By Helen Nyambura-Mwaura
JOHANNESBURG Oct 16 (Reuters) – A plunge in Iran’s currency
could slice 5 percent or more off MTN Group’s full-year
earnings, the latest setback for the South African mobile
operator over its money-spinning business in the Middle Eastern
country.
MTN, Africa’s largest wireless operator, made a big – and so
far profitable – bet on Iran in 2005, taking a 49 percent stake
in Irancell which now contributes about 9 percent to its
earnings.
However, the tumbling rial, along with an ongoing $4.2
billion lawsuit over MTN’s Iran licence, highlight the political
risks of doing business with a country increasingly under
pressure from Western sanctions over its nuclear programme.
Sanctions have slashed Iran’s oil export earnings and
triggered a rush by its citizens to exchange their savings for
foreign currency, dragging the rial down. While the official
rate is 12,600 rials per U.S. dollar, the price on the open
market hit a record 37,500 rials earlier this month.
“As I understand it, the authorities are trying to stabilise
the rial at around 25,000 to the dollar. Let us assume it went
to the 25,000 point as a first step. That would cut MTN’s
Iranian earnings stream roughly in half,” said Richard Barker, a
Credit Suisse analyst in Johannesburg. “That is going to knock
roughly 5 percent off their earnings.”
MTN finance director Nazir Patel said in August the rial’s
slide could have a big impact on second-half earnings, expected
in March.
Spokesman Paul Norman said on Tuesday the company was not in
a position to comment further.
MTN has been unable to move money out of Iran for months due
to the widening U.S. sanctions, and has said it was in talks
with the Unites States about repatriating funds.
Continued…
