Telkom tanks on R1.5bn bill for re­struc­tur­ing

Earn­ings for 2020 will be hit, it warns

Pretoria News - - THE X-FILES - DINEO FAKU

THE SHARES of partly state-owned Telkom tum­bled 16.93 per­cent on the JSE to close at R19.43 a share on Fri­day af­ter it said that the first phase of its re­struc­tur­ing would cost R1.5 bil­lion.

Telkom said the re­struc­tur­ing – in which some em­ploy­ees had opted for vol­un­tary sev­er­ance pack­ages and vol­un­tary early re­tire­ment pack­ages as an al­ter­na­tive to re­trench­ment – would hit its earn­ings in the 2020 fi­nan­cial year.

“The cash out­flow re­lated to the re­struc­tur­ing process is ex­pected in the first half of the new fi­nan­cial year.

“Avail­able cash re­sources will be used to fund the re­struc­tur­ing process. This al­lows Telkom to re­main within the cur­rent debt lev­els,” said Telkom.

In Jan­uary, Telkom, which is 40 per­cent state-owned, an­nounced that it in­tended to axe 3 000 em­ploy­ees as it grap­pled with high debt and a de­cline in the fixed-voice mar­ket in a tight econ­omy.

Telkom has bled more than 80 per­cent of its value to R19.43 a share on Fri­day from about R100 last June amid an ag­gres­sive sell-off by in­vestors. Telkom is also bat­tling debt of R11.7 bil­lion.

South African Com­mu­ni­ca­tions Union (Sacu) or­gan­iser Keith Aimes said on Fri­day that 2 100 em­ploy­ees had agreed to ac­cept vol­un­tary sev­er­ance pack­ages.

Aimes said or­gan­ised labour had ob­jected to the pack­ages be­cause em­ploy­ees were agree­ing to them for the wrong rea­sons.

“The com­pany co­erces peo­ple to take pack­ages out of fear. They say if you do not take a pack­age and are force­fully re­trenched, you will get less money,” said Aimes.

The Labour Court ear­lier this month gave Telkom the go-ahead to con­tinue its re­trench­ment process af­ter dis­miss­ing an ap­pli­ca­tion launched by Sacu and the Com­mu­ni­ca­tion Work­ers Union (CWU).

Sacu and CWU ap­plied for an ur­gent in­ter­dict to pause the process, charg­ing that the of­fers were made to em­ploy­ees with­out hav­ing prop­erly con­sulted the unions first.

How­ever, Judge Robert La­grange said it was the unions, not Telkom, that were re­spon­si­ble for erect­ing the “stum­bling block to con­sul­ta­tions pro­ceed­ing”.

Aimes said the unions walked out of the process, be­cause of dis­sat­is­fac­tion with the pack­ages and had since re­turned to the process.

The com­pany needed to in­vest in its fi­bre busi­ness, Aimes said.

“We be­lieve that the com­pany should in­vest in fi­bre and up­grade the net­work,” he said.

Telkom has said the re­struc­tur­ing was due to the shift to fi­bre, LTE/LTEas new sources of rev­enue, cou­pled with the rapid de­cline in its high-mar­gin fixed-voice busi­ness, which had hurt the group.

It said its fixed-voice rev­enue in the se­cond half of the fi­nan­cial year had plum­meted rel­a­tive to the first half, de­spite re­duc­ing the le­gacy fixed-voice rev­enue con­tri­bu­tion to group rev­enue to 22 per­cent in 2019 from 56 per­cent in 2013.

“The mo­bile busi­ness sus­tained its growth tra­jec­tory into the se­cond half of the year from a higher base and con­tin­ued to drive the over­all group rev­enue growth thus, off­set­ting the neg­a­tive im­pact of fixed-voice rev­enue.

“How­ever, the growth in the new rev­enue streams has not been suf­fi­cient to off­set the neg­a­tive im­pact on group earn­ings be­fore in­ter­est de­pre­ci­a­tion and amor­ti­sa­tion (Ebitda).

“There­fore, group Ebitda con­tin­ues to be un­der pres­sure,” Telkom said.

SIMPHIWE MBOKAZI African News Agency (ANA)

IN JAN­UARY, Telkom said it in­tended to axe 3 000 em­ploy­ees as it grap­pled with high debt and a de­cline in the fixed-voice mar­ket. |

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