JOHANNESBURG: MTN Group, Africa’s biggest mobile phone firm by sales, is planning to expand in Iran, exploiting frontier markets amid falling sales at home.

The move is part of MTN’s 10-year plan to cement its leading position in risky but lucrative frontier markets in the Middle East and Africa, where it aggressively expanded a decade ago.

But setbacks in Nigeria have knocked MTN’s share price and drawn sharper scrutiny of its hunt for returns in politically unstable and economically fragile markets.

“We’re very excited about Iran and the possibilities there,” MTN’s newly appointed head of strategy, mergers and acquisitions, Stephen van Coller, said in an interview with Reuters. “That digital economy in Iran is going to move fast.”

MTN, which has set aside about $700 million in capital expenditure that includes revamping its network in Iran, is also looking to expand its services to include rapidly expanding its e-commerce offering in a country where it has already invested $22m in Snapp, a Tehran-based taxi-hailing app.

“While our presence in Iran’s e-commerce space is still relatively nascent, it is growing rapidly, particularly in the retail and travel sectors,” Coller said. MTN also has a joint venture with Germany’s Rocket Internet, which invests in tech start-ups in the Middle East.

Many international companies have sought to capitalise on the opening up of the region’s second largest economy since international sanctions against Iran were lifted in January after Tehran agreed to curtail its nuclear programme.

With a young population and high levels of mobile ownership, Iran is seen as an opportunity for telecoms companies seeking to expand into frontier markets.

“As those restraints get lifted you will see that economy grow really quickly. It’s almost like South Africa in 1994 in a way,” said Coller, referring to the end of apartheid.

Published in Dawn November 29th, 2016