e Kavir Yazd telecommunication company from the bidding, as illegal. It concluded that Mobin had acquired TCI stock by circumventing the competitive bidding process.”
It must be noted that there were other companies on the list of potential buyers, including IRGC Cooperative Foundation, Social Security Investment Company (Shasta), and Mehr Eqtesad Iranian Investment Company, a subsidiary of Mehr Finance and Credit Institution with close links to IRGC’s Basij volunteer militia. Mehr Finance is the most traded company on the Tehran Stock Exchange.
The critics of the deal fear that the privatization of TCI means making the military majority share holder in the company which in their view would have dire consequences.