MTN Group has issued a statement explaining that it is under investigation in the USA for allegedly supporting terrorism. The pan-African telecommunications company, with headquarters in South Africa, states that it is being accused of, along with other Westen businesses, making payments to the infamous Taliban for protection of its infrastructure in Afghanistan.
When iAfrikan reached out to MTN to get more clarity on whether the allegations are true and if at all the company made any payments to anyone in Afghanistan in exchange for protection of its infrastructure, an MTN spokesperson responded by saying that "As per issued SENS, MTN is reviewing the details of the report and is consulting its advisers. We therefore cannot offer any additional comments at this stage."
"On 27 December 2019 a complaint for violation of the anti-terrorism act was filed in the United States District Court for the District of Columbia (“The Complaint”). The Complaint was filed on behalf of American service members and civilians, and their families, who were killed or wounded in Afghanistan between 2009 and 2017. The Complaint alleges that several Western businesses supported the Taliban by, inter alia, making payments to ensure the protection of their infrastructure. The defendants named in the complaint are six different groups one of which is MTN and certain of its subsidiary companies including MTN Afghanistan," reads part of the statement by MTN Group issued on the morning of 30 December 2019.
MTN likes difficult markets
MTN is no stranger to political interference in its operations and also using its political capital to advance its business operations, especially in Africa. One such case study is Nigeria, a country whose MTN operations now account for 30% of the MTN Group revenue since that famous day on 16 May 2001 when the first GSM voice call was made in Nigeria using the MTN network.
Following that first voice call in 2001, MTN Nigeria went on to launch its services in Abuja, Lagos, and Port Harcourt. The company has gone on to become a very important corporate in the West African country and one of the largest companies in Nigeria.
However, the company has been, for several years, a contentious one in Nigeria. So much so that between South Africa and Nigeria, its well-documented problems have had to, on several occasions, escalate up to the highest political offices of each country.
The height of this political squabble between Nigeria and South Africa (which among others, has seen Nigerian citizens marching to MTN offices - not marching to the South African High Commission in Abuja - protesting against xenophobic attacks against Nigerians in South Africa) was when the Nigerian Communications Commission handed MTN Nigeria a $5,2 billion fine for not complying, on time, with rules regarding unregistered SIM cards on its network. After much back and forth and political interference on both sides, the fine was reduced.
However, what would prove pivotal and turning point in reducing tensions, was the clause accompanying the reduced fine that stated that MTN Nigeria would be required to list on the Nigerian Stock Exchange.
Although it still has the issue of a $2 billion tax bill to settle in Nigeria, the appointment of ex-Central Bank of Nigeria governor and Emir of Kano, Sanusi Lamido, to the company’s International Advisory Board (IAB) chaired by Thabo Mbeki seems pivotal to easing tensions between South Africa and Nigeria considering that MTN Group said that “in recent years MTN Group has experienced challenging regulatory environments and highly competitive trading conditions” when announcing the IAB.
You could be asking, why is this example of Nigeria important and what does it have to do with the problems MTN is facing in Afghanistan?
Where eagles dare
One possible advantage of operating in markets where your competitors dare not enter seems to be that you end up being a monopoly (or the most dominant player) and I would also add it comes with a lot of political capital. Going back to the Nigeria example, despite operating in approximately 20 countries across Africa, the bulk of MTN's revenue comes from South Africa and Nigeria, with Nigeria, from previous case studies, proven to be a more difficult market to conquer for MTN's other competitors including South Africa's Vodacom.
You look at other markets where MTN operates outside Africa and the pattern is clearer. These include countries such as Yemen, Syria, and Iran. All these are politically contentious markets which most Western businesses dare not even enter considering how politically volatile they are considered by some Western political analysts.
Take Iran for example, which behind Nigeria, is home to MTN's second largest subscriber base. In Iran, MTN holds a 49% stake in MTN Irancell with the majority stake held by a consortium linked to the Middle-Eastern country's government. With the USA imposing sanctions on Iran, despite the political capital MTN enjoys with Iran's government, this has made business more than just tricky for the Telco. Specifically, because of the sanctions, as of the end of 2018, MTN has stated that it won't be able to get out as much as $161 million out of Iran as a result of the American imposed sanctions.
There's smoke, where's the fire?
All these examples, including the recent complaint for violation of the USA's Anti-Terrorism Act filed in the United States District Court for the District of Columbia during December 2019, suggest one thing: that it is highly probable that the reason why MTN is able to enter ad thrive in politically contentious markets is the political relationships it enjoys in these countries and the political capital that comes with that.
For years this could not be proven without any reasonable doubt, now, it seems, we are about to learn (should this case end up going to court in the USA), what exactly this political capital means, and dare I say it, how much it costs MTN. As is being alleged in Afghanistan, a war-torn country that has been trying hard to restore peace, to operate a telecommunications company in susch a country it isnot hard to imagine requiring more than normal security to protect infrastructure, the question is now who was doing the protecting and who paid them.
Of course, so far, this is all smoke without a fire identified...yet.
When you operate at the scale MTN operates, operating and investment capital is not sufficient. Political capital goes a long way to solving problems, but sometimes, as is now possibly the case in Afghanistan, it can backfire.Share this article via: