IOL 16 January 2020

JOHANNESBURG – Parastatal Telkom intends to axe 3 000 of its workers as it grapples with increasing debt and a decline in the fixed-voice market in a tight economy.

In a formal notice issued to organised labour on Wednesday, Telkom said South Africa’s depressed economy, regulatory uncertainty and a tough competitive environment had taken a toll on its business.

Alfie Ngubo, Telkom’s group executive for employee relations, said in the letter the retrenchments would impact its support employees, specialists, supervisors and managers in the Openserve, consumer business, small and medium business, and the Telkom corporate centre divisions.

“For Telkom to survive the current and anticipated tough trading conditions – forecast to deteriorate in the short to medium term – it is imperative to seek and implement measures to drastically reduce costs, eliminate efficiencies and improve operational and financial performance to secure its continued commercial viability and, therefore, security for the majority of employees,” Ngubo said in the letter.

He said the deteriorating economic climate, increased operational regulatory and competitive constraints, and the rapid migration from fixed voice to data had hurt the business.

Its fixed-voice market, which makes up half of Telkom’s gross revenue, was under-performing, while both Openserve and the consumer business required a different skills set and were out of sync with the new focus on fibre, mobile voice and data services, he said.

“The decline in fixed-voice and data services, and the concomitant decline in revenues, is primarily due to migration to mobile voice and data, as well as fibre, where Telkom is one of the smaller players in terms of size and subscriber market share.”

Telkom’s net debt increased to more than R11.7 billion in the six months to September from R8.8bn in March.

It said the rapid migration to voice and data services had not been accompanied by an agile and flexible organisational and operational adaptation.

“As a result, our current organisational and operational models are out of sync with the new mobile-focused business,” the company said.

The retrenchments follow previous steps to improve financial stability, including salary freezes, restructuring and voluntary severance packages.

The group said it planned to embark on a consultative process with organised labour, in line with the requirements of section 189 of the Labour Relations Act from Wednesday.

It also proposed roping in the Commission for Conciliation, Mediation and Arbitration to facilitate the consultation process.

South African Communications Union general secretary Karriem Abrahams yesterday criticised Telkom for reducing staff.

Abrahams said the company had outsourced workers more than 18 months ago to companies including Perx , Smollan and BCX, and charged that Telkom had dictated through service-level agreements that ex-Telkom staff must be reduced.

“We can take it further back to where Telkom outsourced to WNS about four years ago, and that was well over 1 000 people, where 90 percent of the ex-Telkom staff were retrenched,” Abrahams said, adding that employees were paying for the missteps of managers.

Telkom’s share price had a tumultuous year, having fallen from about R100 a share in June.

In December, the company, which is 40 percent state-owned, informed the market that its proposed takeover of Cell C was off the table, after receiving written notice from Cell C’s board rejecting its non-binding proposal.

Telkom shares closed 0.03 percent higher at R34.61 on Wednesday.

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