MTN struggles to get money out of Iran
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?"
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.
Good. Now they know what it's like to be ripped off.
Having fleeced SA consumers with call-rates that are double what they should be, they proceed to do business with a regime that thinks nothing of having women stoned to death for nothing more than being attractive, funds terrorism, and adjusts election results.
If you're that blind MTN, it's no wonder you've been caught with your pants down.
fred you are as ignorant as ever. Iran has no intention of using its nuclear operations other than for domestic consumption for electricity. let me educate you, the only reason that the west is putting sanctions on iran is simply to criple the economy and ultimately steal and ransack its oil fields. just like iraq, afghanistan, libya etc. open your eyes and wipe off that cobwebs. iran is not trading its oil in dollars and is rather using yuen and rupees which america simply cannot stand. so do some research look up GEAORGE GALLOWAY ON IRAN. HE IS A BRILLIANT. he is a brilliant guy and u will understand when explains the main reasons for the iran sanctions.
That you believe an oppressive terrorist regime that thinks nothing of stoning women to death for being attractive, routinely threatens to destroy Israel, denies the occurrence of the single biggest attempt at genocide in human history, adjusts election redults, and abuses the Palestinian people to hold onto power is acceptible, worthy of support and should have nuclear weapons really shows how out of touch with positive reality you are.
Regarding the oil contracts in Iraq, you're obviously not aware that the US was awarded all of ONE contract. The lion's share went to companies from Indonesia and China.
You have much to say from a faulty perspective on the so-called West and it's oil interests, but nothing to say about Russia and China, autocratic countries with the worst human rights records of any country who are propping up the two last violently oppressive regimes in the Middle East.
For the above reasons, your perspective is wrong.
really you have too see what Europe and The USA Did to their people
sorry you also should be able to read what he stated about Isreal by translating farsie to english and read the whole thing about Isreal not what the Western Media wrote ( oh sorry The USA was an Angle to kill so many Iraq people for a Wild Goose Chase )
@ Mogamat... Afghanistan's oil? Last I looked they don't produce anything of note. But then someone who supports a regime - summed up by Fred - probably wouldn't know that.
Why don't MTN pay Iran locally for the oil South Africa imports from them and the SA government can then reimburse them. One way of getting their monty out of Iran on a regular basis>
Because we'd be helping to kept in power a violently oppressive regime, which goes against every principle we stood for during the Apartheid struggle.
Really...how cruel is the world. Israel doesn't struggle to get money out SA from its Soda stream company operating in hear but they do have nukes that are far superior to those theoretical ones Iran have.
i exported in rands the best thing i ever done be proud of your rand and creat a demand for the currency
Anybody doing business with terrorist crooks only have themselves to blame for dealing with these rag-heads.