MTN’s Plan to Exit Iran Investment Stymied by US Sanctions as Company Faces Criminal Probe and Eyes Telkom Acquisition

MTN Group faces a perfect storm of challenges as US sanctions freeze its $10 billion Iran investment, a Department of Justice grand jury investigation probes potential terrorism links, and the company considers reviving Telkom acquisition talks amid South Africa’s evolving telecoms landscape.

Africa’s largest mobile operator MTN Group finds itself at a critical crossroads, balancing geopolitical pressures, regulatory challenges, and strategic expansion plans. The Johannesburg-based telecommunications giant’s complex web of international operations has created unprecedented challenges that could reshape its future trajectory and South Africa’s entire telecoms sector.

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Iran Investment Becomes Frozen Asset Under Escalating US Sanctions

South Africa’s MTN Group is facing major hurdles in its efforts to pull out of its investment in Iran, where US sanctions have turned its stake into what executives call a frozen asset. CEO Ralph Mupita told reporters at a briefing in Johannesburg on Friday, 5 September 2025, that the restrictions make it impossible to move funds in or out of the country. “You cannot take money in and you cannot take money out,” Mupita said, highlighting how these barriers have stalled the company’s long-term strategy to fully exit the Middle East region.

MTN holds a 49% minority interest in Irancell, Iran’s second-largest mobile operator, but has zero operational control over the business. The investment, valued at billions of rand, has been locked in place for years due to escalating US sanctions on Iran, which aim to curb the country’s nuclear ambitions and support for regional militias. These measures restrict financial transactions, leaving MTN unable to repatriate dividends or sell its shares without navigating complex legal and regulatory obstacles.

The telecom giant’s predicament is compounded by broader geopolitical tensions. Iran has been under heavy US sanctions since the Trump administration withdrew from the 2015 nuclear deal in 2018, with further restrictions added in recent years. The Treasury Department’s latest actions in 2025 have targeted Iranian weapons procurement networks and oil trade facilitators, creating an increasingly complex sanctions environment.

These sanctions have not only frozen assets but also complicated international business dealings, forcing companies like MTN to maintain passive investments while seeking exit routes. Analysts say the frozen status could impact MTN’s financial flexibility, as the group cannot access or liquidate the value tied up in Irancell, estimated at around R10 billion based on recent valuations.

Criminal Investigation Intensifies Legal Pressure

Adding to MTN’s challenges is an active grand jury investigation by the US Department of Justice into the company’s conduct in Iran and its former operations in Afghanistan. The probe, confirmed in MTN’s interim financial results on 14 August 2025, focuses on potential violations related to sanctions and anti-corruption laws.

The investigation stems from MTN’s historical ties in these regions, where US authorities have scrutinised foreign companies for dealings that might breach sanctions. In Iran, Irancell has faced allegations of links to entities involved in regional conflicts, though MTN maintains it has complied with all applicable laws. The Afghanistan unit, sold in early 2024, operated in a volatile environment amid Taliban control, raising questions about compliance during the transition.

According to National Security News, the investigation could have severe implications if proven. Criminal penalties under US law are among the harshest in the federal system, with potential sentences of up to 20 years imprisonment per count, and where deaths result—as alleged—life imprisonment. Any funds, property, or assets linked to the crime can be seized, and a company can be barred from access to US financial markets.

The fallout has already been material for MTN as a listed company. Its share price dropped nearly 9% after the disclosure, and the risks run deeper with potential investor flight, financing complications, and board accountability issues looming. The investigation represents what analysts call “the globalisation of American justice,” with US law now routinely reaching beyond America’s borders to hold corporations accountable when their actions allegedly contribute to harm against US and allied citizens.

Defensive Legal Strategy and Ongoing Litigation

This is not MTN’s first brush with US legal scrutiny. The company has been defending lawsuits in US courts from plaintiffs alleging indirect support for terrorism through its operations, claims MTN vehemently denies. In a statement on 27 August 2025, MTN said it is “respectfully defending cases brought against it by plaintiffs in the US and maintains that the plaintiffs have sued the wrong defendants in the wrong courts.”

