The Communication Workers Union (CWU) has reacted with outrage after mobile operator MTN announced last week that it would sell its stores in South Africa.

While details have not been finalised, MTN’s plan has been received with scepticism by employees who fear their jobs may be on the line, affecting thousands.

“MTN, in most of the time if not all of the time, has been engaging CWU in bad faith,” says the labour union’s secretary general Aubrey Tshabalala.

The CWU has labelled MTN’s plan to sell its stores as an “embarrassing transformation broad-based black economic empowerment (BBBEE) plan” that seeks to avoid converting casual workers to permanent positions.

The union, which represents a significant number of workers in the telecommunications space, says MTN has not been forthcoming with details.

Last week, ITWeb reported that the mobile operator’s employees had expressed fears that the company’s move to sell off its stores (Branded Channel) will result in them losing their jobs.

The employees also claimed MTN’s plan was to “dupe them into joblessness without proper consultations” with the workers at these facilities.

When contacted for comment, MTN denied the retrenchment accusation but confirmed there are plans to sell off stores, and employees will be transferred over to new employers with their current total cost to company packages, for a minimum period of 12 months.

“It’s unfortunate that this exciting project, that is seeking to achieve some important MTN and national objectives, has been either misunderstood or intentionally misrepresented in this manner,” Jacqui O’Sullivan, executive for corporate affairs at MTN, said last week.

According to O’Sullivan, MTN’s objective with this project is not to close stores, but to rather increase, not only the company’s store footprint, but also its BBBEE ownership of MTN stores.

“The plan will see MTN increasing its number of stores in the coming two years, creating businesses for new owners and new job opportunities for new store employees. The opportunity for staff to apply to become a store owner is not a once-off opportunity.

Now, Tshabalala says MTN has already been retrenching people in dribs and drabs to avoid being called out.

“In the last year or so, we’ve been observing and challenging massive retrenchments at MTN happening in pocket forms from department to department. Furthermore, MTN in most of the time if not all of the time, has been engaging CWU in bad faith.”

Tshabalala explains: “On the 26th of July 2019, the company did invite CWU to a briefing session about a ‘store transformation update’ where they outlined their intention of establishing new stores and affording communities base black owners (new players) through franchises. In their meeting, MTN tabled their embarrassing transformation plan on BBBEE, where in all their franchised stores only one African happens to own their store.

“We were also invited to make inputs in order to assist the business for them in achieving true empowerment for the previous disadvantaged communities. However, to our shock, immediately when we left a meeting, workers were told that engagements around Section 197 (outsourcing) are starting and labour has been consulted.

“As a matter of fact, we did raise the issue of employment equity, bargaining matters at the stores, which includes the permanent employment of workers. And therefore, this strange move by the employer does raise eyebrows and as CWU we continue to challenge MTN’s jobs bloodbath plans, particularly under their current CEO, who has displayed anti-unions antics.”

Analyst Peter Takaendesa, portfolio manager at Cape Town-based Mergence Investment Managers, says by selling the stores, MTN could be “looking to free up some capital to reduce gearing on its balance sheet as well as the BBBEE angle they have suggested”.

Takaendesa adds: “The telecoms distribution model in South Africa is already a combination of franchises, corporate-owned stores and independent distributors. I think MTN initially owned most of its stores, while Vodacom was skewed more towards Vodacom-branded franchises and exclusive distributors such as Smartcall. It is not clear if this [the MTN move] is largely a cost reduction measure, or genuinely migrating their business model more towards franchised retail stores.”

He believes MTN could also look for alternative options available to protect its investment ploughed into its branded channel, in both financial and human resources.

“They have already invested in the two. MTN has to keep growing revenue in mobile data and new digital revenue streams to reduce pressure from administered cost increases and the inflationary impact of the weaker rand on imported equipment. Re-training staff to meet the needs of the new digital telecoms era will be key to protect its human resources over the longer term,” says Takaendesa.