Telkom dismisses union allegation of mass staff reduction

July 10th, 2014, Published in Articles: EE Publishers, Articles: EngineerIT


Telkom has dismissed as baseless union allegations that it was planning to reduce its number of employees by 9500 over the next six months.

The South African Communications Union (SACU) claimed that the company intends slashing its workforce in half — firing 9500 of its 19 000 employees — within the next six months, with most cuts to come from its field services division.   Common sense dictates that reducing a company’s labour force by almost 50% is tantamount to suicide!  One wonders where unions get their information.

Telkom CEO Sipho Maseko

Telkom’s management this week placed on record the facts surrounding its restructuring process. In a statement the company said that prior to and throughout the restructuring process Telkom has consulted with all stakeholders including representative labour unions to ensure that the facts are consistently communicated.

The company also rejects allegations that race is being considered as the only criteria for the placement of employees in Telkom’s new structure. The fact is that Telkom’s focus is on retaining the right skills for its turnaround strategy and will consider several criteria throughout its restructuring process. These criteria include qualifications and experience; the employee’s potential; the last in, first out principle when more than one employee qualifies for appointment into the same position;  and employment equity. It is important to note that employment equity is only one of the four criteria applied to this process and that Telkom, as any other South African company, is required in terms of the Employment Equity Act to comply accordingly.

As far as reducing it staff complement, Telkom said that the entire management pool from which the reduction will come, is in the consultative process currently underway, and  is  made up of 2650 managerial staff. The company is not targeting specific numbers of individuals; it aims to reduce the number of management layers and achieve an employee cost/revenue ratio of 25% over the next five years. Employee costs currently make up 30% of revenue.

Telkom undertook a thorough review and investigation of all options before deciding to issue a Section 189 notice. These include offering voluntary separation and early retirement options, expanding and diversifying the revenue base; and reducing costs and divesting from non-performing investments.

“This restructuring process is an imperative for the survival of the business into the future and its success. Telkom has underperformed for several years as its share of market in fixed voice and data continues to decline and fixed to mobile substitution has intensified competition. The fixed voice market makes up more than half of Telkom’s revenues, and is in decline,” said Maseko.

Telkom is focused on providing more complex value-adding services, especially in IT.  Its R2,7-billion bid to buy services company Business Connexion forms a cornerstone of this plan. Discussions were recently halted due to the sudden passing of Business Connexion’s CEO, but it is expected that the process will soon be restarted.

Maseko said that the intention is to build the right organisation for the future by improving the business performance and unlocking efficiencies, and that the company will continue to explore other avenues that can assist with cost reduction in all areas of the business.



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