Turkcell seeks remedy for loss of licence in Iran to MTN

MTN Group has confirmed it is facing a lawsuit in the United States initiated by Turkey’s Turkcell over its stake in an Iranian mobile network.

MTN, through one of its subsidiaries, owns a 49 per cent shareholding in Irancell, which holds the second GSM licence in Iran. The remaining 51 per cent of Irancell is owned by Iran Electronic Development Company (IEDC).

Turkcell, and its subsidiary East Asian Consortium (EAC), was originally awarded the licence in 2003, though the Turkish operator’s initial 70 per cent stake was reduced to 49 per cent by the Iranian government in 2005.

In June 2005, the Iranian government cancelled the licence awarded to Turkcell and commenced talks with MTN, which resulted in the licence being transferred.

Turkcell has been seeking legal redress since then, and has now launched a lawsuit against MTN.

According to a statement from MTN, it understands the claim would allege that, in approximately 2004 to 2005, in an effort to cause the Iranian government to issue the GSM licence to MTN rather than Turkcell, MTN made improper payments to an Iranian and a South African government official.

The claim also suggests that MTN encouraged the South African government to take a favourable position toward Iran`s civil nuclear power development programme at a meeting of the International Atomic Energy Agency in November 2005; and that MTN enlisted South African government support for the provision of military equipment to Iran.

Turkcell has intimated a range of putative claim amounts, the nominal value of which, if formally asserted, would be substantial.

The MTN Group board has established a special committee to consider the allegations in depth and to recommend appropriate action.