MTN shares sink on court threat

Shares in mobile operator MTN (MTN) tumbled in early trade on the JSE on Friday (3 February 2012) with the group facing a potential lawsuit from Turkcell over its licence in Iran.

An analyst at PSG Konsult noted heavy selling of the group’s stock, accounting for close to a quarter of total value traded on the JSE in the morning session.

Shortly after 10:30 local time, shares in MTN fell 3.64% or R5.04 to R133.25 on the local bourse, having declined 4.4% to R132.21 shortly after the opening bell.

The group advised late Thursday that Turkcell Iletisim Hizmetlera AS (Turkcell) , which was unsuccessful in attaining the second GSM telecommunications licence in Iran, is looking to bring a case against MTN in a US court.

MTN, which owns 49% of Irancell, the group that was awarded the 2nd Iranian GSM licence, said that it had been informed by Turkcell that it believes it has a claim against MTN and its relevant subsidiary, arising out of the award of the 2nd GSM Licence, based on alleged violations of United States laws and has indicated an intention to bring such a claim before a United States court.

Turkcell claimed that MTN had asked South Africa to support Iran’s nuclear development in return for a license.

The Istanbul-basedfirm alleges that MTN made “improper payments to an Iranian and a South African government official,” during 2004 and 2005.
No such claim has been filed or served yet, MTN said in a statement.

“This is the same story that has cropped up again over sanctions from Europe and the US over Iran for its nuclear weapons policy,” the analyst said.

“MTN had a decent run over the past few days on the back of positive sentiment on the local bourse, but this matter, along with ongoing problems in Nigeria, MTN’s biggest market by customer has come to the froth again and serves as a reality check to the group.,” he said.

MTN lost ground on Monday after Islamist group Boko Haram vowed to continue fighting in Nigeria following a fresh round of attacks on the country’s security services.

The group’s shares dropped to about R130, before recovering steadily during the week as the JSE continued to break new ground, through the 34, 300 level.

Nigeria is MTN’s largest territory in terms of subscribers at 41.107 million, while in Iran, through a 49% holding in Iran Cell, the group boasts 33.314 million subscribers and a 44% market share. For the quarter ended September 2011, MTN Group recorded 158.59 million subscribers.

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MTN shares sink on court threat