MTN Announces South African Staff Reductions amid Market Competition

MTN Group plans to lay off as many as 850 members of staff as it continues to contend with slowing revenue and tough competition in its home market.

A union official from the South African mobile operator made the announcement off the back of increased competition and a sudden contrast to the decades of robust industry growth that had been seen prior to the recent slowdown.

Africa's largest telecoms group has expanded rapidly across the continent and in the Middle East over the past two decades but faces stiff competition at home from South African market leader Vodacom.

Margins have also been squeezed by a price war launched by smaller operator Cell C and after regulators decided to cut mobile termination rates (MTR).

"We have just received a massive retrenchment notice at MTN," said Marius Croucamp, an official at the Solidarity union, which largely represents skilled workers.

The process could be concluded by the end of October, he said.

MTN's chief human resources officer, Themba Nyathi confirmed that the company had begun restructuring to improve efficiency but said the process is at an early stage.

"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," he said in a statement.

MTN's revenue from South Africa fell by seven percent to R19.2 billion in the first half of 2014 while margins also declined. Its market share dropped by nearly three percentage points to 31.9 percent.

MTN South Africa has nearly 6,200 employees after letting go 138 in the past 12 months.

"It's certainly a symbol and a symptom of MTN's struggle to maintain market share in South Africa," said Arthur Goldstuck, head of industry research firm, World Wide Worx.

"It's a reflection of the pressure on its margins as mobile termination rates come down dramatically and also as it is forced to compete on price on both data and voice."