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France's Orange in tie-up talks with Iranian telecom titan MCI

Deal would be first time for Western firm to acquire holdings in major Iranian company since Tehran curbed nuclear program
Logo of French telecom operator Orange in front of store in France's northern city of Lille (AFP)

French telecom operator Orange is in negotiations with Mobile Telecommunication Company of Iran (MCI), the country's largest mobile operator, "regarding a number of areas of potential cooperation and business topics," a spokesman said.

"We anticipate that these discussions will be concluded within a few months," the spokesman said in a statement sent to Reuters. The statement did not elaborate on what those areas of cooperation could be.

The Wall Street Journal reported earlier on Wednesday that Orange had entered preliminary talks to buy a stake in MCI, as well as on a commercial and technical agreement.

The company did not specifically confirm or deny this but said: "Like many other international operators, Orange has been considering opportunities in the Iranian market subsequent to the implementation of the JCPOA." The JCPOA is a nuclear deal struck between Iran and six world powers.

Such a deal could make history as the first time a Western firm has acquired a significant holding in a major Iranian company since Tehran agreed to curb its nuclear program last year in exchange for the lifting of international sanctions.

Orange, which is part owned by the French government, is one of several European companies that have explored the potential of getting a stake in MCI, the Journal said, citing people close to the matter.

Orange would need to coax financing for a deal out of Western banks likely to be wary of tripping over US sanctions.

The Journal also reported that Orange would have to adroitly handle the fact that MCI’s parent company, Telecommunication Co. of Iran, is owned by a group of companies that in some cases lead back to Iran’s Revolutionary Guards.

The Revolutionary Guards is a paramilitary force that runs large swaths of the Iranian economy and remains under US sanctions for its alleged involvement in terrorism, an accusation it denies.

"We are conducting feasibility studies to understand and assess what's possible in this complex environment, particularly with regards to certain economic sanctions that apply to Iran," a spokesman for Orange told the Journal.

France, which took a tough stance against Iran's nuclear program, has moved to position French companies to take advantage of January’s lifting of Western sanctions, according to the report.

MCI has a market value of more than $4bn on the Tehran stock exchange.

Orange has yet to make a formal offer for a stake of any size and the companies were first expected to complete a commercial agreement to build trust between the two sides, according to the Journal.