MTN Group Ltd. (MTN) fell to the lowest in more than three weeks after Turkcell Iletisim Hizmetleri AS sued its Johannesburg-based rival for $4.2 billion in damages yesterday in a federal court in Washington.
The stock of Africa’s largest mobile-phone operator dropped as much as 2.6 percent to 135.91 rand a share, the lowest since March 6, and closed at 137.40 rand in Johannesburg.
MTN bribed officials, arranged meetings between Iranian and South African leaders, and promised Iran weapons and United Nations votes in exchange for a license to provide cell-phone services in the Islamic Republic, Turkcell alleged in its lawsuit. MTN bought 49 percent of Iran’s second-largest mobile operator, now named MTN Irancell, in 2005 after the country ended talks on awarding the license to Turkcell.
The lawsuit is a risk for investors buying into MTN’s strong growth in under-penetrated markets, Rob Forsyth, head of industrials at Investec Asset Management, said by phone from Cape Town.
“Those high-risk areas are becoming a little bit more high risk,” Forsyth said. “As a result it’s taking a bit of the shine off the MTN story.”
MTN Irancell contributed 11 billion rand ($1.5 billion) to the South African company’s 121.9 billion-rand group revenue in 2011, MTN said on March 7.
The company’s shares fell 4.4 percent this year after Nigeria’s government removed fuel subsidies, cutting consumer spending power in the company’s largest market, and after Turkcell said on Feb. 3 it may file a lawsuit against the company. Rival Vodacom Group Ltd. has jumped 21 percent.
The latest news helps “quantify the risk,” David Lerche, an analyst at Avior Research Ltd., said by phone.
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