The company faces a class-action lawsuit from families of US soldiers who claim MTN paid protection money to the Taliban in Afghanistan, allegedly endangering American lives. This case, filed in December 2019, has been allowed to proceed in US courts after being determined to have merit by a US district court.

MTN’s woes regarding its operations in the Middle East run deeper. TechCentral reported that Turkish telecoms operator Turkcell had filed papers with South Africa’s constitutional court in its long-running battle against MTN, alleging it lost out on the Irancell licence two decades ago because MTN bribed officials in Tehran and Pretoria.

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Leadership Restructuring Amid Strategic Pivots

While navigating these international headwinds, MTN is turning its focus inward to strengthen its position in its core African markets, particularly South Africa. The company has announced significant leadership changes as it positions for the next phase of growth. Ferdi Moolman, the group’s current chief risk officer and a former MTN Nigeria CEO, will step in as the new head of MTN South Africa from November 1, replacing Charles Molapisi.

Molapisi isn’t leaving the picture, though. He’s sliding back into his old role as Group Chief Technology and Information Officer (CTIO), this time with extra responsibility for spearheading MTN’s adoption of AI across operations, from network optimisation to customer service and productivity. The shuffle comes with more reassignments across the group’s leadership bench, with Karl Toriola, CEO of MTN Nigeria, adding another hat as VP of Francophone Africa.

Market Consolidation Strategy in South Africa

While navigating these international headwinds, MTN is turning its focus inward to strengthen its position in its core African markets, particularly South Africa, where it sees opportunities for consolidation. South Africa accounts for less than a third of the group’s revenue, with operations spanning 16 countries across Africa and the Middle East.

Mupita highlighted the need for mergers in infrastructure and telecom operators, noting the limited profit pool in a competitive landscape. “The South African market needs consolidation in infrastructure and telecoms operators because the profit pool is limited,” he said. The South African telecom market is expected to reach a size estimated at $10.43 billion by the end of 2025 and $12.28 billion by 2030, growing at a compound annual growth rate of 3.33%.

A key development fuelling this optimism is the recent approval of rival Vodacom’s R13.2 billion deal to acquire a 30% to 34.95% stake in Maziv, the parent of fibre operators Vumatel and Dark Fibre Africa (DFA), owned by Remgro. The Competition Appeal Court greenlit the transaction on 14 August 2025, after the Competition Commission dropped its opposition following revised terms addressing job security, open-access fibre, and investments in underserved areas.

This approval came after a complex regulatory journey that saw the deal initially blocked by the Competition Tribunal in October 2024. The tribunal had ruled that the merger would have “permanent anti-competitive effects” and would likely entrench Maziv as the leading fibre-to-the-home provider in South Africa. However, following extensive negotiations and revised conditions, the Competition Commission ultimately reversed its position.

Mupita called this “a major inflection point,” signalling a more favourable regulatory environment for deals that enhance connectivity without harming competition. The approval, after years of negotiations and hurdles, paves the way for similar consolidations, potentially benefiting consumers through better rural coverage and affordability.

Telkom Acquisition Revival: Strategic Implications and Challenges

Amid this consolidation wave, MTN is reportedly considering reviving talks to acquire smaller South African rival Telkom SA, according to people familiar with the matter. The two companies could begin negotiations before the end of 2025, though no deal is guaranteed. Telkom has been engaging advisers to explore options in case a new bid emerges, signalling preparedness for discussions in a regulated market where antitrust scrutiny is high.

Currently, MTN Group has 298 million subscribers across its 15 African markets. Acquiring Telkom SA’s 23 million subscribers would be a significant addition to its base. In the South African market, Vodacom leads with over 52 million subscribers while MTN controls 39.9 million as of March 2025. Telkom holds 23 million, while Cell C has the least share with 7.7 million subscribers.

