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The long arm of US sanctions against “rogue” states such as Iran could throttle plans by Indonesia’s largest telecommunications operator to invest in the Middle East.

“Until we can clear the political hurdles, I think the deal with Iran Telecom will not go ahead,” said Heri Supriadi, vice president of PT Telekomunikasi Indonesia (Telkom), on Tuesday.

Telkom had announced in January that it planned to form a consortium with unnamed Iranian government agencies to purchase a 20 percent stake in the Iranian state-owned provider.

“[The sanctions issue] is the main hurdle,” said Sudiro Asno, Telkom’s finance director, when asked why the Iran-Telecom deal appeared to be going nowhere. He added that Telkom was trying to find a solution to the problem.

According to Heri, there is a strong possibility that Telkom’s US shareholders, which include pension funds, would be forced to sell their holdings because of US sanctions against Iran.

“If significant stakes in Telkom were to be sold, it could potentially hurt Telkom’s share price,” said Chandra Pasaribu, an analyst at state-owned PT Danareksa Sekuritas.

Heri said that Iran Telecom presented an excellent investment opportunity for Telkom as Iran had a large population of about 70 million and an underdeveloped telecom industry.

“There’s no company or country comparable to Iran Telecom or Iran,” Heri said.

Iran Telecom, he said, was even offering easy payment options for the acquisition, with the purchase price of about Rp 20 trillion ($2 billion) payable in 10 annual installments.

“Financially, the acquisition would not put much of a strain on our cashflow,” Heri said.

Chandra, however, questioned the wisdom of investing in Iran Telecom, saying that the company’s financial credibility was in doubt.

Heri Supriadi of Telkom acknowledged that any profit from an Iran Telecom stake “could not be consolidated in Telkom’s top lines [revenue]” because the Indonesian firm was listed in the United States and it was unlikely that the Iranian company could meet the stringent US accounting standards from the complex US Sarbanes-Oxley Act, or even the Generally Accepted Accounting Principles required by the US Securities and Exchange Commission.

The Jakarta Globe tried to reach the US embassy to confirm whether US sanctions on Iran would also have implications for the proposed investment, but no one was available for comment as of press time.