Bumper Profit in Iran

MTN-Irancell, a joint venture between Iran Electronic Development Company and South Africa’s biggest mobile operator, has shown steady profits in the first half of 2017, a press release by the parent firm showed.

According to the results, MTN-Irancell now has 49 million active users, with revenue increasing 17.2% year-on-year. In the previous year, MTN-Irancell generated profits worth $1.2 billion throughout 2016, according to the firm, while in the first half of this year, the firm reported a profit of 1.3 billion South African rand ($96.5 million) from the Iranian venture.

Total revenue rose 6.7% to 64.3 billion South African rand ($4.7 billion), while headline earnings came in at 3.9 billion rand ($290 million), or 212 rand cents per share, in the six months to end June compared with a loss of 4.9 billion ($363 million), or 271 cents per share, a year earlier.

In an interview with South Africa’s MoneyWeb this week, CEO of MTN South Africa Rob Shuter said, “For Irancell, that was a good performance and there things are looking pretty okay.”

He added that Irancell is doing well market-share-wise.

“In most of the mid-tier markets I guess we are holding our own, ideally making small improvements as well,” he said.

Shuter noted that the Iran joint venture is a “very high margin business” even with the “significant government revenue share”, by the Iran Electronic Development Company.

The CEO of MTN South Africa noted that Iran is playing a larger role in the company’s overall profits this year, also buoyed by the recent introduction of the super-fast Internet on offer.

 Data Usage Leading

MTN is expected to benefit from the growth of Iran’s post-sanctions economy and the country’s young population that is buying into the company’s 4G mobile and home Internet offers.

The joint outfit now has one of the fast domestic Internet packages available to consumers currently, with speeds of up to 40 MB, according to tests conducted by Financial Tribune.

In fact, the key driver of the company’s growth in the past six months is data, with incoming and outgoing voice calls rising compared to the previous half year in 2016.

According to the results, MTN earned 2.5 billion rand ($186 million) for outgoing voice calls this year, while data revenue is up 68% in H1 2017.

Another interesting result is like in several other markets, H1 SMS revenue is down 44% YOY, with users now opting for applications like Telegram messenger and Facebook’s WhatsApp to conduct peer-to-peer communications.

The results booklet also does not mention MTN’s recent investments into Iran Internet Group and beyond, including its share in profits from ventures such as Snapp, the country’s largest ride-hailing application, Bamilo and Pintapin all of which are targeting different sections of the country’s e-commerce landscape.

 Infrastructure Investment

Through its local subsidiary, MTN has also invested heavily in overhauling the fixed communications infrastructure of broadband connection in the country.

In May, Shuter flew to the Iranian capital to sign a $300 million investment deal with Telecoms Minister Mahmoud Vaezi in Iranian Net, which aims to roll out fiber optic Internet in several cities.  

That initial investment, later to be followed by a loan of $450 million to the fiber telecoms company, gives MTN a 49% stake in Iranian Net.

After the signing ceremony, Vaezi said, “Iranian Net has been endeavoring to attract foreign investment to launch the fiber optic to home services. TCI has launched a similar project recently. With MTN-Iranian Net entering the sphere, people will have a chance to choose between the two.”