Telkom says retrenchments are aimed at ‘safeguarding its sustainability’

Telkom says it will commence with a consultation process with organised labour as part of a section 189 retrenchment process.

The telco informed trade unions and staff that it could cut up to 3,000 of its more than 15,000 employees as it struggles with declining performance in fixed voice and data services.

It said that it is also grappling with organisational and operational inefficiencies linked to fixed voice and data services, which require more staff to install, maintain and market.

Telkom said it will consider voluntary severance and early retirement packages for employees affected by phase one of the job cuts.

“The section 189 process is a section of the Labour Relations Act which sets out the guidelines for retrenchment procedures. Telkom approached the CCMA to facilitate the process,” it said in a statement on Wednesday.

“Rapid changes in technology remain a key challenge for the group. While Telkom has made the necessary investments in new technologies and revenue streams, particularly in the fast-growing mobile business, this has taken its toll on profitability.”

The company said it launched a Section 189 process on Wednesday, 17 January as part of the group’s efforts to ensure its stability and sustainability into the future as it contends with an increasingly tough operating environment.

“Besides the difficult macroeconomic environment confronting all companies operating in South Africa – where GDP per capita is declining because economic growth is lagging population growth – Telkom is having to reposition itself amid fundamental changes within the telecommunications industry.

“At the same time, Telkom has seen a sharp decline in fixed-voice and interconnection revenues across the group as customers shift towards new technologies, such as fibre to the home. This trend will continue,” it said.

Further, it said it has been competing in a duopolistic mobile market in which the two largest players have virtual control over voice and data prices.

“The group is optimistic that the Data Services Market Inquiry will yield firm regulatory action to stimulate competition in South Africa’s mobile market,” it said.


Read: Telkom cannot pay executives R100 million and then fire 3,000 workers: union

Latest news

Partner Content

Show comments

Follow us

Recommended

Telkom says retrenchments are aimed at ‘safeguarding its sustainability’