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MTN jumps in on ride-sharing game

Lauren Kate Rawlins
By Lauren Kate Rawlins, ITWeb digital and innovation contributor.
Johannesburg, 12 Oct 2016
MTN has invested in an Uber-like app, called Snapp.ir, based in Iran.
MTN has invested in an Uber-like app, called Snapp.ir, based in Iran.

MTN has invested over R300 million in Uber-like Iran-based ride-sharing app Snapp.ir.

The mobile operator has had billions stuck in Iran since 2012, when the US placed economic sanctions against Tehran. The sanctions were imposed as the US believed the country was developing a nuclear programme.

MTN has a 49% stake in government-controlled MTN Irancell, the second-largest mobile phone operator in Iran.

It appears the R316 million ($22 million) investment in Snapp.ir is a way for the company to repatriate some funds.

In an e-mail to Bloomberg, Snapp.ir CEO Shahram Shahkar said the funds will help the company to expand to cities outside of Tehran.

Earlier this year, following partial removal of sanctions in Iran, MTN said the group expects to see an opportunity to expand services and more appetite for growth in this market.

"While it has taken longer than initially expected, MTN continues to engage the various related parties in an effort to repatriate approximately $1 billion (R15.6 billion) equivalent from MTN Irancell," the company said.

This year, after the Nigeria fine fiasco, it was reported MTN operations in the Middle-Eastern country delivered a strong performance despite the impact of a slow economy and sanctions. Subscribers increased by 5% to 46 million in a highly penetrated market, and total revenue grew by 11%.

Snapp.ir was founded in 2014, and according to Shahkar, now has 500 000 users and 10 000 drivers.

Before the Bloomberg article, Israel-based tech Web site Geektime published a story citing the same information.

The article states MTN was the sole investor in a venture capital round held for the ride-sharing start-up on Monday.

The same sanctions preventing MTN taking money out of Iran, prevent Uber from opening up shop there. Snapp.ir works similarly to its global rival, but is differentiated by setting the price of the trip before it commences.

Shahkar told Geektime, in addition to expansion, the investment will be used to introduce new services such as premium cars, like Uber Black, and other features.

Snapp released a statement today saying it had closed a funding round led by MTN.

As part of the round, MTN has invested another R316 million ($22 million) into Snapp.ir's parent company, the Iran Internet Group.

Snapp has grown exponentially since its launch, achieving an average growth of approximately 100% month-on-month, the company says.

MTN MENA VP Ismail Jaroudi says: "We have been watching Snapp.ir closely since its launch, and have been continually impressed with the strength of their team. In a very short time, they have dominated the Iranian taxi-hailing market and we look forward to continuing our successful partnership."

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