Telkom reveals big turnaround plan

 ·13 May 2014
Telkom fixed line

Telkom has big plans to turn the company around, which include restructuring and retrenching many management staff members and specialists.

The telco is starting its consultation with management staff and specialists regarding its planned restructuring and job cuts today (Tuesday 13 May).

Telkom CEO Sipho Maseko held an information session with staff on Monday, 12 May 2014, regarding the company’s restructuring plan of all the managerial and specialist areas.

Maseko informed management and specialist staff (levels M5, S5 and above) of the company’s intention to start the process of Section 189 and 189A of the Labour Relations Act. These sections deal with dismissals based on operational requirements.

He also provided some information behind the decision to start the process, the objectives of the exercise, the consultation process and the timelines which will be followed.

Masko said that Telkom is losing market share, and is facing numerous challenges going forward. This includes declining voice revenues, declining prices and increased operating expenses.

Turnaround plan

Maseko said that Telkom wants to connect every South African to a better life, as the leading provider of converged ICT solutions.

He also wants to optimise shareholder value, with a “leading sustainable financial position”.

“We want to be able to stabilise revenue growth, improve and grow EBIDTA margin by 1% to 2% over the next three years, strengthen free cash flow, and normalise CAPEX to revenue in line with benchmarks,” said Maseko.

He said that the turnaround strategy relies on having the right organisational construct, having the right people on the right seats doing the right things, and setting the right performance objectives and measure it accurately.

Management staff cuts

Maseko said that the company is planning to flatten its managerial and specialist structure, which should help to execute its strategy.

Telkom also wants to address its unsustainable human capital costs, and improve the profitability and sustainability of the company.

A new organisational structure at management and specialist levels will be introduced, with fewer available positions and an overall reduction in headcount.

the operator will consult with all affected staff members, and will then make decisions on the best structure to use, which positions should be merged and which new positions must be created.

Management and specialist employees will apply for the new positions, and appointments will be based on the selection criteria discussed with unions and staff during the consultation process.

Affected employees who have not been placed into suitable positions will fall into the pool of prospective individuals who will be retrenched.

According to the company it is anticipated that 2,635 management staff will be affected by the restructuring process.

The consultation with management staff is set to start today (13 May 2014).

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