By Business Reporter
South African telecommunications giant MTN is facing growing financial pressure from United States sanctions on Iran, with restrictions making it difficult for the company to repatriate funds from its 49% investment in Iranian operator Irancell.
The issue emerged in MTN Group’s interim financial results for the six months ended 30 June 2026, which highlighted the growing financial impact of geopolitical restrictions on its Middle East operations.
According to BusinessTech, MTN said US sanctions imposed on Iran’s Central Bank have created a secondary-sanctions risk if foreign currency is allocated to an MTN entity to facilitate the repayment of receivables or loans.
As a result, about R2 billion owed to MTN has been classified as non-current because the company does not expect the funds to be settled in the foreseeable future.
The restrictions have compounded wider challenges facing Irancell, including the depreciation of the Iranian rial and the escalation of conflict in Iran during the first half of the year.
MTN recognised its attributable share of a R3.9 billion impairment charge relating to Irancell’s assets. The impairment was a major factor behind a 5.8% decline in the group’s reported headline earnings per share to 615 cents.
However, MTN’s underlying performance remained relatively strong. Adjusted headline earnings per share rose 21.3% to 793 cents, while equity free cash flow increased 32.7% to R7 billion.
The group also received R13.9 billion in cash upstreamed from its subsidiaries during the period, helping to strengthen its balance sheet and support a planned R6 billion share buyback programme.
Middle East exit
MTN is attempting to reduce its exposure to the Middle East, with its position in Syria moving closer to resolution.
The company has reached a settlement relating to historical claims involving its former Syrian operation, with an authorised payment of US$43.9 million, approximately R716 million.
MTN Syria was placed under judicial guardianship in 2021 following a dispute over a licence obligation, after which MTN abandoned the operation, saying the regulatory environment had made the business untenable.
MTN Group president and chief executive Ralph Mupita said the Syrian settlement was consistent with the company’s broader strategy to exit the Middle East.
Iran, however, remains a significantly more complicated challenge because of the sanctions regime and the difficulty of extracting capital from the country.
Mixed performance in South Africa
MTN’s South African operation delivered mixed results during the first half of 2026 amid weaker consumer spending and changing customer behaviour.
South Africa’s service revenue increased 1.5% to R21.94 billion, while data revenue rose 4% to R10.9 billion. Data traffic increased by 27.7%, reflecting continued migration towards data-based communications.
Prepaid service revenue, however, declined 3.3%, while the number of prepaid subscribers fell to 28.2 million.
Postpaid service revenue increased 4.9%, supported by a 9.1% rise in subscribers to 4.8 million.
MTN South Africa’s EBITDA fell 7.7% to R8.5 billion, with its reported EBITDA margin declining to about 34.2%.
At group level, MTN’s service revenue rose 9.7% on a reported basis to R115.3 billion, while EBITDA before once-off items increased 24.4% in constant currency to R56 billion.
The results underline the contrasting fortunes of MTN’s diversified African operations and its Middle East investments, with strong growth in markets such as Nigeria and Ghana helping offset the financial and geopolitical challenges associated with Iran.
