MTN hanging on in Iran despite sanctions and Covid-19
Market turmoil hammers the company’s share price down another 12.75%
MTN Group says its Iranian business is still able to achieve strong sales growth in the short term, even as the unit battles to overcome US sanctions and the rapid spread of the coronavirus.
Africa’s largest wireless carrier is finding it tough to take money out of its second-biggest market by subscribers due to measures reimposed by US President Donald Trump, according to CFO Ralph Mupita.
As a partial solution, the Johannesburg-based company allows the Iranian unit to convert earnings into loans from MTN rather than send them to the parent company, he said. “This has placed MTN Irancell in a position where it has enough cash to continue funding its network expansion, even during these tough times,” the CFO said in an interview.
MTN has seven reported cases of employees testing positive for Covid-19, according to Mupita. Iran has suffered the third-biggest hit in the world from the pandemic, with more than 16,000 people infected.
“We have implemented work-from-home measures and temperature screenings at our office locations,” Mupita said. “All international travel is banned, and we are busy implementing efforts to reduce domestic travel where possible.”
MTN’s main operations across Sub-Saharan Africa have been less directly affected by the virus, but the associated hit to the region’s economy and market turmoil have hammered the company’s share price. The stock fell 12.75% to R38,94 on Wednesday.
Adverse trading conditions may affect MTN’s plans to sell assets and raise about R25bn to reduce debt, Mupita said.
The carrier is looking to sell down stakes in telecom-tower group IHS Holdings and its Lagos-listed Nigerian business while mulling further disposals.
“We have managed to reduce debt to the lowest in four years, but would like to push that even lower in the medium term,” the CFO said. “To do this, we will have to wait for more favourable market conditions.”
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