Iran Economy NewsUS Sanctions Limit the Ability of South Africa’s MTN...

US Sanctions Limit the Ability of South Africa’s MTN Group to Repatriate Iran Cash

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US Sanctions Limit the Ability of South Africa’s MTN Group to Repatriate Iran Cash

Iran Focus

London, 13 August – On Wednesday, Africa’s multinational mobile telecommunications company, MTN Group, stated that it will meet its 2018 dividend target despite new U.S. sanctions making it harder to repatriate cash from its Iran joint venture.

MTN reported a 7 percent drop in half-year profits on Wednesday. The company has around 3.4 billion rand ($256 million) in accumulated dividends and loans from its joint venture in Iran. MTN’s shares dropped some 8 percent in late trading following the results and its warning on Iran.

Banks and many companies around the world have scale back dealings with Iran because of the US sanctions on Tehran that went into force on August 7th. According to US President Trump, companies doing business with Iran will be barred from the United States.

In an earnings report, the company said, “The sanctions may limit the ability of the group to repatriate cash from MTN Irancell, including future dividends.”

MTN cut its 2018 dividend in March, in an effort to reduce debt, but said it aimed to increase payouts by 10 to 20 percent over the next three to five years. MTN said that it stood by this plan. “Despite continued challenges in repatriating funds from MTN Irancell, the board remains committed to plans to declare a total dividend of 500 cents per share for 2018,” Chief Executive Rob Shuter said on a conference call.

The company declared a dividend of 175 cents per share in the first six months of the year, which means it will need to pay 325 cents in the second-half of the year to hit the target.

While it is one of post-apartheid South Africa’s largest commercial successes, MTN’s clashes with regulators in recent years have affected its growth. However, a new growth blueprint that includes branching out of basic telecoms services into music streaming, e-commerce and mobile financial services has been drawn up by Shuter.

With the number of users of the mobile payment and transfer service growing to over 24 million across 14 markets, revenues from MTN Mobile Money were up 50 percent year-on-year, outpacing competitors Orange and Airtel.

In an interview with Reuters, Shuter said, “We are putting a lot of effort and resources and money into the (Mobile Money) platform, the distribution, the kiosks.” He added, “We think we can execute on the ground and carve out a good role for ourselves.”

Last month, MTN sold its tiny Cypriot business for 4 billion rand ($301 million) to Monaco Telecom. The company is also reviewing its presence in other markets where it is not a major player, such as its smaller businesses in Liberia, Guinea and Guinea-Bissau.

“We want to be a high-growth geography but we also need a decent regulatory environment, (a) stable trading environment. This means for example some of these markets in the more war-torn areas will always be under review,” Shuter said. He is most likely referring to Syria and South Sudan, both in the throes of civil war.

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