Shares of South Africa’s MTN Group tumbled nearly 4% in early trade on Friday, after it said it faces a potential lawsuit from Turkey’s Turkcell over its licence in Iran.
Shares of MTN, Africa’s largest mobile operator, were down 3.9% at R133 at 7.09am GMT.
MTN said after the close of trade on Thursday it faces a lawsuit from Turkcell, which claimed Africa’s largest telecom group asked South Africa to back Iran’s nuclear development in return for a cellular licence in the country.
The Johannesburg-based company said in a statement the Turkish mobile operator, which unsuccessfully bid for the same licence, will also claim that MTN asked South Africa to aid Iran’s military and that it bribed officials of both governments.
Turkcell plans to file the charges in a US court and the claim amount would be “material”, MTN said.
Officials for Turkcell were not immediately available for comment.
MTN said that none of the claims had been substantiated and the charges lacked legal merit.
MTN chairperson Cyril Ramaphosa, a leading member of the ruling African National Congress and a well known businessman, said in a separate statement the company would set up a special committee to investigate the charges.
“MTN has zero tolerance for corrupt and unethical business practices,” he said.
MTN, a $33-billion mobile company with operations in 21 countries across Africa and the Middle East, is one of South Africa’s most prominent companies.
MTN is a major player in Iran, where it has over 32-million subscribers and makes nearly 10% of its revenue.
Shares in the company have faced some selling in recent weeks on speculation that its business in Iran could be impacted by US sanctions.
But a spokesperson for MTN told Reuters last week that its operations in Iran were continuing as normal. — Reuters