MTN Group's Iran Writedown Shakes Up Earnings Reports, Hiding Robust Growth

MTN Group, Africa’s largest mobile operator, anticipates a robust underlying earnings growth of up to 23% for the first half of 2026. This positive outlook for its core business, however, is significantly overshadowed by a substantial writedown on its Iranian operations and adverse currency losses, which are expected to cut its reported profit. The discrepancy between the strong performance of its telecom operations and the accounting losses tied to its Iranian venture is a central theme in the company's financial narrative.

The company forecasts adjusted headline earnings per share (EPS) to range between 775 cents and 808 cents, marking an impressive 18% to 23% increase from 657 cents recorded in the first half of 2025. This adjusted metric, which strips out volatile items like foreign exchange losses, hyperinflation, and impairments, reflects the underlying health and growth trajectory of MTN's core businesses. In contrast, reported earnings per share are projected to decline by 20% to 30%, falling to 377 cents to 431 cents from 539 cents in the previous year. Similarly, headline earnings per share are expected to be between 580 cents and 645 cents, a decrease from 645 cents a year earlier.

This significant gap in financial performance is primarily attributed to MTN's 49% stake in Irancell. The group recorded substantial impairment losses amounting to 213 cents per share, driven by geopolitical instability and challenging economic conditions in Iran, a marked increase from 104 cents a year earlier. Furthermore, non-operational charges of 178 cents per share contributed to the reported profit decline, including 126 cents from foreign exchange losses and 52 cents due to hyperinflation. For years, sanctions, currency controls, and geopolitical risks have severely limited MTN's ability to repatriate cash from its Iranian operations, raising ongoing questions about the assignable value of this stake.

Despite these significant financial headwinds, MTN’s core telecom business demonstrated strong growth. The company reported an increase in service revenue that aligns with its medium-term targets, coupled with improved EBITDA margins and free cash flow generation. Specific markets such as Nigeria, Ghana, and Uganda reported commendable growth during the period, bolstering the group's operational strength.

However, not all segments performed uniformly. MTN South Africa continued to experience weakness in prepaid voice revenue, while fintech revenue in Nigeria faced pressure following regulatory suspension of airtime lending services. These localized challenges highlight the dynamic and often complex operating environments across MTN’s diverse portfolio.

In a strategic move to gain more control over its infrastructure costs, MTN is progressing with its planned acquisition of IHS Towers. Shareholders of IHS approved the transaction on August 4, clearing a crucial condition for MTN to acquire the 75.3% stake it does not currently own. While regulatory approvals are still pending, this acquisition is expected to give MTN greater oversight of infrastructure expenses across its markets. However, it also introduces a capital-intensive business into its portfolio and will add to the company's debt burden. Investors will closely scrutinize the full interim results, expected around August 24, to assess whether the cash generation from MTN’s operating businesses is robust enough to offset these new financial pressures.