With relations between Pretoria and the Trump administration increasingly strained, it is hardly ideal timing for one of South Africa’s largest companies to be fighting potentially costly lawsuits in US courts.
On September 25, a federal court in New York rejected MTN’s requests to reconsider earlier rulings allowing certain claims in the Zobay case to proceed or to permit an immediate appeal. The Zobay and the related Long case now move to discovery.
Both were brought by victims of attacks in Iraq and Afghanistan and their families, who accuse MTN of aiding the groups responsible. MTN denies wrongdoing.
Discovery allows both sides to seek relevant documents and question witnesses under oath ahead of having a possible trial. The court has made no finding of liability.
The ruling highlights a potential liability that remains difficult to quantify, and lands on a share that was already sliding. MTN has declined about 20% over the past three months while Vodacom is little changed. The day after MTN disclosed the ruling, the shares fell 7.2%.
Uncertainty
“It’s one of those things where you like the operational story, but all these hanging legal things, they just reduce your conviction,” says Mergence Investment Managers chief investment officer Peter Takaendesa. “So you probably end up just saying: ‘Well, I demand a higher margin of safety.’”
He says MTN’s share price now goes some way towards covering that uncertainty, with the company at a lower forward earnings multiple than Vodacom’s.
In the six months to June 2026, adjusted headline earnings per share climbed 21.3% to 793c. Basic earnings, however, were hit by a R3.9bn impairment relating to MTN’s 49% stake in Iranian operator Irancell. In the year to December 2025, MTN’s service revenue grew 22.7% at constant exchange rates and ebitda before one-off items rose 36.8%. Vodacom delivered normalised growth of 12.9% and 14.2% respectively in its financial year to March 2026.
In Nigeria, MTN’s largest market, Takaendesa says, “Oil is doing well for it, it has built large reserves, the currency has been allowed to largely float. So maybe that risk is lower for now. That real growth that I’m talking about can actually be converted into solid cash flows in rand or dollars.”
“As it dips below sort of a sub-10 p:e, it becomes cheap. For 20% plus, potentially early 20s growth rate, it becomes quite cheap, and you’re probably compensated for some of those things if nothing else changes, of course,” Takaendesa says.
In addition, MTN faces three other US terrorism lawsuits and a claim exceeding $4.2bn from Turkcell subsidiary East Asian Consortium, which alleges that MTN used bribery to secure its Iranian mobile licence. MTN denies the allegations.
In August 2025 MTN disclosed that there was a US department of justice grand jury investigation into the group, its former Afghanistan business and Irancell. It says it is co-operating. It has not been charged.
“But then you’ve got all these nagging things,” Takaendesa adds. “And you cannot actually put a good value on them. That’s the problem.”
Allegations
In the New York cases, the plaintiffs allege MTN’s dealings with Iranian entities linked to the Islamic Revolutionary Guard Corps helped bankroll the groups that attacked Americans in Iraq, while also claiming that MTN paid the Taliban in Afghanistan protection money and switched off its cellphone towers when the Taliban asked.
MTN says sanctions have stopped it from extracting capital or dividends from Irancell since May 2018, and it wants to get out of the Middle East. Independent telecoms analyst Dobek Pater sees little benefit in it staying.
But an exit would leave the litigation unresolved. “The US court case is likely to continue after MTN’s exit from Iran,” says Pater. Discovery lets MTN rebut the allegations, but also lets the plaintiffs build their case.
Takaendesa would consider buying more if the share falls further, provided the operating outlook and economic conditions remain intact. “You’ve got a bit of a margin of safety [then].”
