Johannesburg - MTN Group Ltd., Africa’s largest wireless operator, will consider cutting employees as part of a plan to reduce costs and tackle falling subscriber numbers amid tougher competition in its domestic market.
“In South Africa, we are going to have a close look at our staff numbers,” newly appointed chief financial officer Brett Goschen told reporters in Johannesburg today.
“We’re looking groupwide. We’re looking to be a lot more efficient.”
MTN plans to lower its spending across managed services, distribution and procurement as well as labour costs, said Goschen, who was appointed chief financial officer last month after the resignation of Nazir Patel pending an internal investigation.
The mobile-phone company will focus on reducing the cost of contractors, while permanent workers won’t be excluded from the review, he said.
The Johannesburg-based company’s first-half profit rose 22 percent, exceeding estimates, after subscriber numbers increased in fast-growing markets including Nigeria and Ghana, according to a statement today.
Sales advanced 9.8 percent to 65.2 billion rand ($6.5 billion), the company said.
Headline earnings per share, which exclude one-time items, were 6.54 rand for the six months through June, compared with 5.36 rand a year earlier, beating the 6.49-rand median profit estimate by four analysts in a Bloomberg survey.
Total subscribers increased 6.5 percent to 201.5 million, supported by 7.8 million net additions in Nigeria and further growth in smaller African markets such as Sudan and Ivory Coast.
South African customer numbers declined slightly after weak consumer spending and competition on pricing hampered the business in Africa’s largest economy.
MTN plans to add 21.1 million subscribers in the full year, the company said.
MTN shares advanced 1.5 percent to 198.85 rand by 3:54 p.m. in Johannesburg.
The stock has increased 12 percent this year, compared with a 0.9 percent decline at Vodacom Group Ltd.
South African wireless companies are looking at other African markets as consumers increasingly use more profitable data-enabled smartphones and domestic voice-service revenue declines.
MTN data-subscriber numbers increased by almost 30 percent in the half year, while data traffic grew 56 percent, the company said.
MTN has expressed interest in expanding into Madagascar, according to people familiar with the matter. A move into India is also “worth considering,” chief executive Sifiso Dabengwa told reporters.
The company has held talks about a potential tie-up with Reliance Communications Ltd. of India this year, three people familiar with the matter said in May.
MTN was also in discussions on the possible acquisition of Neotel, the South African unit of India’s Tata Communications Ltd., although it is no longer involved, Dabengwa said.
MTN plans to pay a gross interim dividend of 3.70 rand a share.
The company said on August 1 it made a currency gain of about 1 billion rand during the six-month period, compared with a 1.5 billion-rand loss the previous year.
MTN became aware of the issue that led to Patel’s resignation in June and a probe is being led by auditing company KPMG, according to Dabengwa. It’s expected to be completed within three weeks, he said.
“It’s totally an internal issue, an internal governance issue,” the chief executive told reporters today.
“It doesn’t relate to any external matter.” - Bloomberg News