Labour unions Solidarity and the Communication Workers Union (CWU) have criticised Telkom over its planned job cuts.
This follows Telkom’s decision yesterday to reduce its workforce by 15%, citing the need to optimise group costs as the reason for the redundancies.
The telephony group revealed its intention to enter into a formal consultation process with relevant stakeholders in terms of Section 189 of the Labour Relations Act (S189A process) regarding the restructuring of certain operations.
The S189A process will impact all business units and subsidiaries, and is intended to ensure the sustainability of the group, says Telkom.
“Management has, therefore, embarked on a restructuring programme, which includes the S189A process, to optimise group costs in line with evolving technology capabilities and demands.”
The company currently has about 11 000 employees, meaning up to 1 600 employees will be shown the door.
Reacting to the news today, CWU secretary general Aubrey Tshabalala took exception to Telkom’s decision, telling ITWeb: “This is just a lousy excuse for creating an artificial profit for executive and board members to pocket lucrative bonuses every two years.
“If you go to the 2016, 2018 and 2020 retrenchments processes, the rationale is the same, with a few senseless additions, such as the release of spectrum and the COVID-19 lockdown.”
According to Tshabalala, the champion and architecture of this process is former CEO Sipho Maseko “who…led to the institution shrinking from being one of the giants of telecoms in Africa, to being just an entity in South Africa”.
He adds: “When Maseko took over, Telkom had a net debt of R545 million, compared to when he left in 2022, leaving Telkom with R16 billion debt. Now the new CEO [Serame] Taukobong appears to be following in his footsteps and this will have a disastrous end result, which may lead to a complete closure of Telkom.”
This is not the first time Telkom has announced job cuts. In 2018, Telkom reduced permanent staff by 12.5%.
In 2020, it retrenched about 3 000 employees after facing challenges with declining revenues in fixed voice and fixed data services over the years.
Risky move
Solidarity says it is still studying the various Section 189 notices and the impact they will have on employees, as well as the finances of the relevant entities.
Spokesperson Morné Malan tells ITWeb: “Given that at least three related business units are affected (Telkom, Openserve and BCX), there is an added layer of complexity in this regard.
“It is of vital importance to us not only that workers are not unduly disadvantaged, but also that our members, who will continue their employment after the process, can be reassured their company will be stable and sustainable after the process has been finalised.
“We will continue to actively engage and consult with Telkom and the other entities in accordance with the Labour Relations Act to ensure none of our members’ rights are infringed upon, especially given the precarious situation in which workers find themselves where unemployment is staggeringly high, inflation has climbed drastically and the overall economy has stagnated.”
The telephony group yesterday reported muted performance in the quarter ended 31 December (Q3 FY2023), revealing that a cost-saving programme to uplift medium-term profitability had been launched.
It said: “Telkom has embarked on cost-saving initiatives targeting a reduction of costs over the next six to 18 months, to reduce and optimise the group cost structure and return to a blended group EBITDA margin of more than 25%.
“A number of initiatives are already in progress to address the group cost base. These are aimed at rebasing our cost structures. The benefits of these initiatives are expected to be visible in the medium-term from FY2024 onwards.
“Telkom will be required to invest in exiting and reducing certain direct and operating costs in the coming six to 18 months. A substantial portion of these costs will be accrued for in FY2023.”
In addition, Telkom says, in order to mitigate the impact of frontloaded investment in working capital, as well as ongoing pressure on free cash flow (FCF), “the group plans to raise a further R1 billion by the end of FY2023 through the sale of qualifying device receivables to external financial institutions to mitigate the impact on FCF”.
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