Turkey’s largest cell phone operator Turkcell has dropped its multibillion-dollar lawsuit against MTN Group, after a US Supreme Court ruling did not work in its favour.
The Turkish telecoms company filed a $4.2 billion lawsuit in the US District Court of Columbia over the awarding of Iran’s second mobile licence to MTN in 2005. It alleged that MTN Group used bribery to win a mobile phone contract in Iran that was first awarded to Turkcell.
However, in April the high court limited the ability of foreign plaintiffs to bring before the US court cases alleging corporate misconduct that took place outside the United States or without a strong U.S. connection to the conduct.
Meanwhile, the Johannesburg based company said it welcomed Turkcell’s decision to drop the suit.
“Turkcell’s decision to drop their claim was expected, however, we welcome it,” MTN Group President and CEO Sifiso Dabengwa said.
“After becoming aware of Turkcell’s claims in February last year, the MTN Board commissioned Lord Hoffmann to lead a thorough investigation into these allegations. Then in February this year, the Committee led by Lord Hoffmann determined that Turkcell’s allegations were without foundation. The Committee concluded that they found nothing in the conduct of MTN that put at question MTN’s integrity or propriety during the period that Iran’s second mobile licence was awarded.”
Dabengwa added that “Now that this case is behind us, we are forging ahead with great determination towards achieving MTN’s newly launched vision to deliver a bold new digital world to our customers. MTN is one of Africa’s success stories, a great company founded on innovation, courage and values of honesty.”
Reuters reported that MTN shares rose 3.1 percent on Thursday, a day after the suit was dropped by Turkcell.
“It is definitely good news for MTN. If the case had gone ahead in the US and MTN was found guilty, there was going to be a direct financial implication that they would probably incur. The most important thing would have been the ramifications in other regions they are operating in. That is something that would dent their reputation and impact on future prospects.” industry analyst at Frost & Sullivan, Ishe Zingoni said.
