MTN finally starts getting its stranded millions moving out of Iran
MTN Group, which has been trying to repatriate $1bn to SA from Iran, has extracted several hundred million dollars from that 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.
The stranded cash includes a $430m loan repayment from the 49%-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 management and moves to normalise its business in Iran, where US-led sanctions had stopped it reaping the fruits of a thriving venture. Iran is one of MTN’s most important markets, but friction with the US could resurface at any time, particularly with the possibility of policy changes when Donald Trump becomes US president.
Trump’s election "puts an unknown into the mix" said Peter Takaendesa, a money manager at Mergence Investment Managers in Cape Town. "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 even if the change in administration on 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 lack of ties between Iran and international banks slowed the process. 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 second biggest 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 330-billion 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 that will go towards the country’s first cab-hailing smartphone application, Snapp.ir. E-commerce is projected to grow to $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 group’s annual report.
Sanctions against Iran were lifted in January after inspectors certified that the country curtailed its nuclear programme as promised under a 2015 agreement with world powers. MTN gained its Iran licence in 2005.