South Africa’s MTN Group has introduced the top of a decade-long authorized battle centered on its Iranian subsidiary, MTN Irancell.
In a press release launched on November 30, 2022, the group confirmed that the Excessive Court docket of South Africa has dismissed a lawsuit launched in 2013 by Turkey-based Turkcell and its wholly-owned subsidiary, East Asian Consortium (EAC).
Turkcell and EAC had been pursuing $4.2 billion in damages from MTN. The case was centered on allegations of impropriety associated to the Iranian authorities’s 2005 determination to oust Turkcell as a shareholder in Iran’s first personal sector cell licensee, Irancell, and set up MTN as a replacement.
In November 2020, Turkcell withdrew from the litigation, leaving EAC as the only plaintiff, however the Excessive Court docket decide put an finish to proceedings by dismissing EAC’s motion with prices.
MTN Group says it’s “delighted on the final result,” having persistently maintained that the lawsuit was with out advantage.
Let’s take a look on the background of the case.
Beginning of Irancell
In 2003, with incumbent operator Cell Communication Firm of Iran struggling to deal with the overwhelming public demand for cell companies, the Iranian administration bowed to public stress to open up its state-run monopoly to non-public sector funding. The Ministry of ICT marketed a young for the nation’s second nationwide GSM license in October that yr.
In February 2004, a shortlist of 5 candidates was drawn up. This included Mobilkom Austria, a bunch backed by Orascom of Egypt, one other by Turkey’s largest cell operator Turkcell, one by MTN Group of South Africa, and a consortium between Wataniya Telecom and Deutsche Telekom unit T-Cell.
Later that month, the Turkcell consortium was introduced because the winner—just for a heated political battle to ensue.
The Turkcell consortium was introduced because the winner—just for a heated political battle to ensue.
A tough-line faction throughout the conservative-run parliament alleged that the Turkish cellco had hyperlinks to Iran’s bitter foe, Israel, and argued {that a} nationwide safety menace can be posed if it gained entry to cellphone strains.
Such claims had been a serious public embarrassment to Iran’s reformist president Mohammad Khatami, who had been trying to forge higher hyperlinks with Turkey—a rustic Iran has historically had strained relations with.
Regardless, Khatami organized the signing of a shareholder settlement with Turkcell in September 2004, whereby the cellco agreed to take a 70% stake in Irancell and pledged to spend upward of $3 billion on the enterprise.
Political Battleground
In response, the conservatives pushed by means of a brand new legislative invoice designed to offer the federal government a veto on overseas direct funding in native companies, successfully giving parliament energy to cut back Turkcell’s stake in Irancell.
In April 2005, parliament voted to decrease Turkcell’s holding to 49%. This was adopted by months of limbo because the movement to cut back the stake was handed from parliament to the Supreme Nationwide Safety Council to the Guardian Council and again once more for approval.
Throughout this era, President Khatami was ousted by the ultra-conservative Mahmoud Ahmadinejad within the elections of June 2005, hampering Turkcell’s trigger nonetheless additional.
Regardless of frequent reviews that it supposed to stroll away from the deal, the Turkish firm finally accepted the diminished 49% stake, and Irancell formally obtained its GSM working license in August 2005.
This was removed from the top of the matter, although.
Stories quickly emerged claiming that the Iranian authorities was secretly lining up MTN of South Africa, the runner-up within the authentic 2003 tender, to exchange Turkcell.
MTN Arrives
Because the Turkish firm and the federal government continued to disagree over the small print of its participation—together with whether or not Turkcell might enhance its stake sooner or later—what occurred subsequent got here as little shock.
In October 2005, it was introduced that MTN had changed Turkcell as 49% shareholder.
In October 2005, it was introduced that MTN had changed Turkcell as 49% shareholder, offering a $388 million fee assure, which was put towards Irancell’s GSM license.
Whereas Turkcell stated it will struggle the choice handy the Irancell stake to MTN, it was not till February 2012 that the Turkish firm launched lawsuits in opposition to each the MTN Group and MTN Irancell.
Turkcell claimed that MTN officers had made “improper funds” to authorities in Iran in order that it will be favored within the license award. Moreover, it claimed that MTN inspired the South African authorities to offer its backing to Iran’s nuclear vitality program and to assist sway the award of contracts for army gear to Iran.
Whereas MTN launched a press release saying that it will examine the Turkcell allegations, the South African authorities instantly denied any involvement. Turkcell, in the meantime, refused to cooperate with an impartial panel led by UK decide Lord Hoffmann, which MTN set as much as study the case.
Turkcell’s case was introduced earlier than a U.S. federal court docket in Washington, DC. The Turkish agency claimed that the lawsuit had worldwide ramifications due to the connection to arms offers and Iran’s nuclear program.
In June 2012, a South African police unit, the Directorate for Precedence Crime Investigation, started wanting into the allegations after Turkcell wrote to Lord Hoffman, saying it had proof that bribes had been made.
A month later, MTN known as on a U.S. federal decide to dismiss Turkcell’s lawsuit because it had “no conceivable” connection to the US. In October, the identical U.S. federal court docket postponed its determination, pending the end result of a separate lawsuit within the U.S. Supreme Court docket.
Federal judges had been awaiting the end result of a court docket case between Kiobel and the Royal Dutch Shell oil firm, which alleged breaches of the Alien Tort Statute, a human rights legislation that Turkcell was utilizing as the idea for its lawsuit.
The long-running dispute got here a step nearer to decision in February 2013, when Lord Hoffman cleared MTN of allegations of bribery. In Might 2013, Turkcell withdrew its lawsuit, a month earlier than the U.S. Supreme Court docket was anticipated to make a ruling.
New Swimsuit
In November 2013, nonetheless, Turkcell filed a brand new lawsuit—this time, with the South Gauteng Excessive Court docket in MTN Group’s dwelling nation of South Africa, claiming $4.2 billion in damages plus curiosity.
Turkcell filed a brand new lawsuit—this time, with the South Gauteng Excessive Court docket in MTN Group’s dwelling nation of South Africa.
This case was based mostly on the identical allegations initially made in 2012. MTN reiterated that it will proceed to “vigorously defend any proceedings instituted by Turkcell in respect of such issues.”
Within the meantime, a separate case—filed by Turkcell in opposition to the Iranian authorities in 2008—was dismissed by the Worldwide Court docket of Arbitration in The Hague in October 2014.
In Might 2017, Turkcell stated it was assured that the MTN case would quickly go to trial. Proceedings had been delayed by a sequence of objections raised by the South African group.
In October that yr, MTN moved to have the case dismissed on the grounds {that a} court docket in South Africa had no authority to rule on a lawsuit involving the federal government of Iran. MTN labelled Turkcell’s claims as “opportunistic, an abuse of the method of Court docket, baseless and with out advantage.”
Continued Progress
Cell Subscriptions in Iran
The most recent court docket ruling seemingly places to mattress all of Turkcell’s claims relating to Irancell.
Underneath the steering of MTN, Irancell finally launched in October 2006—with a staggering six million subscriptions on its books by the top of the next yr. By September 2022, this elevated to 52.1 million, claiming round 39% of the nation’s total cell market.
MTN Group has made strikes to exit three of its Center East operations, although it has introduced no plans to do the identical with Irancell.
