Chinese telecommunications equipment maker ZTE has said that it will restrict its business development in Iran after news agency Reuters reported yesterday that it allegedly sold the Telecommunication Company of Iran (TCI) a surveillance system to monitor landline, mobile and Internet communications.

 ZDNet Asia has quoted a ZTE spokesperson as saying "Our main focus for business in Iran is to provide standard communications and network solutions for commercial use to help operators upgrade their network," she told ZDNet Asia in an e-mail. "We are a small scale telecommunication equipment supplier in the Iran market [and] sell standard equipment [to them] as we do globally. In the future, we will restrict our business development in Iran."

Reuters on Friday reported that Telecommunications of Iran (TCI), Iran’s largest telecommunications of Iran has bought a powerful surveillance system from Chinese telco major ZTE.

The system is capable of monitoring landline, mobile and internet communications, interviews and contract documents show.

The report said that the system was part of a 98.6 million euro ($130.6 million) contract for networking equipment supplied by Shenzhen, China-based ZTE Corp to the Telecommunication Co of Iran (TCI), according to the documents. Government-controlled TCI has a near monopoly on Iran''s landline telephone services and much of Iran's internet traffic is required to flow through its network.

According to report, ZTE-TCI deal, signed in December 2010, illustrates how despite tightening global sanctions, Iran still manages to obtain sophisticated technology, including systems that can be used to crack down on dissidents.