Telecommunications

Major South African company hit by United States sanctions

Malcolm Libera

 ·24 Aug 2026

MTN is facing significant financial and operational pressure from US sanctions on Iran as the South African telecommunications group continues its withdrawal from the Middle East.

The issue was highlighted in MTN’s interim financial results for the six months ended 30 June 2026, which showed that geopolitical restrictions are preventing the company from freely extracting capital from its 49% investment in Irancell.

Additionally, MTN has taken a major step towards completing its Middle East exit by reaching a settlement that will allow it to formally resolve its position in Syria.

MTN said it had reached a settlement agreement regarding historical claims linked to its former Syrian operation. The agreement provides for an authorised payout of $43.9 million, equivalent to about R716 million.

“In 2021, MTN Syria was placed under judicial guardianship over a disputed licence obligation. MTN Group subsequently abandoned the operation as the regulatory actions made business untenable,” the company said.

MTN Group president and CEO Ralph Mupita said the settlement was consistent with the group’s broader strategy.

“Concluding this settlement agreement is consistent with the Group’s Middle East exit strategy,” he said. Iran, however, remains a much more complicated problem for MTN.

The group said the escalation of conflict in Iran during the first half of 2026 affected Irancell’s operational performance.

The depreciation of the Iranian rial, together with a higher discount factor, also reduced the value of MTN’s investment. MTN recognised its attributable portion of an impairment relating to Irancell’s assets.

“As at 30 June 2026, the Group recognised its attributable portion, amounting to R3 900 million of the impairment charge relating to the recoverable amount of assets of Irancell,” it said.

US sanctions have also made it difficult for MTN to repatriate money from Iran.

The company said the US Treasury Department’s Office of Foreign Assets Control designated Iran’s Central Bank as subject to sanctions on 20 September 2019.

“Sanctions imposed on the CBI create a secondary sanctions risk if the CBI allocates foreign currency to an MTN entity for the purpose of repatriating the receivable and/or loan,” MTN said.

MTN South Africa reported mixed results

As a result, billions of rands owed to MTN cannot be treated as readily available cash. The company said there is no clear indication of when sanctions might be lifted, forcing it to classify a substantial portion of its receivables as non-current.

“Considering the continued uncertainty of when the sanctions will be lifted, the Group has classified about R2 billion of the outstanding receivables as non-current as the settlement is neither planned nor likely to occur in the foreseeable future,” MTN said.

The R2.009 billion has consequently been presented as part of MTN’s investment in associates and joint ventures rather than as a short-term cash resource.

The pressure from Iran weighed on MTN’s reported earnings. Adjusted headline earnings per share increased 21.3% to 793 cents.

However, reported HEPS declined 5.8% to 615 cents, largely because of the R3.9 billion Irancell impairment and foreign exchange losses in South Sudan.

Underlying cash generation was stronger, with equity-free cash flow rising 32.7% to R7 billion. MTN also received R13.9 billion in cash upstreamed from subsidiaries, including R6.6 billion from Ghana and R2.7 billion from Nigeria.

The stronger cash position is supporting a R6 billion share buyback programme, which will begin after the current closed period. No interim dividend was declared.

In South Africa, MTN reported mixed results as it focused on improving subscriber quality amid weaker consumer spending. Prepaid service revenue fell 3.3%, while prepaid subscribers declined to 28.2 million.

Postpaid service revenue increased 4.9%, supported by a 9.1% increase in subscribers to 4.8 million. Data revenue grew 4%, while data traffic increased 27.7%.

MTN South Africa’s EBITDA fell 7.6% to R8.5 billion, with the margin declining to 34.2%.

Despite the pressure, MTN’s latest results show that its withdrawal from the Middle East is progressing, with Syria largely resolved, while Iran remains a significant financial and geopolitical challenge.