South Africa’s MTN Group said on Friday it intended to appeal a ruling from the Administrative Court of Damascus to place the company’s Syrian business under judicial guardianship and was also considering other steps.
The latest lawsuit is an added headache for the mobile operator, whose entry into the Middle East has been marred by allegations, which it has denied, that it used bribes to win a 15-year operating license in Iran and also that it aided militant groups in Afghanistan.
The company said a lawsuit was filed to the court by the Syrian Ministry of Telecommunications and the Syrian Telecommunications and Post Regulatory Authority earlier this month, seeking interim measures against MTN Syria.
The Syrian State Council said on Thursday this was after MTN had violated its obligations in its licensing contract, which deprived the Treasury of 21.5% of the total revenues.
According to the court order, the judicial guardian will be responsible for managing the day-to-day operations of MTN Syria, in which MTN has a 75% stake. Chairman of TeleInvest, the minority shareholder of MTN Syria, has been appointed to serve as the judicial guardian.
“MTN Group strongly disagrees with the allegations made before the court as well as the court’s decision and intends to file an appeal. In addition, MTN is also considering other appropriate steps to take in light of the ruling,” it said in a statement.
This comes as MTN is planning to sell its stake in MTN Syria to TeleInvest as part of plans to exit the Middle East in the medium term. In a response to questions, MTN’s spokeswoman said advanced talks with TeleInvest were on hold until the matter is resolved.
In the six months to June 2020, MTN Syria contributed 0.7% to the group’s reported earnings before interest, tax, depreciation and amortisation.
At that time, the net assets attributable to MTN Syria in the MTN Group accounts had been written down to the estimated recoverable amount of 1.4 billion rand ($80 million).