No BT lay-offs in SA

By Candice Jones for BT
Johannesburg, 14 Nov 2008

The local branch of global telecommunications behemoth BT has no plans to follow its parent company in job cutting.

The group announced yesterday that it plans to cut around 10 000 jobs by the end of March. This is expected to affect contract workers and offshore workers. The company has already let go of 4 000 employees, meaning that over the next four months another 6 000 will be lost.

The move follows the company's profit warning two weeks ago, which revealed it expected a profit increase of between 7% and 8%, compared with the market expectation of 9%. The company also released its results for Q2.

According to Brian Armstrong, BT VP for the Middle East and Africa, the UK business has also felt significant margin pressure. However, he adds the EMEA and central and eastern Europe, the region under which SA falls, has not seen the same pressure.

The local arm doubled its expected revenue, which, according to Armstrong, is double the local business's target for the year. It also increased the number of connections in SA, as well as boosted its customer base by 100.

Opportunity knocks

The international lay-offs are part of an ongoing restructuring process that has become prevalent among many large international telecoms businesses. Says Armstrong: “The company has been participating in an ongoing cost optimisation strategy, and the job cuts are only one part of it.”

Local provider Telkom is another company that had plans to restructure through outsourcing. However, its “capability management” strategy was placed on hold because of severe pressure from trade unions.

Armstrong says, while there are currently no plans to lay off South African staff, the local business is still part of the global group and “one can't rule anything out”. However, he adds that a deal recently signed with local black empowerment investment group, Sekunjalo Investments, provides a stronger case for growth.

Last week, Sekunjalo announced it would pay R27 million for a 30% stake in BT SA.

The changing local telecoms market conditions have also created good prospects for the business, adds Armstrong. “The South African telecoms market is very dynamic at the moment; both in terms of technology changes and regulatory changes. This kind of dynamism only creates opportunity.”