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IRGC Gives Up Stake In Telecommunications Possibly To Avoid Sanctions

Milad telecommunication tower in Tehran, December 16, 2015

The Islamic Revolution Guards Corps (IRGC) withdrew as shareholder from the Iranian Telecommunications Company and a major cell phone operator company, Hamrah Avval, on Wednesday October 24.

The IRGC announcement annuls a controversial acquisition during which it had got hold of 50 percent plus one share of the country's national telecommunications company and its leading cell phone operator in 2009. That was the biggest transaction to date in the history of the stock exchange in Iran.

The announcement was made after Iran's Supreme Leader Ayatollah Ali Khamenei last week renewed an order he had issued on January 20 ordering IRGC and other military forces to abandon commercial interests that were inconsistent with their status as military organizations. IRGC had ignored the order during the past ten months.

Most observers on social media welcomed the decision. Some, such as Iran analyst Reza Haghighatnejad questioned whether it was an anti-corruption measure or a decision to avoid US sanctions.

Had the two companies been hit by sanctions, it would have affected Iran's telecommunications backbone and one of the most important cell phone operators in the country.

Other observers linked the development to efforts by the Iranian regime to prove that it is complying with the FATF standards.

In 2009, when IRGC acquired the companies without a tender bid, the media and critics within the Iranian political circles lashed out at the populist Ahmadinejad administration. Even then- Vice-President Mohammad Reza Rahimi criticized the administration for handing over the key companies to IRGC.

The Iranian Parliament (Majles) also admitted that the transaction was made under a "non-competitive" and "stage-managed" situation.

IRGC's supporters argued that the corps needed to control the telecommunications networks for security reasons. The counter-argument at the time was that even if IRGC's reasoning was true, it did not need to own the networks.

What made the acquisition controversial at the time, was that the company which had submitted the highest bid withdrew its offer without any explanation minutes before the IRGC stepped in as a prospective buyer bidding only 3 rials (less than one cent) higher than the best offer.

The IRGC announced on Wednesday that the initiative to end its ownership of the two companies was based on a decision made by the joint staff of the Iranian armed forces.

Stock exchange observers in Tehran say that "The Executive HQ of Imam Khomeini's Order," a body which is part of the gigantic economic conglomerate that operates under the supervision of Khamenei's office is likely to buy the shares IRGC is giving away, and to own the largest number of shares in the telecommunications sector.