Most Telkom retrenchees opt to leave voluntarily
Telkom had cut more than three-quarters of the jobs it intended to reduce, communications minister Stella NdabeniAbrahams said, getting a step closer to saving an estimated R10bn in wage costs.
It would also help the company better compete with established mobile phone operators.
The partly governmentowned company, which is labouring under an R11.8bn debt pile, is in the middle of cutting 3,000 jobs as the company contends with falling revenue from its fixed-line phone network.
Though the company’s mobile phone network — written off as doomed to fail when it launched a decade ago —
is growing fast, it is still a lot less profitable compared to MTN’s and Vodacom’s because the bulk of Telkom’s earnings are spent on rolling out high-speed 4G networks.
In an interview with Business Day, Ndabeni-Abrahams said more than 2,300 Telkom employees had so far chosen to voluntarily leave the company.
The job cuts makes for bad politics in a country where three in 10 people are unemployed, the highest unemployment rate in more than a decade.
Ndabeni-Abrahams, who expressed her displeasure at the retrenchments, said that the government was aware that Telkom was dealing with technological advances that could affect any company.
Telkom, the former fixed-line telephone monopoly, is 40% owned by the government.
The company said it would use its cash reserves to pay for the cost of the restructuring, which it has said would amount to R1.5bn and lead to weaker annual earnings.
But analysts have said the job cuts could save the company as much as R10bn and put it in a stronger position to compete with MTN and Vodacom, the duo that control about 70% of the SA cellphone market.
In e-mailed responses to Business Day’s questions, Telkom said it was in different stages of consultation with union leaders from the Communication Workers Union, Fedusa, Solidarity and the Information Communications and Technology Union.
The company, led by CEO Sipho Maseko, has said the restructuring is a result of the shift to fibre and LTE as new sources of revenue.