MTN appeals to court to dismiss $4.2bn Turkcell case

By Loni Prinsloo

(Bloomberg) — MTN Group Ltd. has asked South Africa’s High Court in Johannesburg to dismiss a $4.2 billion damages claim by Turkcell Iletisim Hizmetleri AS, five years after the case was first brought in relation to the awarding of an Iranian license in 2005.

Africa’s largest wireless operator by sales denies Turkcell’s allegations that it paid bribes to South African and Iranian officials to secure 49 percent of Irancell Telecommunication Co. Services, according to court papers. MTN has asked for the case be dismissed with costs paid by the Istanbul-based carrier.

A pedestrian checks his mobile handset as he passes a giant logo outside the headquarters of MTN Group Ltd. in Johannesburg, South Africa. Photographer: Nadine Hutton/Bloomberg

“Turkcell’s claim is opportunistic, an abuse of the process of court, baseless and without merit,” MTN said in emailed comments on Tuesday. “We have every expectation that we will prevail.”

MTN’s defense marks the latest salvo in a long-running effort by Turkcell to be compensated for losing out on the license, which was originally awarded to the Turkish company. Turkcell first sued Johannesburg-based MTN in the U.S. in 2012, though was later forced to withdraw the claim after the Supreme Court ruled that it couldn’t be heard in the country. The case was later filed in South Africa in 2013, but was delayed following objections by MTN and subsequent amendments.

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.

“We consider that it is most unjust to burden MTN with a fifth round of litigation of substantially the same matters,” MTN said. “Turkcell was the author of its own misfortune in failing to obtain the license.”

Key Territory

Iran has emerged as a key territory for MTN after the lifting of U.S.-led sanctions allowed the carrier to repatriate almost $1 billion of funds tied up in the country earlier this year. The company had more than 49.5 million customers in Iran as of the end of September, behind only Nigeria’s 50.3 million.

MTN has sought to expand in the country since the sanctions were lifted, agreeing to buy a 49 percent stake in an Iranian state-owned internet provider for 540 million rand ($38 million) in May. Chief Executive Officer Rob Shuter has said the company is prioritizing investments in its biggest markets, particularly in networks.

An employee prepares a Samsung Electronics Co. smartphone for a customer inside an MTN Group Ltd. phone store in Cape Town, South Africa. Photographer: Dean Hutton/Bloomberg

MTN shares declined 0.1 percent to 122.80 rand as of 11:57 p.m. in Johannesburg, valuing the business at 231 billion rand.