MTN is potentially headed for lawsuit as it may have to compensate a group of US citizens alleging the company’s involvement in sponsoring terrorist attacks in Iran and Afghanistan. City Press reported that MTN and the accusers have agreed on the hearing’s timelines.
Accusations imply that MTN, alongside other international telecoms companies, might have, knowingly or unknowingly, contributed to supporting terrorism in Iran and Afghanistan between 2011 and 2016, directly affecting the accusers.
Speaking of this, the telecommunication company has agreed to a schedule for furnishing the plaintiffs’ legal representation with litigation-related information. The agreed-upon dates include initial disclosures on 29 February next year and subsequent initial discovery requests on 15 March 2024.
The telecoms giant has emphasized being represented by esteemed international law firms, stating, “MTN Group is one of the world’s 10 largest Africa-based multinational corporations, and it is represented in this case by two extremely large, capable, and well-regarded international law firms.”
Responses to allegations and business restructuring plans
According to the lawsuit filed on June 22, 2021, numerous American citizens suffered injuries or fatalities in attacks from 2011 to 2016. Over 50 Americans assert that the telecom company and Chinese technology company ZTE engaged in transactions with the Islamic Revolutionary Guard Corps (IRGC), fully aware that the dealings would contribute to financing, arming, and supporting its terror activities.
They have also been accused of backing the Taliban’s campaign against US citizens in Afghanistan. Plaintiffs alleged that the telecom and its subsidiary, MTN Dubai, violated the Anti-Terrorism Act and the Justice Against Sponsors of Terrorism Act. The telecom company refuting the allegations, stated, “MTN is reviewing the details of the complaint and is consulting its advisers. It conducts its business in a responsible and compliant manner in all its territories and so intends to defend its position where necessary.”
Regarding the telecom’s plans, Daily Investor reported the company’s announcement to exit Afghanistan by year-end and consideration of withdrawal from three West African markets. MTN, in a Q3 trading update, mentioned that the process to exit Afghanistan is in the regulatory approval stages and remains on track to be finalized by year-end. The group received a binding offer for the sale of MTN Afghanistan for about $25 million in June 2022.
Moreover, exiting Afghanistan aligns with the company’s five-year plan to streamline its business, involving withdrawal from the Middle East. Once the Afghanistan exit is complete, Iran will be the company’s sole remaining business in the region. The telecom also stated it is actively considering the potential exit of three smaller operations in West Africa, including MTN in Guinea-Bissau, Guinea-Conakry, and Liberia.
MTN’s contemplated exit and business refinement in West Africa
The telecom giant is contemplating the exit of three smaller operations in West Africa—MTN Guinea-Bissau, MTN Guinea-Conakry, and MTN Liberia. This move is driven by the desire to focus resources on core markets and larger ventures, enhancing overall operational efficiency and effectiveness. Financially, the exit aims to optimize resources, potentially leading to improved financial performance and profitability.
Another key consideration is risk mitigation. Smaller markets often pose unique challenges and uncertainties, and by withdrawing from these operations, the telecom giant aims to reduce exposure to potential risks in less profitable or more volatile regions. Additionally, the exit aligns with a broader strategy to strengthen the company’s market position in larger and more lucrative markets, fostering increased market share and competitiveness.
Regulatory considerations play a role in this decision as well. Different regions have distinct regulatory landscapes, and by streamlining operations, the telecom aims to focus on complying with the laws and regulations of its core markets. This move is part of a portfolio management effort, allowing the telecom company to carefully shape its business portfolio and align with overarching corporate goals.
Ultimately, the potential exit offers the company flexibility to redirect funds and resources towards more promising opportunities or invest in technological advancements within its core markets.
While these developments hold potential benefits, careful consideration is necessary, taking into account the potential impact on local economies, employment, and telecommunications access in the regions where the company might exit. Successful execution will depend on adaptability to evolving market conditions.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!