MTN redundancies: symptom of decline or transformation?

The removal of 280 employees by MTN Nigeria at the end of April shocked the telecoms market and wider economic community in Nigeria, given MTN’s position as the leading mobile operator in the country (39.73% of the market) and its continous stream of annual revenue. The mobile operator explained the move thus: “Our people are our greatest asset; each individual's knowledge, experience and ideas contribute to our continued growth and improvement. As such, ensuring a healthy and highly motivated workforce is a priority for us. “It is with this in mind that MTN Nigeria has implemented a voluntary severance scheme, designed to balance individual employee needs with business exigencies. It provides a financial incentive and opportunity for employees who have worked with MTN for more than five years to pursue other career interests and personal ambitions full-time, while increasing opportunities for professionals with a fresh perspective wishing to join the MTN family. “Its successful conclusion last week makes it possible for MTN to tailor the competence and experience base of its workforce to meet technology shifts and future business needs. MTN is unrelentingly committed to Nigeria, and continues to execute its strategy of attracting, developing and retaining the best Nigerian talent. This is in line with the ongoing business transformation to drive sustained growth and thereby facilitate MTN's continued role as a partner for progress and socioeconomic development in Nigeria.” However, analysts in the market are looking beyond the statement and wondering whether the development represents sign of corporate decline or the stated transformation, based on the firm’s recent travails in the industry. On 20 October 2015, MTN Nigeria was fined $5.2bn by the Nigerian Communications Commission (NCC) for not deactivating 5.2 million unregistered SIM cards. The dispute created a negative brand image for the operator in Nigeria and became a financial albatross on the neck of MTN. It also led to the resignation of its group chief executive, Sifiso Dabengwa, and CEO of MTN Nigeria, Michael Ikpoki. Despite the reduction of the fine to NGN330bn, it continues to drag down the company’s revenue. MTN also became the subject of public hearings at the National Assembly over the alleged illegal transfer of $13.9m from Nigeria to South Africa without official authorisation. The company denied breaking the law but the matter lingers. MTN Nigeria may be leading the mobile market in Nigeria in terms of voice calls (60.3 million subscribers), according to latest figures from the NCC, but it faces stiff competition in the data segment. The mobile data segment includes Globacom, Etisalat, Smile Communications and Spectranet as major mobile data providers, driving down the projected revenue of MTN as its data subscribers dropped from 32.7 million in August 2016 to 30.5 million in March 2017. MTN has also faced subtle pressure to enlist on the Nigerian Stock Exchange. In response, the company originally said it would list in 2016, then shifted to 2017 and presently, there is uncertainty when it plans to enlist. Overall, experts suggest the redundancies at MTN are about MTN, and are not a reflection on the health of the telecoms sector in Nigeria, which remains robust despite ongoing recession.

MTN redundancies: symptom of decline or transformation?

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