MTN SA loses subscribers, layoffs ‘on the cards’

2014-08-07 17:10

Mobile giant MTN has lost about 430 000 subscribers in South Africa in the first half of the year and may consider retrenching some employees.

According to its interim results released today, MTN SA has struggled to keep its footing in the face of increasing competition in the market, particularly from rival Cell C.

Market share for the operator declined by 2.7 percentage points to 31.9% as competition intensified in the prepaid segment.

MTN also reported a 7% decrease in revenue to R19.1 billion and Group CEO Sifiso Dabengwa also said the cut in mobile termination rates that started in April contributed to the decline in revenue.

Dabengwa said MTN SA recovered slightly in the second quarter with an addition of 394 000 subscribers due to new prepaid price offerings.

MTN kept costs down and they declined by 6.8% in the first half of the year, with marketing and distribution costs slashed.

Dabengwa said when it came to staff, they were able to get rid of 1200 contractors.

“With tariffs declining so much, it does put costs under pressure. If necessary we may have to retrench employees,” said group chief financial officer Brett Goschen.

In Nigeria, the mobile operator did well and managed to pick up 1.7 million subscribers since the beginning of the year. MTN has also launched mobile money in that country called Diamond Yellow financial services. Dabengwa said it was too soon to comment on the performance of the new product as it was only launched a few weeks ago.

Data was the biggest driver of revenue in Nigeria and the number of 3G devices on the network has increased by 45% to 8.1-million, while there are over 10 million daily downloads on MTN Play.

In areas with political conflict like Iran and Syria, MTN has had trouble repatriating funds.

Goschen said, in Iran particularly, they have been looking at other avenues to get the money out by engaging with the Iran central bank, the United States as well as working with the South African ambassador to the US.

Goschen said MTN is owed about $900 million (about R9.6 billion) in dividends by its Iranian operations.

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