CORRECT: MTN Shares Drop On News Of Probe Into Iran Bribery Allegations

Date : 02/03/2012 @ 5:52PM
Source : Dow Jones News
Stock : Turkcell Iletisim Hizmetleri As (TKC)
Quote : 9.55  -0.02 (-0.21%) @ 3:59PM

CORRECT: MTN Shares Drop On News Of Probe Into Iran Bribery Allegations

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Shares of South Africa's MTN Group Ltd. (MTN.JO) fell Friday after the company said it is investigating claims by Turkey's largest mobile phone operator that it engaged in corruption to secure a deal in Iran.

According to MTN, Turkcell Iletisim Hizmetlera AS (TKCM) alleges the South African company encouraged Pretoria to support Iran's nuclear power development program in 2005, and also claims MTN made improper payments to an Iranian and a South African government official between 2004 and 2005 to enable the company to secure a license to operate in Iran.

MTN holds a 49% stake in Irancell, Iran's No. 2 mobile phone operator, with the government as its partner. Turkcell lost out to MTN in 2005 in securing the license, the second to be tendered in Iran. Around 21% of MTN's subscribers are in Iran.

MTN Chairman Cyril Ramaphosa said late Thursday the company's board of directors was setting up a special committee to investigate the allegations made by Turkcell to preempt possible legal action. "MTN has zero tolerance for corruption and unethical business practices," he said.

Turkcell declined to comment Friday. South Africa's Department of International Relations and Cooperation said the government wouldn't be "dragged" into the issue, which it said is between the two companies.

The Turkish company has also pursued various cases against Iran's government, one of which is still pending, claiming Iran violated a shareholders agreement.

The allegations come as MTN's Iranian operation is the target of a U.S. lobby group, which is seeking to get foreign businesses to leave Iran. United Against Nuclear Iran last week sent a letter to MTN Chief Executive Sifiso Dabengwa calling for the company to pull out of the country, alleging MTN's technology is being used by Iran's government to locate and track mobile-phone users. MTN declined to comment on the letter at the time, but said it had no intention of leaving the country.

Meanwhile, analysts at Credit Suisse have said rising sanctions against Iran from the U.S. and Europe could start to hinder MTN's access to cash flows in the country. The U.S. and Europe are enacting new sanctions in an effort to choke off revenue to Tehran to try to stop what they say is a program of nuclear weapon development, a claim Iran denies.

At 1319 GMT, MTN shares were down ZAR2.82, or 2%, at ZAR135.47.

-By Devon Maylie, Dow Jones Newswires; +27117837848;

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