MTN's
Iranian Plans Are Said to Hit Wall of New US Sanctions By Loni Prinsloo
July 31, 2018, 1:55 PM GMT+2
Updated on July 31, 2018, 3:54 PM
GMT+2
·
Africa’s largest carrier had planned to
invest $750 million
·
Iranian partner can’t contribute due to
economic challenges
MTN Group Ltd.’s $750 million plan to
extend fiber-home broadband connections to Iranian cities has been put on hold
because of looming economic sanctions imposed by U.S. President Donald Trump,
according to people familiar with the matter.
A plan devised a year ago for Africa’s
largest wireless carrier to buy a stake and extend loans to state-owned
broadband provider Iranian Net has made little progress, said the people, who
asked not to be identified as the information isn’t public. The Iranian
government hasn’t been able to contribute funding as it battles to shore up the
economy and arrest a currency slump, they said.
MTN will update shareholders on Iran as
part of a first-half results announcement scheduled for Aug. 8, according to a
spokesman. The Johannesburg-based company had 43 million customers in the
country at the end of 2017, its second-biggest market after Nigeria. Iranian
Net was founded in 2011 to provide high-speed broadband, but has missed several
deadlines due to a lack of capital, according to the people.
MTN shares erased gains and were little
changed at 114.21 rand as of 3:51 p.m. in Johannesburg, valuing the company at
215 billion rand.Corporate Headache
Trump’s decision to withdraw from an
international nuclear deal with Iran and reimpose an embargo on energy and
financial sectors is proving a headache for MTN and other international
companies. Under previous sanctions lifted following a 2015 deal, the wireless
carrier had about $1 billion stuck in the country, which it only managed to
repatriate last year.
Under new Chief Executive Officer Rob
Shuter, MTN has vowed to exit or sell markets that it sees as more trouble than
they’re worth, and disposed of its tiny Cyprus business earlier this month.
However, Iran’s size makes it likely the South African company will look to see
out the current impasse, given the importance placed by MTN on its three
biggest markets, which also include South Africa.
“MTN conducts business in some
jurisdictions where socio-political-economic conditions are very volatile and difficult
to predict,” said Ron Klipin, a money manager at Cratos Capital. “Iran,
Nigeria, Yemen remain difficult areas of operation, which could impact on MTN’s
financial results due to major currency volatility and lack of liquidity.”
(Updates with analyst comment in final
paragraph.)
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