Africa’s biggest mobile operator, MTN Group, yesterday said it was going ahead with its 2018 target of repatriating dividend from its joint venture with Irancell despite likely complications that may arise from new US sanctions on the country.
READ ALSO: MTN says U.S. withdrawal may limit its cash repatriation from Iran
Chief Executive, Rob Shuter, said on a conference call in Johannesburg that the company stands by its plan to increase payouts by 10 to 20 per cent over the next three to five years to its investors.
“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,” Mr Shuter said. MTN, which reported a 7 per cent 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 the Middle East nation, which signed a nuclear deal with the Barrack Obama administration in 2015.
But President Donald Trump warned on Tuesday that companies doing business with Iran would be barred from the United States.
The telecoms boss, however, said the sanctions may limit the ability of the group to repatriate cash from MTN Irancell, including future dividends.
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 per cent 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 66 per cent 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 per cent stake in Irancell, MTN said in May, 2017 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 per cent stake.
In Nigeria,MTN said its local unit would list on the Nigerian Stock Exchange before the end of 2018, although stakeholders are beginning to query its commitment to the project.
The telecoms firm planned to raise at least $400 million to cut debt for MTN Nigeria, then valued at $5.23 billion.