MTN Repatriating Profits From Iran

South Africa’s MTN Group has started the process of repatriating profits valued at over $1 billion from its 49% share in MTN-Irancell, Iran’s second-largest mobile network operator.

The situation of MTN-Irancell being part of the wider group of companies in the Islamic Republic, which earned large sums from its main pay-as-you-go subscribers has been vexing the company for long.

Now, the telecommunications group expects to complete the transfer process within the next six months after the lifting of sanctions in its largest market in the Middle East.

MTN had previously said that it was beginning the process of sending the money to Johannesburg. However, the bank didn’t name the financial institution to which the cash was heading to.

“We are pleased to report that we have commenced the repatriation of cash from MTN[-Irancell],”  executive chairperson, Phuthuma Nhleko, said on Monday.

The news of MTN being able to transfer its funds follows its agreement to boost its local joint venture with Germany’s Rocket Internet Group, called Iran Internet Group. In that agreement, MTN offered the local company $20 million in funds to expand its operations.

Neither MTN nor its local subsidiary Irancell named the bank facilitating the transfer.

The IIG investment does highlight the issue of reinvesting into the Iranian market for the company, which has thrown its support for 4G and 5G technologies in recent months, including showing off its new tech at current events.

The update on the transfer follows a visit to Iran by South African President Jacob Zuma in April for bolstering trade relations with Iran. During his stay, Zuma made the pitch to help the company repatriate its profits, although the Pretoria government did not say it was handling the transfer itself.

“The easing of sanctions on Iran and its related economic uplift offer significant opportunities to expand services in the country, particularly in the digital space where we have a strong market position,” Nhleko stated at the time of the president’s visit.

 Nigeria Fine Looms

MTN had experienced a tough 2015, particularly in the last quarter of the year when the Nigerian Communications Commission imposed a $5.2 billion fine relating to subscriber registration requirements.

Amid allegations of illegal movements of funds out of Nigeria, all remittance of dividends from the West African operations has been suspended pending an investigation by the Senate of the Federal Republic of Nigeria, Engineering News ZA reported on October 25.

MTN Nigeria has been accused on the floor of the Nigerian Senate of illegally repatriating $13.97-billion through its bankers and allegedly violating the Foreign Exchange Act.

“The allegations made against MTN Nigeria are completely unfounded and without any merit,” MTN Nigeria CEO Ferdi Moolman said at the time.

MTN Nigeria, four commercial banks, individual MTN Nigeria directors and shareholders, the Central Bank of Nigeria and others appeared before the Senate last week, following which the CBN instructed the banks to suspend any remittance of dividends until further notice, Nhleko said in the group’s third-quarter update.

The company pointed out that MTN Nigeria had not declared a dividend since April 2015 and had no intention of undertaking dividend payments over the next six months, as it works to pay the N330-billion penalty it incurred for the late disconnection of improperly registered SIM cards.

 Quarterly Performance

During the three months to September 30, both MTN’s South African and Nigerian operations posted improvements, with the group’s subscriber base expanding 0.9% quarter-on-quarter to 234.7 million.

MTN South Africa reported a 0.5% quarter-on-quarter contraction in subscribers to 29.7 million and MTN Nigeria reported a 2.5% uptick in subscribers to 60.5 million.

South Africa’s revenue improved 3.6% quarter-on-quarter and Nigeria had slowed its revenue decline to 1.2%.

MTN reported capital expenditure for the period of R21.2-billion, a 10.5% year-on-year increase, with 2,669 third-generation and 1,995 fourth-generation antennas added.