Telkom is looking to cut R1 billion in costs per year, including slimming down its employee numbers, in an attempt to turn its business around, according to a report by Business Day.
This move will include job cuts, as indicated in previous reports, of around 7,000 staff, which would impact all areas of Telkom’s business.
In an interview with the paper, Telkom CEO, Sipho Maseko indicated that cutting jobs would be part of the company’s strategy, as it looks to “shed a bit of weight” in terms of staff.
“We are way out of shape in so far as revenue to staff is concerned. We will have much more thorough conversations,” the CEO was quoted as saying.
According to Business Day, Maseko said he would begin consulting with unions over the possible retrenchments next week.
Bloomberg previously reported that Maseko was looking to reduce the operator’s workforce by a third over the next 5 years, including sacking as many as 1,000 managers.
This was due to “an urgent need for Telkom to address its cost base including its human capital requirements as it substantially and directly impacts the Company’s performance.”
Following the reports, Maseko reassured Telkom employees that they would be “kept in the loop at all times” regarding any possible retrenchments, and encouraged them to focus on the job at hand.
“Focus on your job and contribute to the company’s well-being by doing what is expected of you to the very best of your ability.”
“Our turnaround programme will continue unabated. Stabilising the company is not the end of the journey, it is just the beginning,” Maseko said at the time.
Telkom has been implementing a turnaround strategy since Maseko’s appointment in March 2013 – over a year ago.
The strategy has seen the company settle its competition cases to the tune of R649 million; impairing legacy equipment to the value of R12 billion; and engaging with MTN in a network roaming deal for its loss-making mobile arm.
During his tenure, Maseko has seen Telkom’s stock price sink to its lowest point of R11.34 (May 2013), and rise up to a 30-month high of R35.89 (April 2014).
In March, Telkom advised that it expects headline earnings per share for the year ending March 2014 to be at least 20% higher than in 2013.