MTN Group is near an agreement with the Iranian government to acquire a 49% stake in a state-owned internet provider, as Africa’s biggest wireless carrier by sales seeks to expand in a fast-growing yet politically challenging market, according to two people familiar with the matter.
Company officials are planning a meeting with minister of communications and information technology Mahmoud Vaezi later in February to finalise the purchase of shares in Iranian Net, said the people, who asked not to be identified because the talks are private. The move will help smooth the process of repatriating funds from the Middle Eastern country as the government would prefer some profit to be invested locally, one person said.
“MTN continues to see growth potential in Iran and we look at opportunities on an ongoing basis to build on and complement our existing footprint,” spokesperson Chris Maroleng said in e-mailed comments.
A deal would fuel MTN’s expansion in a market that opened up to foreign investors following the lifting of US-led sanctions in 2016.
The carrier already owns a 49% stake in Tehran-based mobile carrier Irancell Telecommunication Services, and has been repatriating some of the $1bn that had been trapped in Iran before restrictions were removed.
In October, the company also agreed to invest about €20m in Snapp.ir, the Islamic Republic’s first cab-hailing smartphone application.
The purchase of the stake in Iranian Net is expected to be completed before the end of the first quarter, one of the people said. Further investments in Iran will be identified once the deal has been finalised, the people said. The talks were reported in 2016 by TechRasa, a website focused on Iranian technology news.
US-led international sanctions on Iran were lifted in April following a deal intended to prevent the country from building a nuclear weapon.
President Donald Trump has repeatedly criticised the agreement, putting its future in doubt.
For now, Iran can benefit from a limited amount of Western investment that has started to flow, and some foreign companies such as MTN have been able to move funds out of Iran that had been locked inside the country.
“In Iran there is a lot of risk with Trump taking the presidency,” Michael Treherne, an analyst at Johannesburg-based Vestact, said by phone. “Trump is making a lot of noise and can reverse the deal that eased the sanctions. That will make it very difficult for them to operate, but there is a lot of push back from Europe.”
MTN shares rose 0.76% to R116.63 on the JSE on Thursday, the first gain since January 31. On Friday afternoon they were 0.6% up at R117.33.
The company announced its first full-year loss on Wednesday, related to issues in Nigeria and SA.
Iranian Net was founded in 2011 to provide high-speed broadband internet services to cities in Iran, but has missed several deadlines on the project due to a lack of capital, one of the people said. Delta Partners is the financial adviser on the deal and will assist the phone company and Iranian Net to compile a joint business strategy. A Delta spokesman said the company was unable to comment on the details at the moment.
MTN had 47.8-million subscribers in Iran as of the end of September, trailing only Nigeria as the company’s biggest market. Data sales soared 62% quarter-on-quarter as smartphone use in the country jumped, the company said on October 24. (Bloomberg)