Iran policy not swayed by phone firm, S.Africa says

REUTERS -- South Africa denied on Friday it had been pressured by MTN Group into backing Tehran's nuclear programme and aiding its military when the Johannesburg-based mobile operator was bidding for a telephone licence in Iran.

"South Africa's foreign policy is independent and it cannot be influenced by anyone," Foreign Ministry spokesman Clayson Monyela said.

MTN is the latest South African company to come under scrutiny for its dealings in Iran. Petrochemical group Sasol said in November it may sell its operations there.

The spotlight on South Africa's relations with Iran is uncomfortable for the ruling African National Congress (ANC) government of President Jacob Zuma.

While Pretoria has been reluctant to join the West in imposing sanctions, it has stopped short of open support for Iran, which supplies a quarter of its crude.
MTN, Africa's biggest mobile operator, is facing a lawsuit in a U.S. court from rival Turkcell over its licence in Iran.

Turkcell, which unsuccessfully bid for the Iranian licence awarded to MTN in 2004, confirmed on Friday its case against MTN was under way.

"Talks between our company and MTN have been conducted for some time and these talks are continuing. As a sign of our company's goodwill and desire to continue these talks, a statement will not be made about this issue until the said talks are completed," Turkcell said.

Turkcell planned to allege that MTN encouraged South Africa to take a favourable stance towards Iran's nuclear development programme, MTN said.

The leading Turkish mobile firm will also accuse MTN of asking Pretoria to provide military equipment to Iran and bribing officials of both governments in order to win the licence, MTN said.

MTN dismissed the allegations as having no legal merit, but its shares tumbled as much as 4.4 percent before recouping some losses. The shares were also hit by a downgrade from brokerage Credit Suisse.

Analyst Richard Barker cut his rating on MTN to "neutral" from "outperform", citing the risk that Western sanctions could impact its Iran business.

The United States and Europe have tightened sanctions on Iran in recent weeks to force Tehran to provide more information on its nuclear programme, which Israel sees as a major threat. Tehran says the programme has purely peaceful ends.

"The problem with the Iran business has always been that it's in Iran. You know that there are higher risks attached to that," Credit Suisse's Barker told Reuters.

"What has changed is that we've seen a crystallisation of one of those specific risks... We basically don't know how easy it's going to be for MTN to get cash out of Iran. And if they can't get cash out of Iran, then what is that business worth to them?"

MTN owns 49 percent of local unit Irancell, which accounts for about 32 million of its subscribers and nearly 10 percent of its revenue.

A $33 billion mobile operator, MTN is present in 21 countries across Africa and the Middle East. It is the biggest company with a primary listing in Johannesburg and a flagship firm of post-apartheid South Africa.

MTN was set up with government help in 1994 as the first black-owned company after the end of apartheid. It has close ties to the ANC, which regards it as a national champion.

South Africa in 2009 blocked a merger between MTN and India's Bharti Airtel, for fear the company would lose its national character.

MTN Chairman Cyril Ramaphosa - a leading ANC member and a prominent businessman - said in a statement that the company had "zero tolerance for corrupt and unethical business practices".

MTN will set up a special committee to investigate the charges, he said.
Turkish Prime Minister Tayyip Erdogan visited South Africa in October, bringing a large business delegation in an effort to boost trade from its current humble levels.

Shares of MTN were down 2.4 percent at 134.93 rand at 1101 GMT, having earlier fallen more than 4 percent.

Shares of Turkcell were down 0.4 percent at 9.30 lira.