An ongoing US antiterrorism case looks to have turned in mobile operator MTN’s favour as a judge recommended that the case be dismissed, sending shares shooting up more than 8% on Monday.
The case has been hanging over MTN for close to two years after the families of more than 200 US soldiers killed and wounded in Afghanistan — which the US invaded in the early 2000s to topple the Taliban — claimed it had paid protection money to the Islamist movement and actively helped its fighters from being detected by counterinsurgency forces.
On Monday, the Johannesburg-based operator said it was “pleased to report” that on Friday “the magistrate judge to whom the case had been referred made a recommendation to the district judge presiding over the case to grant the motion to dismiss for all defendants in the case, including as submitted by MTN”.
Shares in the group ended 5.59% firmer on Monday at R111.30, closing at their highest level in 12 months and booking their biggest gain in three months. The stock is up 82% so far in 2021.
A year ago, lawyers representing the families of US servicemen and civilians killed and injured by the Taliban between 2009 and 2017 filed an enlarged and amended complaint in the district court of Washington DC.
A US-led military coalition invaded Afghanistan in 2001 to depose the Taliban government, which had been in power since the late 1990s, because it was accused of harbouring Osama bin Laden and his al-Qaeda organisation, which masterminded terror attacks on the US in September 2001.
The lawyers sought damages from MTN and the other companies as a result of their alleged explicit financial support for what the US considers a terrorist organisation.
MTN and two of its subsidiaries, MTN Dubai and MTN Afghanistan, had earlier filed a request that the court dismiss the case for two reasons: “Firstly, the court lacks jurisdiction over MTN defendants, which does not operate in the US, and secondly, the complaint does not allege any conduct by MTN defendants that violated the Anti-Terrorism Act.
The magistrate judge further concluded that the court did not have jurisdiction over the case, MTN said. “The plaintiffs are permitted to file objections to the report with the district judge,” and MTN will have an opportunity to respond.
MTN entered Afghanistan in 2006 and over a period of years that overlapped with the US occupation built the operation to become the country’s largest network.
These latest developments come as MTN is in the process of exiting its businesses in the Middle East: Iran, Yemen, Syria and Afghanistan.
Those operations contributed to a decrease in earnings per share (EPS) of between 75% and 85%, which the company expects to report for the six months ended June 2021. This translates to a range of 101c to 169c for the period, compared with 674c previously.
The group’s EPS includes impairment losses of about 75c that relate mainly to MTN Yemen, largely noncash, and from the deconsolidation of MTN Syria of roughly 262c. MTN also noted a gain on the fair value of its investment in micro-insurer aYo of 96c.
Headline earnings per share, which strip out the effect of one-off financial events, are expected to be lower by between 5% and 15% from the previous reporting period’s 430c.