MTN's hard year continues, with the company confirming 403 employee retrenchments are on the horizon.
The mobile network's local operations have been through the financial grinder over the last six months, facing declining margins and a considerable drop in its subscriber base.
The company will take another knock to its revenue with the recently proposed interconnect rate cut, although it will be less dramatic than previously expected.
MTN's head of HR, Themba Nyathi, says the economic environment is another reason the company's South African arm plans to reduce its permanent and temporary workforce. “Approximately 403 permanent employees may be affected towards the end of March next year, which comprises about 7% of MTN SA's 4 679 permanent employees.”
He says the company will also put a clamp on the number of temporary workers it employs, of which it employs roughly 3 000.
Soften the blow
While Nyathi has confirmed there is a specific number in mind, he says MTN will try to limit the number of jobs that are affected. “To mitigate the effects of possible job losses, a proper consultative route, firstly to avoid retrenchments and redundancies, and secondly to mitigate its adverse effects, will be followed, in line with legal requirements.”
The company's declining financials are a marked difference from the first half of this year, when MTN took home both Verizon Business and iTalk Cellular in January. However, its June interim results showed a bleak picture for growth in its South African operation.
It has noted several times since the results set that 2009 has been its most challenging year yet. Analysts at the presentation in June said the South African operation seems to be on an accelerated decline.
MTN CEO Phuthuma Nhleko hoped the decline was just a blip and predicted the global recession would soon be on an upswing.
Other options
However, Nyathi says the company is now in the process of “re-engineering” the South African business.
MTN says it is looking at business processes to better its delivery and operations. It will centralise its support centres and services, and franchise its MTN outlet stores. MTN SA sales teams will be given higher targets and all unnecessary costs will be cut.
The company says it will continue its infrastructure upgrades to ensure customer delivery is on target.
MTN lost 750 000 subscribers between June and September this year, which it blamed on both the recession and the newly-implemented subscriber registration Act.
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