It has been reported that MTN has issued retrenchment notices to 847 members of its managerial staff as a response to slowing growth and tough competition in the market.
MTN is the largest telecoms operator in Africa, and has experienced rapid expansion across the continent and into the Middle East, but they are facing stiff competition in their home country, South Africa.
The South African mobile market is dominated by Vodacom who claims 50% market share. MTN comes in second but has been steadily losing market share to Cell C and Telkom Mobile, as much as 3% over the past six months, from 32% in 2013, to 29% for the period ended May 2014, according to Blue Label Telecoms’ breakdown of its airtime distribution.
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.
According to the employee section 189 letter MTN sent out, it 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, including the non-payment of performance bonuses to senior management, and the termination of contractors. But according to MTN these were not significant enough to reduce costs efficiently.
MTN said it hoped to complete the consultation process by 30th September 2014.
Telecoms trade union Solidarity has met the news with disapproval. While they acknowledge that MTN is facing a tough economic situation, they feel an alternative to retrenchment should be discussed.
Solidarity’s Marius Croucamp says, “Our best efforts would be to try and minimise the effects of the retrenchments on workers and on our members in general.”