More jobs to go at limping MTN

CELLULAR behemoth MTN says it faces "significant performance challenges" in its home market, causing it to axe 847 managers.

CELLULAR behemoth MTN says it faces "significant performance challenges" in its home market, causing it to axe 847 managers.

But the operator with the second-most subscribers in South Africa may have to cut deeper to balance rising costs against its flailing financial performance. This is its second lot of retrenchments in a year.

A letter sent to staff by MTN South Africa's human resources boss, Themba Nyathi, lays bare the extent of problems.

Nyathi said MTN was "uncompetitive". It faced falling revenue and was "perceived as ineffective [with] uncompetitive cost structures". It had a "significant drop in market share" as it was being outperformed by Vodacom and Cell C.

Already, MTN has halted performance bonuses for top brass, cancelled a canteen subsidy, frozen new jobs and is reviewing the policy on providing handsets and SIM cards to staff.

This has not gone far enough, so it has now proposed a severance package of two weeks' pay for every year worked.

On Friday, Nyathi said this would not be the end of job cuts. "We project further cuts because of the removal of duplications, reskilling for digital value offering and changes in the marketplace. The nature of our skills profile is changing."

MTN's job cuts compound the retrenchments across South Africa this year.

In the first two quarters, the manufacturing sector alone shed 60000 jobs as the official unemployment rate hit a three-year high of 25.5% by the end of June, which means 5.2million people are out of work.

Loane Sharp, economist at the Free Market Foundation, expects the number of jobless to increase by 260000 over the next 12 months because of a sharp slowdown in the domestic economy, a tough global economy and "a raft of additional labour laws and regulations" being implemented.

Solidarity says it is engaged in retrenchment talks with 20 metal-engineering companies.

"There seems to be a lot of panic among the workforce [at MTN]," said Marius Croucamp, the head of industries for Solidarity. "They get a sentiment that this is just the first wave."

Vodacom's revenue per employee is triple that of MTN's.

Farai Mapfinya, the head of equities at JM Busha Asset Managers, said "Telkom ranks the worst by a mile" on the employee:expense ratio, which measures spending on staff as a percentage of revenue earned.

"Vodacom's employee-expense ratio is 6.03%, while MTN is at 6.35%. There is scope to cut further for both, but we don't think it is anywhere near enough to offset the decline on the top line."

Cell C has also reviewed jobs .