MTN SA, which is embroiled in a dispute with the sectorial regulator, says it may again cut jobs if mobile termination rates (MTRs) are decreased, as the Independent Communications Authority of SA (ICASA) has proposed.
This comes as the operator continues to engage ICASA over its bid to cut the interconnect fee - what operators charge each other to carry calls - to 10c for the two dominant players in 2016. The aim is to have an across-the-board MTR of 10c by 2017, although the rate is initially skewed in favour of Telkom Mobile and Cell C.
The regulator's new regime - set to kick in from next month - will see Vodacom and MTN pay smaller players Cell C and Telkom Mobile 44c per minute, while the latter two will pay just 20c per minute. The current termination rate is 40c.
Speaking during a question and answer session, on the back of MTN's presentation of its 2013 financial results this morning, MTN SA CEO Zunaid Bulbulia said the entity, which celebrates its 20th anniversary this year, would have to optimise costs if the rates went through as proposed.
MTN and Vodacom, which have both launched legal action against ICASA, have been censured by smaller operators Cell C and Telkom Mobile for opposing new termination rates that could see retail prices coming down.
Bulbulia said a reduction could affect in the region of 400 to 500 staff members. MTN SA, which continues to face revenue pressure, currently has 6 000 employees.
This follows the company's December move, when it trimmed its head count by 1 000 "given its increased focus on aligning costs with revenue. The cost structures of the business will continue to be reviewed in 2014," it says.
Group CEO Sifiso Dabengwa adds MTN's overall cost structure needs to be lower.
Top line challenges
In the past financial year, the local unit reported revenue 6.1% higher, to R39.8 billion, which was impacted by a R1.9 billion adjustment made to revenue as a result of a change in the way it accounts for handset sales.
Excluding this adjustment, revenue declined 1.6%, mostly because of lower outgoing voice revenue, which declined 8.3%, to R19.3 billion.
Data revenue, including MTN Business, increased 20.2% to R8.8 billion, and contributed 22.2% to total revenue. "This was a positive result despite lower data pricing," says MTN.
It notes the local unit is also starting to gain traction after a challenging 2013, which saw it left behind in the price wars and suffering market share shrinkage as a result.
Overall, MTN reported revenue up 3.1% in constant currency, which strips out foreign exchange effects, to R136.5 billion. Subscribers surpassed the 200 million-mark.
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