Turkcell’s $4.2 Billion MTN Claim to Be Heard in South Africa

Updated on
  • Case will go to trial five years after it was first lodged
  • Turkcell alleges MTN paid bribes to secure Iranian license

Turkcell Iletisim Hizmetleri AS’s claim for $4.2 billion of damages against MTN Group Ltd. will go to trial in the High Court in Johannesburg, five years after the case was first brought in relation to the awarding of an Iranian license in 2005.

Turkcell alleges that Johannesburg-based MTN, Africa’s largest wireless operator by sales, paid bribes to South African and Iranian officials to secure the license after it was initially awarded to the Turkish company. The case was first lodged in South Africa in 2013, but was delayed following objections by MTN and subsequent amendments.

“We believe we have a very strong claim,” Serhat Demir, legal and regulation executive vice president of Turkcell, said in an emailed statement on Thursday. “The South African courts will be able to evaluate the huge amount of evidence we have to support our claim that MTN went to extraordinary lengths to unlawfully take Turkcell’s rights to the Iranian GSM license.”

MTN shares fell 0.5 percent to 116.91 rand as of 1:51 p.m. in Johannesburg. The stock is down 7.23 percent this year, valuing the company at 220 billion rand ($16.9 billion). Turkcell fell 0.7 percent.

“MTN continues to believe that there is no legal merit to Turkcell’s claim and will accordingly oppose it,” the company said in an emailed statement.

Unwanted Distraction

The trial will come as an unwanted distraction for MTN Chief Executive Officer Rob Shuter, who is trying to turn around the company after its first ever annual loss and the settling of a $1 billion regulatory fine in Nigeria. Iran has emerged as a key market for MTN after the lifting of U.S.-led sanctions allowed the carrier to repatriate almost $1 billion in trapped funds. MTN had almost 47 million customers in Iran as of end March, behind only Nigeria’s 57 million.

Turkcell first sued MTN in the U.S. in 2012, though was later forced to withdraw the case after the Supreme Court ruled that it couldn’t be heard in the country. The $4.2 billion figure is based on profit the Turkish company says it could have made had it been able to keep the license, plus interest.

MTN spokespeople couldn’t immediate be reached for comment.

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