MTN SA recovery includes retrenchments

 ·7 Aug 2014

MTN says it continues to implement cost cutting measures for its under-performing operation in South Africa, including retrenchments.

Speaking at the group’s results presentation in Johannesburg on Thursday (7 August 2014), MTN chief financial officer, Brett Goschen said that the group continues to pursue cost cutting measures relating to headcount.

In March, the group announced that it reduced the staff headcount for its South African operation by approximately 1,000 people.

He would not put a figure on the number of retrenchments, or a time frame, saying only that they are ongoing.

However, MTN group president and CEO, Sifiso Dabengwa, said that over the past year, there has been a focus on contractors – numbering almost 1,000 – “who are no longer with us”.

“We have had previous rounds of retrenchments,” Goschen said, adding that the company would continue to “look at it closely”, given the increased competition around pricing in the country.

MTN reported a 7% fall in revenue for its South African operation to R19 billion in interim financial results for the six months ended June 2014, citing increasing competition.

Market share declined by 2.7 percentage points to 31.9% as competition intensified in the pre-paid segment, the group said of its SA operation.

Dabengwa said that challenges for its local operation were “as a direct result of not being competitive”.

Looking ahead, Goschen said he believes that the SA segment has turned a corner, with the group “cautiously optimistic”. He pointed to 400,000 net additions in July alone.

Frost & Sullivan, the growth partnership company, noted that MTN South Africa comprises approximately of 37% of the South African market share.

“Steps are being taken to maintain and grow market share and the South African operation is expected to experience positive subscriber and revenue growth in the next 6 months through offering innovative and affordable products,” it said.

MTN has strengthened its leadership structures by announcing the appointment of Zunaid Bulbulia as group chief operating Executive, with Ahmad Farroukh replacing Bulbulia as CEO of MTN South Africa at the end of July.

“MTN continues to respond to challenges in the markets in which it operates and the restructuring of the leadership is a positive step towards enhancing its competitive position and, ultimately, to ensure sustainability in the long term,” said Frost & Sullivan ICT industry Analyst, Joanita Roos.

More on MTN

Competition hits MTN SA revenue

Leadership changes at MTN

MTN SA announces job cuts

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