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MTN South Sudan cuts jobs as economy struggles

MTN warned that if the South Sudan economy continues its downward trend, it may be forced to close its operations there.

MTN warned that if the South Sudan economy continues its downward trend, it may be forced to close its operations there.

MTN South Sudan is cutting dozens of jobs and cancelling expansion plans for new cellular sites due to an economic crisis in the country.

MTN corporate services head Khumbulani Dhlomo told Reuters the company had reduced foreign staff numbers by 75% and would cut 55% of local staff.

The telecoms operator is one of the country's biggest but Dhlomo says it has scrapped plans to put up 40 new cellular transmission towers and 100 third-generation transmission sites.

"If the economy continues its downward trend, MTN [South Sudan] may be forced to close," Dhlomo warned.

South African-headquartered MTN is the latest among a number of foreign firms to reduce operations in South Sudan as a currency devaluation, spiralling inflation and lower revenue from oil continue to cause difficulties in the world's newest nation.

During MTN's group results for the year ended 31 December 2015, announced earlier this month, the company reported forex losses of R434 million in South Sudan as a result of the depreciation of the South Sudanese pound by 509% against the US dollar.

South Sudan forms part of what MTN calls its small ‘opco cluster'. The cluster of countries did relatively well over the past financial year, increasing subscribers by 7.3% to 37.4 million and increasing revenue by 1.6%. The cluster's EBITDA, however, decreased 8% mainly due to high inflation and unfavourable currency movements impacting foreign denominated expenses.

At the time, MTN said South Sudan, along with Benin, Congo Brazzaville and Guinea Bissau, had showed healthy double-digit subscriber growth for the 2015 financial year.

But Dhlomo told reporters in the capital, Juba, this week that subscriber numbers in South Sudan had dropped by 10% since October last year and the company was expecting more losses this year. Dhlomo told Bloomberg the operator has slightly more than one million subscribers in South Sudan.

He says MTN has invested as much as $170 million in the country over the past two years, without seeing profit.

MTN is not the only South African organisation pulling back in South Sudan. SABMiller, which was bought by AB InBev last year, in January announced it would close its brewery in South Sudan this month due to difficulties in obtaining foreign exchange to buy raw materials. SABMiller said its South Sudan business closure would affect most of its 237 employees and indirectly hit thousands of individuals and businesses.

In mid-December, South Sudan abandoned its official fixed exchange rate and moved to a floating rate. The country's inflation was 202.5% year-on-year in February from 165% in the year to January, due to rising food and non-alcoholic drink prices. The National Bureau of Statistics said in a statement this month that inflation rose 18.6% month-on-month in February.

Oil-producing South Sudan won independence from Sudan in 2011 but in December 2013 slid into civil war after a dispute between president Salva Kiir and his former deputy Riek Machar.

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