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UPDATE 2-MTN in talks with U.S. to move money out of Iran
* H1 adjusted headline EPS 537.4 cents, vs 470.1 cents
* H1 revenue 66.43 bln rand, versus 56.54 bln rand
* Group subscribers up 7 percent to 176 mln
By Helen Nyambura-Mwaura
JOHANNESBURG, Aug 8 (Reuters) - MTN Group, Africa's top telecom, is in talks with South African and U.S. officials about moving money out of its Iran business, as tightening sanctions have prevented it repatriating funds, its chief executive said.
Johannesburg-based MTN, which reported a 14 percent rise in first-half profit, also said on Wednesday a likely devaluation of the Iranian rial -- another result of U.S.-led pressure on Tehran -- could have a "severe impact" on second-half results.
The mobile operator owns 49 percent of MTN Irancell, which contributes nearly 10 percent of its total revenue, but has become an increasing headache, with the potential to tarnish MTN's image as a post-apartheid success story.
MTN is being sued by rival Turkcell for $4.2 billion in a U.S. court, saying it used bribery and lobbied South Africa to support Tehran's military in return for a 2005 cellular licence in Iran that was originally awarded to the Turkish firm.
MTN has denied the charges and called Turkcell's demands "extortionate".
Chief Executive Sifiso Dabengwa told reporters after MTN's first-half results on Wednesday that it had been unable to take cash out of the business for at least six months.
"There is general acceptance that we should not be punished. U.S. sanctions should not have unintended consequences for non-U.S. companies," Dabengwa said.
Washington is putting increased pressure on Iran over its nuclear programme and appears to be cracking down on non-U.S. companies with ties to the country.
New York regulators accused British bank Standard Chartered on Monday of scheming with the Iranian government and hiding $250 billion worth of transactions.
Speaking in Cape Town on Wednesday, U.S. Secretary of State Hillary Clinton called on South Africa to use its long-standing links with Tehran to persuade Iran to reconsider its suspected pursuit of nuclear weapons.
"South Africa can play an even greater role on issues like curbing Iran's pursuit of nuclear weapons, or preventing nuclear materials from falling into the hands of terrorists," Clinton said in a speech billed as the centrepiece of her 11-day Africa tour.
"The Iran issue is going to have a detrimental impact on MTN's future in terms of revenues," said Mervin Miemoukanda, a research analyst at consulting firm Frost & Sullivan.
"With all the uncertainty around Iran, the future is not bright in terms of revenues and subscribers."
MTN, which operates in 21 countries across Africa and the Middle East, will likely see its earnings squeezed if Iran devalues the rial, said Chief Financial Officer Nazir Patel.
The currency has tumbled against the U.S. dollar in free market dealings as traders bet on a devaluation in the official exchange rate. The central bank governor said on Sunday a change to the government's "reference rate" would be announced within the next 10 days.
"It is likely to have a severe impact on second-half earnings," Patel said at the earnings presentation.
Despite the complications of sanctions, Iran continues to be a major money-spinner for MTN. The mobile operator reported a 14 percent rise in adjusted headline earnings per share, as growth in Iran, together with South Africa and Ghana, helped overcome tough competition in the key Nigeria market.
Revenue from the Iran business jumped by 30 percent in the six months to end-June, the company reported. Local subscribers increased more than 10 percent, to more than 38 million. Iran now accounts for 22 percent of MTN's 176 million subscribers.
"I don't think they are prepared to lose 20 percent of their customer base. They will find ways of continuing to operate in Iran - even if it's tough," said Frost & Sullivan's Miemoukanda.
MTN said adjusted headline earnings per share totalled 537.4 cents for the period, compared with 470.1 cents last year. Headline EPS, the main profit gauge in South Africa, excludes certain one-time items.
Group revenue totalled 66.43 billion rand ($8.16 billion), compared with 56.5 billion rand in the same period last year.
Shares were down 0.9 percent at 152.35 at 1333 GMT, underperforming a slight rise in the benchmark Top-40 index .
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