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Sanctions make it harder for South Africa's MTN to repatriate Iran cash

Wednesday 08/August/2018 - 06:02 PM
Sada El Balad
Edit by: Mohamed Emad

MTN Group، Africa’s biggest mobile operator، is sticking to its 2018 dividend target despite new U.S. sanctions making it harder to repatriate cash from its Iran joint venture، the company said on Wednesday، according to Reuters.

MTN، which reported a 7 percent drop in half-year profits on Wednesday، has around 3.4 billion rand ($256 million) in accumulated dividends and loans from its joint venture in Iran.

MTN’s shares slumped by around 8 percent in late trading following the results and its warning on Iran.

Sanctions imposed on Tehran by the United States this week have already led banks and many companies around the world to scale back dealings with Iran.

Companies doing business with Iran will be barred from the United States، President Donald Trump said on Tuesday.

“The sanctions may limit the ability of the group to repatriate cash from MTN Irancell، including future dividends،” the company said in an earnings report.

In March، MTN cut its 2018 dividend to reduce debt but said it aimed to increase payouts by 10 to 20 percent over the next three to five years، lifting sentiment in the firm which some investors had expected to scrap this year’s payout.

MTN said on Wednesday that it stood by this plan.

“Despite continued challenges in repatriating funds from MTN Irancell، the board remains committed to plans to declare a total dividend of 500 cents per share for 2018،” Chief Executive Rob Shuter said on a conference call.

The company declared a dividend of 175 cents per share in the first six months of the year، meaning it would have to pay 325 cents to reach in second-half of the year to hit the target.

MTN said headline EPS، the primary measure of profit in South Africa that excludes certain one-off items، fell 7 percent to 215 cents in the six months through June due to unfavorable currency swings as well as a lower contribution from joint ventures and associates.

Those contributions dropped by a hefty 66 percent to 197 million rand، mainly due to a drop in the contribution from MTN Irancell and a widening loss at its e-commerce joint venture، Africa Internet Holdings.

In addition to its 49 percent stake in Irancell، MTN said in May last year it had agreed to invest more than $295 million in Iranian Net، a fixed line broadband network in which it planned to buy an initial 49 percent stake.

MTN said its MTN Nigeria unit expected to list on the Nigerian Stock Exchange before the end of 2018.

According to pre-IPO documents seen by Reuters in February، the telecoms firm planned to raise at least $400 million to cut debt for its Nigeria unit، then valued at $5.23 billion.

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