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South Africa’s MTN faces Iran crossroads as US sanctions loom

A billboard in Tehran promotes Irancell in which MTN has a 49 percent stake.

South Africa's MTN Group is reported to have put on hold a $750 million expansion plan in the Iranian broadband market in the face of US sanctions which are about to take effect on Monday.

Africa’s biggest wireless networks group, which has a 49 percent stake in national operator Irancell, had agreed last year to invest in fixed line broadband network, Iranian Net.

MTN had sought to buy a 49 percent stake in Iranian Net and invest in both equity and loans to help the Iranian company develop a fiber network in eight of the country’s main cities in order to provide high-speed broadband.

However, little progress has been made after a year and the South African wireless carrier has decided to shelve the plan because of looming US sanctions, Bloomberg quoted people familiar with the matter as saying. 

There was no word on MTN’s another agreement signed last year, under which the company undertook to invest in Iran Internet Group, which runs a car hailing app called Snapp.

MTN has capitalized on strong growth in the Iranian telecoms market - its second biggest after Nigeria with 43 million subscribers at the end of 2017 – to build an unassailable business jurisdiction.

Following the lifting of sanctions on Iran in early 2017, the Johannesburg-based company was allowed to repatriate $1 billion in accumulated dividends from its stake in Irancell.

For its entry into Iran in 2005, the company found favor with Iranian authorities who wrote off Turkcell to grant a $4.2 billion contract to MTN, angering the Turkish mobile phone company.

Turkcell has taken MTN to courts in the US and South Africa, accusing that the group “acted wrongfully” and interfered with its relationship with the Iranian government over the granting of the mobile license.

With the US sanctions about to kick in next week, Turkey has said it will not abide by the bans and continue trade with the Islamic Republic.

MTN’s new Chief Executive Officer Rob Shuter has vowed to abandon or sell markets that the company sees as prone to trouble and risk not worth it.

However, “Iran’s size makes it likely the South African company will look to see out the current impasse,” Bloomberg wrote.


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