MTN Eyes $204m Revenue Boost As The US Plans To Lift Iran Sanctions
MTN eyes $204m revenue boost as the US plans to lift Iran sanctions
Iran's push to end US-led sanctions on its economy could have a significant positive impact on MTN Group, Africa's largest telecommunications provider.
The telco owns a minority 49 percent stake in MTN Irancell but has been unable to repatriate funds since 2018 due to the sanctions.
However, if the sanctions are lifted, the group could repatriate up to 2.8 billion rand ($204 million), according to sources familiar with the matter.
Iran sanctions
MTN's troubles in Iran date all the way back to 2010. Iran came into conflict with the US over its nuclear activities, and several sanctions, including one targeting the country's financial sector, were imposed. This made large capital and foreign currency transfers extremely difficult.
However, when former US President Barack Obama signed an accord in 2015, the sanctions were lifted, allowing MTN to repatriate approximately $1 billion.
Sanctions were reinstated in 2018 following the resignation of former US President Barack Obama. President Donald Trump withdrew from the Obama administration's nuclear deal.
This resulted in MTN's loan repayments remaining trapped in the country.
MTN’s troubles with repatriating funds
However, this is not the group's first run-in with repatriation issues. As a global brand, the group frequently needs to recover funds from countries with disparate regulatory regimes.
In Nigeria, for instance, the group encountered difficulties in 2018. The telco was accused of illegally repatriating large sums of money from the country in order to avoid paying required taxes to the government.
Abubakar Malami, Nigeria's then-Attorney-General, released an incriminating report alleging accumulated tax liabilities totaling approximately $2 billion.
Malami stated in the letter that the liabilities stemmed from a ten-year "revenue assets investigation" conducted by the Nigerian government 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 assisting the company in repatriating over $8.2 billion.
In Summary
Joe Biden's new administration is more in favor of the Iran deal. Diplomats are hopeful that the historic 2015 agreement will be restored within the next few months.
This is a significant boost to MTN's second-quarter plans, as it will be able to withdraw a portion or all of the funds it is owed in the country once sanctions are lifted.
This could help the company pay down its R44.6 billion in net debt disclosed in its first-quarter report. The company is already in the market to sell its operations in the Middle East, including Syria, Afghanistan, and Yemen.
