Bloomberg News

MTN Says Turkcell May File Lawsuit Over its Iranian License

February 03, 2012

Feb. 3 (Bloomberg) -- MTN Group Ltd., Africa’s largest mobile-phone operator, said Turkcell Iletisim Hizmetleri AS may file a lawsuit against it over the acquisition of an operating license in Iran.

Turkcell “believes it has a claim against MTN,” and Turkey’s biggest mobile-phone operator has “indicated an intention to bring such a claim before a U.S. court,” MTN said in a statement yesterday.

MTN said Istanbul-based Turkcell alleges the Johannesburg- based company made “improper payments to an Iranian and a South African government official,” during 2004 and 2005 in order to secure a license in that country. MTN says the suit, which is yet to be filed, lacks merit.

The company’s Iranian unit, MTN Irancell, contributed 5 billion rand ($655 million) in revenue in the six months to June 30, or about 9 percent of MTN’s sales, and 2.1 billion rand in earnings before tax, interest, depreciation and amortization. MTN had 33.3 million subscribers in Iran as of Sept. 30.

Koray Ozturkler, deputy chief executive officer in charge of corporate affairs at Turkcell, wasn’t immediately available when called by Bloomberg.

“Irrespective of the validity of Turkcell’s claims, the very fact that such allegations have been made is serious,” MTN Chairman Cyril Ramaphosa said in a separate statement today. MTN has set up a special committee to probe the claims.

Share Price

On Jan. 4 and Jan. 5 MTN posted its biggest two-day decline in three years in Johannesburg on concern about possible sanctions that may be imposed by the U.S. and the European Union against Iran and over a strike in Nigeria, its biggest market, over the removal of fuel subsidies, which could cut consumer spending.

“The negative news flow around MTN’s name seems to be gathering momentum,” Johan Snyman, an analyst at Renaissance BJM in Johannesburg, said in an interview. “People will be watching the MTN share price.”

MTN rose 2.1 percent to 138.29 rand in Johannesburg yesterday, giving the company a market value of 261 billion rand, the second-biggest of any South Africa-based company. The statement was released after the market closed.

--With assistance from Ercan Ersoy in Istanbul. Editors: Antony Sguazzin, Ana Monteiro

To contact the reporter on this story: Janice Kew in Johannesburg at

To contact the editor responsible for this story: Antony Sguazzin at

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