MTN's head office in Johannesburg. Picture: EPA/KIM LUDBROOK
MTN's head office in Johannesburg. Picture: EPA/KIM LUDBROOK

JUBA — MTN South Sudan, a unit of Africa’s biggest cellular services company, said it is cutting jobs and cancelling expansion plans as the war-torn country battled an economic crisis.

The workforce will be reduced to just more than 80 people from 170, while plans to build 40 communication towers have been shelved, according to Khumbulani Dhlomo, the company’s head of corporate services. MTN had invested as much as $170m in the country in the past two years, without seeing profit, he told reporters on Tuesday in the capital, Juba.

"We have seen a decrease in our customer base," he said. "People now have to choose between buying a phone, buying airtime, and buying bread."

MTN has slightly more than 1-million subscribers in South Sudan, according to Mr Dhlomo.

Oil-producing South Sudan has seen its currency collapse and inflation surge since conflict erupted in December 2013 and curbed crude output. The International Monetary Fund projected the economy would contract 5.3% last year. The landlocked country has sub-Saharan Africa’s third-largest crude reserves, and currently pumps about 160,000 barrels a day.

"The biggest challenge is the exchange rate of the US dollars," Mr Dhlomo said. "It’s either the US dollars are too expensive for the company, or not there. We are trying as much as possible to do what we can, so that at the end of the day we don’t find ourselves in a position where we have to close the company.

"Obviously, if the economy doesn’t change, the dollar keeps on doing what it is doing, then you can’t survive, and there is a possibility to close down."

In its most recent financial statements, MTN reported figures from South Sudan as part of its "small opco cluster", which increased its subscriber base 7.3% to 37.4-million last year.

Benin, the Republic of the Congo,Guinea Bissau, and South Sudan had shown healthy double-digit subscriber growth, the results statement said.

Despite weak economic conditions, revenue increased 1.6% to R147bn supported by positive growth in Benin, Zambia, Guinea Bissau and South Sudan. Difficult operating conditions in Yemen, Afghanistan, Liberia and Guinea resulted in a revenue decline.

MTN’s results included foreign exchange losses of R434m in South Sudan, as a result of the depreciation of the South Sudanese pound by 509% against the US dollar.

Reuters reported on Tuesday the world’s newest country plunged into civil war in late 2013, when a political crisis provoked fighting between forces loyal to President Salva Kiir and rebels allied with his former deputy, Riek Machar.

Mr Dhlomo told Reuters the company had reduced foreign staff numbers 75%, and would cut 55% of local staff, without giving exact figures.

He said subscriber numbers had dropped 10% since October last year, and the company was expecting more losses.

It had scrapped plans to put up 40 new cellular transmission towers and 100 third-generation (3G) transmission sites.

"If the economy continues its downward trend, MTN may be forced to close," he said.

SABMiller, South Sudan’s main non-oil foreign investor, was due to shut its brewing operations in the first quarter of this year, as a shortage of foreign currency curtailed its ability to import raw materials.

SABMiller said it had failed to turn a profit since setting up the country’s first brewery in 2009.

Bloomberg with Reuters and Staff Writer