ETCMY Eutelsat Communications SA (PK)

Iran is taking preliminary steps toward leasing or buying commercial satellites and potentially acquiring related technologies, according to industry officials familiar with the matter, another sign of dramatic changes stemming from the recent international rollback of economic sanctions.

Providers of satellite services and hardware on both sides of the Atlantic are maneuvering to land business in Iran, even as Tehran has started recruiting Western advisers to pave the way for such deals, which could include using satellites already in orbit, according to some of these officials. But agreements, they predicted, are at least weeks or months away.

Some of the global satellite industry's biggest players are actively involved, and the secretive Iranian Space Agency already has made preliminary moves to get assistance from various legal and technical experts in the U.K., according to one person involved in the discussions.

For now, these officials said, European space companies seem to have the inside track thanks in part to closer diplomatic ties and because the European Union's remaining sanctions against Iran are less restrictive than those enforced by the U.S.

The current talks are largely exploratory, according to industry officials, with no major satellite-related deals believed to be imminent as Iranian President Hassan Rouhani visits Paris this week. The heightened level of activity, however, reflects Iran's long-standing interest in gaining access to Western commercial-space technology.

Iranian government officials at an aviation-industry conference in Tehran said they weren't responsible for space issues, and the relevant official couldn't immediately be reached for comment.

Since the rollback of international nuclear and other sanctions nearly two weeks ago, Iran has moved quickly to complete multibillion-dollar deals for aircraft, cars, construction projects and energy with Italian and French companies. Now, authorities in Tehran also appear ready to rev up negotiations for potential satellite pacts with U.S. and European suppliers.

"There are going to be some big contracts, and they're going to come quickly," said Keith Volkert, a U.S.-based satellite-industry consultant who works for American and European clients. As soon as Tehran decides on a path, he adds, a number of satellite-services companies "could put coverage into Iran instantly."

Tehran has built and launched a number of fledgling domestic satellites, though so far they have all been relatively small and the government was forced to turn to Russia, China and India for design and launch of potentially more-ambitious projects. An Italian-built communications satellite that was never delivered because it was caught up in sanctions may be turned over to Tehran in coming months, according to industry officials.

But bigger and more expensive plans may be brewing. Paris-based Eutelsat Communications SA, which operates a fleet of 39 satellites with considerable capacity for television broadcasting and Internet connectivity over Iran and the Middle East, is talking with the country's space agency about expanding offerings in the region, according to one of the industry officials familiar with the matter.

Another official said two British advisory outfits—including a London-based law firm specializing in international trade—also are engaged in early discussions with the agency about ways to boost Iran's Internet and possibly video connections. Options include buying new ground equipment or renting capacity on foreign satellites. Negotiations for Iran to buy new satellites are bound to be more complex and controversial, so they would take longer to nail down.

Yet initial steps have begun. A Washington-based partner at Hogan Lovells, an international law firm with an extensive list of satellite and telecommunications clients, said "we are advising a wide range of companies about potential provision of services and equipment to Iran." The partner, Stephen Propst, also stressed that at this point, U.S. companies are lagging behind rivals across the Atlantic.

"On the European side, the lifting of the sanctions is broader and they are in a stronger position to do some of these transactions," Mr. Propst said.

Tehran's leadership has been frustrated over the years by the refusal of most Western satellite and component makers—along with major insurance companies—to open a dialogue about possible contracts as a result of stringent trade and banking restrictions.

"The Iranians have been looking at a satellite project for many, many years, including ultimately expanding services to other countries," said Jeremy Rose, a partner in Comsys Ltd., a British consulting firm involved in the latest round of discussions with Iranian officials.

In coming years, many experts predict Iran is likely to set its sights on acquiring advanced ground systems or terminals, and eventually large telecommunications or imaging satellites from Western sources. Vietnam and Myanmar are among the countries that previously set up their own national satellite operators.

Egypt's plans to buy two satellites from Thales Alenia Space, majority-owned by France's Thales Group SA, are expected to be completed soon, according to industry officials familiar with the details. A spokeswoman for Thales Alenia said negotiations were still under way.

Iran's focus on commercial space stretches back at least to the beginning of the decade, when officials of Informatics Services Corp., affiliated with the Central Bank of Iran, publicly acknowledged reverse-engineering some U.S.-designed ground equipment they purchased before it was restricted by sanctions imposed by Washington. Known as VSAT systems, for very small aperture terminals, such hardware allows consumers, corporate networks, automated credit-card transactions and many other applications to send and receive data using satellites and ground stations.

"The Iranians have always been quite interested in VSAT technology," said Tim Farrar, a U.S.-based satellite consultant.

Mr. Farrar and other industry experts said the U.S. government might look favorably on some transactions involving satellite technology geared for consumer applications, as another way to ensure broader Internet access for Iran's population.

Write to Andy Pasztor at andy.pasztor@wsj.com

(END) Dow Jones Newswires

January 28, 2016 07:05 ET (12:05 GMT)

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