MTN: 10,100 -50 (-0.49%)
South Africa's MTN says sanctions complicate efforts to repatriate Iran cash
* On course to pay 500 cents per share dividend in FY 2018
* Company may struggle to repatriate $256 mln from Iran
* H1 profit down 7 percent
(Add CEO comment)
By Tiisetso Motsoeneng
JOHANNESBURG, Aug 8 (Reuters) - 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.
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.
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 unfavourable
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.
MTN is seen as one of post-apartheid South Africa’s biggest
commercial successes, but clashes with regulators in recent
years have hobbled its growth.
It appointed Shuter about a year ago to put it back on
growth trajectory. He has drawn up a new growth blueprint that
includes branching out of basic telecoms services into music
streaming, mobile banking and e-commerce and is reviewing the
company's presence in markets where it is not a major player.
MTN sold its tiny Cypriot business last month for 4 billion
rand ($301 million) to Monaco Telecom, sparking vague talk that
other smaller businesses in Liberia, Guinea and Guinea-Bissau
were next on the chopping block.
"We want to be a high-growth geography but we also need a
decent regulatory environment, (a) stable trading environment.
This means for example some of these markets in the more
war-torn areas will always be under review," Shuter said.
His comments would likely put the spotlight on Syria and
South Sudan, both of which have been gripped by civil war in
($1 = 13.3034 rand)
(Reporting by Tiisetso Motsoeneng
Editing by Ed Stoddard and Adrian Croft)
First Published: 2018-08-08 07:36:29
Updated 2018-08-08 11:13:12
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