Massive retrenchments at MTN SA

MTN is undergoing a “massive” retrenchment process, with as many as 847 manager-level staff affected.

Trade union Solidarity says that mobile operator “failed to inform staff that if they belong to a registered trade union they have the right to union representation”.

It cited the retrenchment notice as being “massive” and said it would consult its members who may be affected.

In an employee section 189 letter, seen by BusinessTech, MTN said it is contemplating possible dismissals due to operational requirements, based on its structural changes at various management levels.

MTN said it is faced with “significant performance challenges”.

Earlier this month, the group 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.

Speaking at the group’s results presentation, MTN chief financial officer, Brett Goschen said that the group continues to pursue cost cutting measures relating to headcount.

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

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”.

According to the section 189 document, MTN has 6,196 employees in SA, with 138 employees having been retrenched by MTN over the last twelve months preceding the latest proposed retrenchment round.

“At this stage, we contemplate that 847 Management layer Employees, across the company are likely to be affected,” it said.

The company said it has considered and implemented various alternatives to the proposed retrenchments, “that upon review thereof, were found to have not, by large, been significant in reducing costs and expenses”.

These included non-payment of performance bonuses to senior management , and  the termination of the contractors’ employment and third party consultant model

MTN said it hoped to complete the consultation process by 30th September 2014.

When asked for comment, MTN issued the following statement on behalf of Themba Nyathi, chief human resource officer at MTN SA:

“As part of this process, and as announced in our interim results on 7 August  2014, MTN SA will continue to review its cost structures, including employee costs, to ensure better alignment with revenue performance and the changing needs of the business and our clients.

“To deliver on this commitment, MTN SA has begun a process of internal staff consultations on a proposed organisational restructuring for better efficiencies. This process and the proposals are at a very early stage and we will update the market as key decisions are made.

“This is part of the on-going process of renewal that allows us to deliver the strategic investments, product innovations and new services our customers expect and so ensure MTN’s sustained competitiveness in this rapidly evolving market.”

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Massive retrenchments at MTN SA