The push by Iran to lift the U.S.-led sanctions on its economy could significantly benefit MTN Group, Africa’s largest telecommunication provider.
The telco has a minority 49% investment shareholding in MTN Irancell but has been unable to repatriate any money from the country since 2018 due to the sanctions.
However, if the sanctions are lifted the group would be able to repatriate as much as 2.8 billion rand ($204 million) from the country, according to people familiar with the matter.
The origin of MTN’s troubles in Iran goes as far back as 2010’s. After Iran fell into dispute with the U.S. following its nuclear activities, several sanctions, including one covering the country’s financial-services sector, were put in place. This made it extremely difficult to make large transfers of capital and foreign currency.
However, when former US president, Barack Obama signed an accord in 2015, the sanctions were lifted and MTN was able to repatriate about $1 billion at the time.
In 2018, the sanctions came back into effect after former U.S. President Donald Trump withdrew from the nuclear accord signed by his predecessor.
This lead to the loan repayments owed MTN being stuck in the country.
MTN’s troubles with repatriating funds
However, this is not the first time the group has run into trouble repatriating funds. As a global brand, the group often has to retrieve funds from countries with varying regulations.
In Nigeria for example, the group ran into trouble in 2018. The telco was accused of illegally repatriating huge profits from the country in other to avoid paying appropriate taxes to the government.
Nigeria’s then Attorney-General, Abubakar Malami, released an incriminating report alleging accumulated tax liabilities totalling about $2bn.
In the letter, Malami said the liabilities followed a 10-year “revenue assets investigation” which the Nigerian government conducted between 2007 and 2017.
Similarly, Nigeria’s central bank sanctioned four banks — Standard Chartered, Citi, Stanbic-IBTC, and Diamond — for allegedly violating foreign exchange regulations and facilitating the repatriation of over $8.2bn on behalf of the company.
The new administration of Joe Biden is more in favour of the deal with Iran. Diplomats are hoping to have the landmark 2015 deal restored within the next few months.
This is a great boost for MTN’s second-quarter plans because it should be able to withdraw some or all of the funds it’s being owed in the country once sanctions are lifted.
The could help pay down the net debt of R44.6 billion reported in its first-quarter report. The company is already looking to sell its middle eastern operations in Syria, Afghanistan and Yemen.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!