Cape Town – US sanctions against Iran seems to be a thorn in MTN’s flesh, its latest interim results show.
Chief executive Sifiso Dabengwa admits that the South African telecommunications giant could for the past six months hardly bring a single cent out of Iran to South Africa.
MTN’s Iranian network is currently the second largest in the group and Iranians now comprise around 20% of its subscribers.
In the past six months the Iranian business has made a significant contribution to MTN’s profit. This division’s subscribers have increased by 10.4% and its turnover by 28.3%.
According to Dabengwa, MTN is engaged in negotiations with American officials about its business in Iran. “It's generally accepted that we should not be punished. US sanctions should not have unintended consequences for non-American companies.”
The sanctions against Iran could further harm MTN if that country’s currency, the rial, has to devalue as a result. The rial has recently done poorly against the dollar and Iran will make an announcement in this regard in the coming week.
The devaluation of the rial will have a serious impact on MTN’s earnings in the second half of the financial year, says finance director Nazir Patel.
The Turkcell court case is still hanging over MTN’s head. The company is being challenged in a US court over its operating licence in Iran. Turkcell, its Turkish competitor, accuses it of having bribed officials, including an ambassador, to get the licence. Turkcell is claiming $4.2bn in damages.
Turkcell’s allegations are also being investigated in South Africa by the Hawks, the police’s elite investigation unit.
MTN has instituted an independent investigation into the allegations through the Hoffmann commission. Reporting on its interims, MTN says the investigation is ongoing.
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