Despite continued sanctions on Iran, South African telecommunications giant MTN Group considers its investment in the country a “hidden gem” that will eventually bring value to the group.

Since the US reimposed economic sanctions against Iran in 2018, after withdrawing from the multilateral Joint Comprehensive Plan of Action (JCPOA) agreement, MTN has accumulated about R6-billion in dividends and loans that it cannot repatriate from its 49%-owned joint venture, Irancell.

Prior to the renewed sanctions, MTN was able to remit some of the billions of rands in accumulated dividends and loans after Iran emerged from a decade of economic isolation when the JCPOA agreement resulted in the lifting, in 2016, of the crippling sanctions against the Middle Eastern country.

The JCPOA was officially adopted in October 2015, followed by its implementation in January 2016, with the US and the European Union lifting sanctions as Iran met its nuclear commitments.

While the renewed sanctions two years later effectively blocked MTN’s efforts to take money out of its second-biggest market by subscribers, the company has kept its 49% shareholding in Irancell, which delivered what MTN said was a robust set of results in an economy that has continued to rebound despite the sanctions.

“We have kept our shareholding in Iran. It is a really big business [with] very exciting assets,” said MTN Group CEO and president Ralph Mupita during an editors’ roundtable following the release of its results for the six months to June 30.

He explains that, while the value may be invisible amid the sanctions, Irancell is building a significant ecosystem and is one of its most digitally advanced businesses.

“It is a very exciting market. You have to see from the ground to believe just the depth of the digital ecosystem that is there.”

Mupita highlighted the performance of ride-hailing app Snapp, which remains a market leader, ranking among the top ride-hailing apps globally and reaching 4.3-million daily rides. Last-mile delivery service Snappbox also remained the market leader, with almost 330 000 daily orders, while food delivery app Snappfood increased its revenue by 86%.

It is substantial business, he assures, pointing out that, while the Iranian joint-venture is MTN’s second biggest market in terms of subscribers, at 52-million subscribers, compared with Nigeria with 70-million and South Africa with 32-million subscribers, it is also MTN’s largest business in terms of traffic.

According to Mupita, Iran accounts for half of all the petabyte traffic recorded by MTN across its 19 operations.

“It is a very sophisticated market, very youthful, with smartphone adoption over 90% and a digital ecosystem that is very deep and rich. [However,] given the geopolitics, you do not see any of that. It is a little gem of a business that is not visible in the MTN share price.”

As at June 30, MTN had intercompany receivables of R5.97-billion owing from Irancell, which it plans to repatriate when circumstances permit.