MTN's Iranian Plans Are Said to Hit Wall of New US Sanctions
(Bloomberg) -- 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.
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.”
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