US Sanctions Cause MTN Stock Prices To Fall

Africa’s largest mobile operator MTN fell sharply on the Johannesburg Stock Exchange (JSE) yesterday after the company flagged that US President Donald Trump’s reinstatement of sanctions against Iran could hamper its efforts to repatriate 200million (R2.98billion) in cash back to South Africa.

MTN fell more than 4percent in early trade before paring the losses after the group warned its shareholders that Trump’s decision could threaten its years-long efforts to repatriate the money back from the Islamic state.

The group said the sanctions could limit the company’s ability to claw back cash in both dividends and loans from MTN Irancell.

It said it would continue to monitor the situation in Iran.

“MTN Group remains committed to our investment in MTN Irancell and to repatriating the balance of legacy cash in Iran while remaining compliant with appropriate legislation,” the group told shareholders.

MTN has thus far managed to repatriate approximately 88m from Irancell, where it holds a 49percent stake, including 61m relating to the full 2017 dividend due as well as a further 27m of historic dividends.But analysts said yesterday that decisions by China and key European countries not to follow Trump left the door open for MTN to bring the money back to South Africa.

In the year ended December, MTN said its joint venture in Iran had 43.3million subscribers. Irancell’s revenue increased 17.8percent, while its data revenue surged 66.3percent in the reporting period.

In 2016, MTN said it expected to complete the transfer process by April last year.

Aeon Investment Management chief investment officer Asief Mohamed said the MTN Iran business was cash flow positive.

“Ideally, MTN would prefer to repatriate cash as soon as possible from foreign territories. However, the decision by other parties to the agreement to honour it is a saving grace for the company,” Mohamed said.

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