Retrenchments to cost Telkom less

Telkom’s share price has gained about 7% after the fixed-line operator said it had reduced retrenchment costs by R300m. In a note to shareholders, Telkom said the cost of the restructuring process had come down from R1.5bn to about R1.2bn.

Telkom’s share price gained about 7% after the fixed-line operator said it had reduced retrenchment costs by R300m.

In a note to shareholders, Telkom said that the cost of the restructuring process had come down from R1.5bn to about R1.2bn.

The group had planned to retrench 3,000 employees, but delayed the process because of the Covid-19 pandemic that has resulted in a national lockdown.

The company’s share price was R20.76 at close of trade on Tuesday.

Led by Sipho Maseko, Telkom, which started the first phase of its retrenchment process earlier in 2020, had previously said that the job cuts were a result of the technological shift to fibre and LTE as new sources of revenue.

The company said that this had been “compounded” by a rapid fall in its “traditional highmargin, fixed-voice business, in line with global trends”.

Telkom — along with MTN, Liquid Telecom, Rain and Vodacom — was recently assigned temporary radio frequency spectrum by the telecoms regulator in an effort to tackle communication challenges related to the Covid-19 pandemic.

“The assignment of additional spectrum, on a temporary basis, will enable us to alleviate congestion in identified sites, ” company said.

The government hopes that this move will reduce congestion on mobile networks and allow for increased coverage in places with little to no mobile service, given the higher demand for telecommunications services because of the Covid-19 lockdown restrictions.

Telecoms companies have seen a rise in network activity the since the start of the lockdown at the end of March. Last week, Telkom joined other internet service providers such as Vumatel, Vox Telecom, Cool Ideas and Afrihost in doubling internet speeds for customers to cater for the increased traffic in home networks as more people work and learn from home.

The company recently reduced wholesale broadband access costs after the Competition Commission, which investigates anticompetitive behaviour, found that Telkom’s subsidiary Openserve was overcharging internet service providers for moving data from a local area to one of the major data centres in the country.

ADDITIONAL SPECTRUM ... WILL ENABLE US TO ALLEVIATE CONGESTION

R1.2bn the reduced cost of the company’s restructuring process

7% the rise in the Telkom share price after its statement on retrenchment