MTN is working on a new commission model for its dealers but will not comment on whether some stores will be closed down.
"MTN is introducing a new dealer commission model to align with its business strategy and reward consequently,” says MTN GM Pieter van Van Rheede Oudtshoorn.
He explains that this was done in consultation with the relevant stakeholders. “MTN has extensively engaged with its dealers over the last four months and the process is almost complete.”
Cutting costs?
Despite dealers' statements to ITWeb that the commission percentage paid to dealers will be reduced and some unprofitable stores will be decommissioned altogether, MTN will not comment on the matter.
“As this is a confidential matter between MTN and dealers, MTN is reserving further comment at the moment,” says Van Oudtshoorn.
Cell C announced a similar move earlier this year when it said it will not renew the contracts of some of its franchises.
The operator also said the process was implemented “to improve its current sales and distribution channel”.
“Within the new model, some of the existing franchisees will stay on and manage a larger number of outlets, some new parties will be introduced and some franchisees will no longer have a contractual agreement with Cell C,” explained CEO Lars Reichelt.
Spiwe Chireka, ICT analyst at Frost & Sullivan, attributed this process to the impact of tariff reductions. “If we look at MTN and Vodacom and what they are doing, we know that profitability is really slow and so you have two options: either increase revenue or cut costs. So this is us seeing mobile operators beginning to react to tariff reductions and a decline in short-term revenue.”
Related story:
Cell C closes franchises
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