MTN halts Turkcell talks to resolve license dispute

MTN Group Ltd. (MTN), Africa’s largest mobile-phone operator, said talks to resolve an Iranian license dispute with Turkcell Iletisim Hizmetleri AS (TCELL) were halted because of compensation demands and the threat of a U.S. lawsuit.

MTN plans to continue cooperating with an independent investigation led by former U.K. judge Leonard Hoffmann into allegations of corruption linked to the Iranian operating license awarded in 2005, the Johannesburg-based company said.

“Talks between MTN and Turkcell have broken down as a result of Turkcell’s extortionate demands for damages” and the Istanbul-based competitor’s efforts to bring the case to court in the U.S., MTN said today in a statement. Xolisa Vapi, an MTN spokesman, declined to comment further when contacted by phone. A Turkcell spokesman declined to comment.

MTN bought 49 percent of Iran’s second-largest mobile operator, now named MTN Irancell, in 2005 after the country’s telecommunications ministry ended talks on awarding the license to Turkcell. Iran Electronic Development Co. holds the rest of the operator.

The South African company said on Feb. 2 that Turkcell had notified it of a possible lawsuit in the U.S. over allegations MTN had made “improper payments” to unidentified Iranian and South African government officials in 2004 and 2005 to secure a license in Iran. MTN said today that Turkcell won’t cooperate with MTN on the investigation Hoffmann is leading.

MTN Irancell contributed 11 billion rand ($1.5 billion) to the South African company’s 121 billion-rand group revenue in 2011, MTN said on March 7.

To contact the reporter on this story: Sikonathi Mantshantsha in Johannesburg at [email protected]

To contact the editor responsible for this story: Kenneth Wong at [email protected]