Johannesburg - MTN
Group, the South African wireless carrier that’s been trying to repatriate $1
billion 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 $430 million loan
repayment from the 49 percent owned venture MTN IranCell Telecommunication Company
Services, as well as dividends accumulated in Iran over five years.
The cash buys
MTN added flexibility as it revamps its top management, and marks a step toward
normalization 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 U.S. 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 percent and were up 0.7 percent at R123.7 at 10:42 a.m. 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 Jan. 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.
Iran, MTN’s
third-largest market, could soon overtake Nigeria as number 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 percent of
earnings, according to its latest financial report.
Read also: MTN complied with Nigeria's law
The Iran money
also helps MTN’s cash position after it agreed to pay a 330 billion naira ($1
billion) 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 20 million euros ($22 million)
that will go toward the country’s first cab-hailing smartphone application,
Snapp.ir. E-commerce is projected to grow to a value of $20 billion 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.
BLOOMBERG