MTN to Buy 49 Percent Stake in Iranian Net

Africa’s biggest mobile operator, MTN Group, is near an agreement with the Iranian government to acquire a 49% stake in a state-owned Internet provider as Africa’s largest wireless carrier by sales seeks to expand in a fast-growing yet politically challenging market, according to two people familiar with the matter.

Company officials are planning a meeting with the Telecoms Minister  Mahmoud Vaezi later this month to finalize the purchase of shares in Iranian Net, said the people, who asked not to be identified because the talks are private, Bloomberg reports.

The move will help smooth the process of repatriating funds from the Middle Eastern country as the government would prefer some profit to be invested locally, one person said.

“MTN continues to see growth potential in Iran, and we look at opportunities on an ongoing basis to build on and complement our existing footprint,” spokesperson Chris Maroleng said.

A deal would fuel MTN’s expansion in a market that opened up to foreign investors following the lifting of US-led sanctions last year.

The South African carrier already owns a 49% stake in Tehran-based mobile carrier MTN-Irancell and has been repatriating some of the $1 billion (R13.44 billion) that had been trapped in Iran before restrictions were removed.

The company also agreed in October to invest about $20 million (R287 million) in Snapp, the Islamic Republic’s first cab-hailing smartphone application.

The purchase of the stake in Iranian Net is expected to be completed by the end of the first quarter, one of the people said. Further investments in Iran will be identified once the deal has been finalized, the people said. 

US-led international sanctions on Iran were lifted in April following an agreement intended to prevent the country from building a nuclear weapon. President Donald Trump has repeatedly criticized the agreement, putting its future in doubt.

For now, Iran can benefit from a limited amount of western investment that has started to flow, and some foreign companies like MTN have been able to move funds out of Iran that had been locked inside the country.

“In Iran, there is much risk with Trump taking the presidency,” Michael Treherne, an analyst at Johannesburg-based Vestact, said. “Trump is making much noise and can reverse the deal that eased the sanctions. That will make it tough for them to operate, but there is much push back from Europe.”

Iranian Net was founded in 2011 to provide high-speed broadband Internet services to cities in Iran but has missed several deadlines on the project due to a lack of capital, one of the people said. Delta Partners is the financial adviser on the deal and will assist the phone company and Iranian Net to compile a joint business strategy.