MTN’s plans to invest $750 million on expanding its operations in Iran have been postponed, in light of looming US trade sanctions on the country.
Citing sources, Bloomberg reported a plan devised a year ago, which involved making an investment to extend fibre home broadband connectivity to Iranian cities, had been put on hold.
MTN said in 2017 it planned to buy a stake and provide loans to state-owned broadband company Iranian Net, but sources said the government failed to provide funding for the move due to the current state of the economy.
Iranian Net was formed in 2011 to provide broadband services, but struggled to meet targets due to a lack of capital, added sources.
MTN will update shareholders on the situation during its H1 2018 results announcement, scheduled for 8 August.
MTN’s position in Iran has not been helped helped by US President Donald Trump’s decision to withdraw from an international nuclear deal with the country, and plans to reimpose a trade embargo on energy and finance.
Bloomberg noted issues with the US is causing a headache for MTN and other international companies operating in Iran.
Indeed, MTN CEO Rob Shuter has said the company will withdraw from markets seen as troublesome and recently agreed a deal to exit from its small operations in Cyprus.
However, given the size of MTN’s operations in Iran, it is unlikely an exit would be feasible. With around 43 million customers at the end of 2017, the country is MTN’s second largest market after Nigeria.
The company entered Iran in 2013, but has since been embroiled in a long-running court battle with Turkcell over the tender process, which saw the Turkish operator miss out on entering the country.
Turkcell claims MTN committed “unlawful acts” during the tender process to gain a licence and is seeking damages of $4.2 billion.