MTN will only exit Iran if the South African government imposes sanctions on the troubled country, which has been accused of gearing up to go nuclear.
Iran has been under increasing pressure from Europe and the US over its nuclear programme. The sanctions imposed by the west have affected the company's ability to move money out of the country and get equipment in to upgrade its network.
If MTN is forced to exit its second-largest operation, it will evacuate its staff and try to sell its stake to a firm in China, Russia or India, which are not currently embroiled in the political fracas between the Middle Eastern country and the west.
Iran is MTN's fastest growing unit, growing revenue 20% in the year to December, accounting for R11 billion of the company's full-year revenue of R121.9 billion. It has 34.6 million of MTN's 164.5 million subscribers, growing 16.6% in the year despite more than 100% penetration.
Real life
The company has come under pressure from the Unite Against Nuclear Iran (UANI) group, which yesterday reiterated that “investors, affiliated institutions and potential customers” should stop doing business with the company.
“In letters to MTN, dated 25 January and 29 February, UANI informed [MTN CEO Sifiso] Dabengwa that the Iranian regime, MTN's partner in MTN Irancell, which is the second-largest mobile phone network operator in Iran, used the network to monitor and track Iranian dissidents and disrupt the communications of Iranian citizens protesting against the repressive regime.”
Dabengwa says the “reality” is that interception equipment is installed on cellular networks in almost every country. He says MTN has no control over such equipment when it is on the government's gateway.
Despite the ongoing sabre-rattling, Dabengwa says the company will only exit the troubled Middle East country if the South African government imposes sanctions and says it can no longer do business there.
Dabengwa says the Iran unit is currently self-funding, but the group intends spending R1.3 billion on its network in the coming year as it anticipates adding another four million subscribers.
Tough going
Dabengwa says it is a challenge getting cash in and out of Iran, but the company has been able to repatriate funds by working through “other” institutions. He says there is also an opportunity to swap cash with a company that has money outside Iran and needs internal funds.
MTN had battled with getting equipment into the country, because of delays at customs and at manufacturers, says Dabengwa. However, this has now been resolved.
Dabengwa says the company is not able to source equipment from US-based firms, but has been purchasing from European companies. MTN's ability to source infrastructure is at risk, but it is not at the point where the company is “significantly” concerned.
“We will just have to manage in terms of other countries and what their laws allow us to do.”
Dabengwa says the company has an emergency evacuation plan in place for its staff in case they need to leave the country. If the company is forced to exit, it would try and sell its stake, he adds.
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