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Johannesburg - MTN Group [JSE:MTN], the South African wireless carrier that’s been trying to repatriate $1bn from Iran, has managed to extract several hundred million dollars from the country with the help of European banks, according to people familiar with the matter.
With a number of money transfers now completed, MTN expects to bring the entire sum home by the end of the first quarter, said the people, asking not to be named because the information isn’t public.
The stranded cash includes a $430m loan repayment from the 49% owned venture MTN IranCell Telecommunication Services, as well as dividends accumulated in Iran over five years.
READ: MTN 'moved' billions of dollars out of Nigeria - lawmaker
The cash buys MTN added flexibility as it revamps its top management, and marks a step toward normalisation of its business in Iran, where US-led sanctions had prevented the company from reaping the fruits of a thriving venture.
While Iran is one of MTN’s most important markets, frictions with the US could resurface at any time, a concern exacerbated by the possibility of policy changes under President-elect Donald Trump.
Trump’s election “puts an unknown into the mix,” said Peter Takaendesa, a money manager at Mergence Investment Managers in Cape Town.
Takaendesa said. “It would be good for shareholders if MTN could get the money out sooner rather than later.’’
The shares rose as much as 1% and were up 0.7% at R123.70 at 10:42 am in Johannesburg.
MTN is confident that it will be able to continue repatriating dividends from Iran in the future, even if the change in administrations, scheduled for January 20, affects the political climate, one of the people said.
An MTN representative declined to comment on the repatriation of funds from Iran.
The company has been trying to take the money out of Iran since April, after US-led international sanctions were lifted earlier in the year.
But a lack of ties between Iran and international banks slowed the process.
The transfers started flowing in October, after unnamed banks began assisting the carrier in moving the funds, the people said.
READ: MTN falls on claim of illegal cash transfer
Iran, MTN’s third-largest market, could soon overtake Nigeria as No. 2 as the company’s growth in the Middle Eastern country accelerates and the Nigerian currency slumps, said one of the people.
Iran now contributes about 10% of earnings, according to its latest financial report.
The Iran money also helps MTN’s cash position after it agreed to pay a 330bn naira ($1bn) fine to the Nigerian government this year for missing a deadline to disconnect customers.
As part of its push in Iran, MTN in October agreed to invest 20m euros ($22m) that will go toward the country’s first cab-hailing smartphone application, Snapp.ir.
E-commerce is projected to grow to a value of $20bn by 2018 in the Middle East and MTN plans to particularly invest in the retail and travel sectors, MTN Chairman Phuthuma Nhleko said in the company’s annual report.
Sanctions against Iran were lifted in January after inspectors certified that the country curtailed its nuclear program as promised under a 2015 agreement with world powers.
MTN gained its Iran license in 2005.
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