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South Africa’s MTN cuts subscriber target on Iran slowdown

October 24, 2013

JOHANNESBURG (Reuters) – South Africa’s MTN Group on Thursday cut its full-year target for new subscribers by nearly 10 percent, as U.S. sanctions against Iran dampen consumer demand for its largest Middle East business.

MTN, Africa’s top mobile operator, now expects to add 19.1 new customers by the end of this year, from the 21.1 million it previously forecast, said spokesman Nik Kershaw.

The Johannesburg-based company owns 49 percent of MTN Irancell, which contributed nearly a quarter of its 2012 revenue. But Iran has seen its economy suffer from U.S. sanctions against Tehran.

“With sanctions (against) Iran, the economy is under pressure. It’s going to put more and more pressure on the business,” Kershaw told Reuters.

MTN on Thursday reported a slower-than-expected 1 percent increase in third-quarter subscribers, to 203.8 million from the previous three months.

The company, which operates in 22 countries in Africa and the Middle East, added subscribers in almost all of its major markets except Iran, where it saw subscribers fall 1.7 percent to 41.3 million.

Business in Iran was also hurt by the withdrawal of a SIM card promotion, Kershaw said.

MTN said on Tuesday it has been unable to repatriate around $450 million from its Iranian unit because of the sanctions.

In Nigeria, Africa’s most populous country, subscribers rose by just 0.6 percent to 55.6 million. South Africa also saw growth of just under 1 percent, to 25.2 million.

MTN said conditions would remain challenging in its home market, where it faces tough competition from local rivals Vodacom and unlisted Cell C.

South Africa’s telecoms regulator said this month it planned to cut by 75 percent the fees mobile operators can charge rivals to use their network.

Analysts have said the change would be a blow to MTN’s revenue. The company said it continued to discuss the proposed changes with the regulator.

Shares of MTN fell 1.7 percent to 197.70 rand, underperforming Johannesburg’s benchmark Top-40 index, which was flat.

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