Johannesburg - Mobile phone operator MTN Group [JSE:MTN]
said it is struggling to get its money out of Iran due to tougher Western sanctions, reflecting the tightening international noose around Tehran.
Africa’s biggest mobile operator, which has units in the Middle East, is no longer able to use Dubai-based banks to move money out of Tehran and is looking for ways to swap cash with companies that need to move payments in, CEO Sifiso Dabengwa told reporters following its annual results presentation.
“It is a challenge because of the sanctions against the central bank and a number of financial institutions,” he said.
“Anyone who is actually dealing in euros and US dollars basically can’t do business with Iran banks... What we can do is that if someone needs funds internally and has funds outside, we can do those kind of exchanges.”
Iran is facing unprecedented economic pain from expanding oil and financial sanctions over its nuclear programme. Tehran denies suspicions its uranium enrichment work is for weapons, saying it is for peaceful purposes only.
Johannesburg-based MTN, which reported a 43% rise in full-year profit on Wednesday, gets nearly 10% of its annual revenue from Iran, where it has a 45% market share.
Dabengwa said MTN would not consider an exit from the business unless South Africa itself imposed sanctions on Iran, something Pretoria is seen as unlikely to do.
“We will just have to manage what other governments, in terms of their sanctions and their laws, require us to do,” he said, adding MTN would make sure it did not violate US sanctions by allowing any US equipment to be used in Iran.
Despite its problems, the company’s Iran business has so far been a moneyspinner for MTN, said Credit Suisse analyst Richard Barker.
“That business just goes from strength to strength. That’s the ironic thing. It’s probably been their strongest performing business over the last couple of years,” he said.
“The interesting question from my perspective is: Can that really continue as the economy comes under more pressure because of the economic sanction regime?"Mobile powerhouse
MTN has transformed itself into a $33bn mobile powerhouse by focusing on fast-growing demand for cellphones and data in emerging markets.
But it faces plenty of hurdles in some of its higher-risk markets. Ongoing unrest in Syria made it difficult to service its network in that country, and revenue fell by nearly 5%.
In Nigeria, its biggest revenue driver, it said results were dampened by mandatory SIM registration.
“There were some challenges if I can mention Syria, or even in Nigeria, in terms of SIM card registration,” said Thecla Mbongue, a senior research analyst at telecoms research firm Informa.
“This happened in other countries like in South Africa, where there has been a little bit of slowdown as a result.”
MTN has said it faces a potential lawsuit in a US court from rival Turkcell, which alleges that MTN won its Iranian mobile licence by lobbying the South African government to take a light stance on Tehran’s nuclear programme.
MTN has said the claim lacks merit, while Pretoria has said its foreign policy is independent. Turkcell has said only it is talks with MTN.
MTN reported a 43% profit increase for 2011 partly due to a restatement of its results for 2010, lowering them by nearly 18% to account for the costs of a share scheme to increase ownership among black investors.
Adjusted headline earnings for the year to end-December totalled 1 070 cents compared with the restated 747c per share. Last year’s number was changed from 909.1c.
Revenue increased nearly 10% to R121.9bn, while total users increased 16.2% to R164.5m.
Shares of the firm jumped 2.8% to R138.94 after it said it had increased its dividend payout ratio to 70%, and that it would continue to buy back shares.