Previous talks in 2022 collapsed over disagreements on exclusivity and concerns about winning regulatory approval, as a merger would create South Africa’s dominant mobile operator. MTN walked away after failing to secure a deal structure that addressed these issues. However, the recent Vodacom-Maziv approval has shifted the landscape, potentially easing paths for similar transactions.

MTN CEO Ralph Mupita, when asked, stated there are no active discussions but did not rule out future interest. “There are no talks with advisers between ourselves and Telkom. We did discuss this at some time in the past, but there are no active discussions,” Mupita told reporters, while noting that future talks could not be ruled out.

To bolster its M&A capabilities, MTN has appointed CFO Tsholofelo Molefe—who previously worked at Telkom—to head its mergers and acquisitions unit. A combination with Telkom could narrow the gap with market leader Vodacom, enhancing MTN’s fibre and spectrum assets while promoting efficiency in a market where infrastructure duplication hampers rural investment.

Regulatory Environment and Competition Dynamics

The potential revival of MTN-Telkom talks occurs in a complex regulatory environment. Strategic M&A analysis suggests that South Africa’s telecom sector is undergoing a pivotal transformation in 2025, driven by anticipated reforms in spectrum allocation, consumer protection, and the revival of the wholesale open access network (WOAN) licensing framework.

For MTN to revive Telkom acquisition talks successfully, it must align its strategy with the Competition Commission’s priorities. This includes offering structural remedies such as asset divestitures or infrastructure-sharing commitments to mitigate market dominance, consumer-centric concessions like commitments to lower data prices or expanded rural connectivity, and leveraging anticipated WOAN reforms to demonstrate that consolidation supports rather than hinders competition.

A major complication for any potential deal is the South African government’s 40.5% shareholding in Telkom. Without the government’s support, which was not forthcoming during the last round of talks, a deal would be difficult to finalise. The government’s position on telecoms consolidation will be crucial, particularly given the strategic importance of digital infrastructure for national development goals.

Financial Performance Amid Strategic Challenges

Despite these challenges, MTN’s operational performance continues to show strength. The group reported a 22.4% revenue jump in H1 2025, powered by Nigeria and Ghana. Headline earnings per share surged over 350%, and the board sweetened dividends to 345 cents per share, pledging even more by year’s end.

Fintech remains MTN’s crown jewel. Its MoMo platform clocked more than $320 billion in transactions in the half year, with revenues climbing nearly 29%. With data demand booming and AI-driven efficiencies in the pipeline, MTN is betting big on connectivity, fintech, and digital infrastructure as the pillars of its growth beyond 2025.

Under the current sanctions regime against Iran, the company has not deployed any capital into the business and has not extracted capital or dividends. MTN maintains a robust ethics and compliance programme designed to ensure compliance with law, including international trade and sanctions regulations.

Future Outlook: Balancing Growth and Compliance

Looking ahead, MTN faces the complex challenge of managing multiple strategic priorities while navigating an increasingly complex regulatory environment. The company’s ability to resolve its Iran situation, successfully defend against US legal challenges, and execute domestic consolidation plans will determine its long-term trajectory.

South Africa’s government supports better connectivity, pushing for investments in underserved areas. The telecom industry argues consolidation is key to making this viable, avoiding redundant networks. With Vodacom controlled by UK’s Vodafone and Telkom partially state-owned, any deal would face rigorous review by the Competition Commission and Icasa to ensure fair competition and public interest.

The resolution of MTN’s various challenges will likely serve as a template for how multinational corporations navigate similar geopolitical and regulatory complexities in an increasingly fragmented global business environment. The stakes extend far beyond individual companies to encompass broader questions about corporate responsibility, international law enforcement, and the future of African telecommunications infrastructure development.

As MTN works to untangle its web of international complications while pursuing domestic growth opportunities, the company’s experience illustrates the complex realities facing global corporations operating across diverse regulatory and political landscapes. The success of its strategic pivot toward African market consolidation may ultimately depend on its ability to demonstrate compliance with international legal standards while maintaining operational efficiency and competitive advantage in its core markets.

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By: Montel Kamau

Serrari Financial Analyst

8th September, 2025