Retrenchments not just about race: Telkom

Telkom said in a statement on Tuesday, 8 July 2014 that it 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,” Telkom said.

Employment equity is one of the four criteria applied to the restructuring, Telkom said, adding that just like any South African company it is required to comply with the Employment Equity Act.

The other three criteria are:

  • qualifications and experience;
  • the employee’s potential; and
  • the last in, first out principle when more than one employee qualifies for appointment into the same position.

Telkom re-iterated that allegations that it will fire 9,500 employees in the next six months are unfounded.

“In fact, the entire management pool that Telkom seeks to reduce from, in the consultative process currently underway, is made up of 2 650 managerial staff,” the company said.

“The company is not targeting specific numbers of individuals,” Telkom said. “It aims to reduce the number of management layers and achieve an employee cost-to-revenue ratio of 25% over the next 5 years.”

According to Telkom, its employee costs currently make up 30% of its revenue.

Why restructure?

Telkom said it 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 revenue base;
  • 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 said.

We have underperformed

In a frank admission, Telkom said that it has under-performed for several years as its share of market in fixed voice and data continues to decline, while fixed-to-mobile substitution has intensified competition.

“The fixed voice market makes up more than half of Telkom’s revenues, and is in decline,” the company said.

“The intention is to build the right organisation for the future by improving the business performance and unlocking efficiencies,” Telkom said.

“The company will continue to explore other avenues that can assist with cost reduction in all areas of the business.”

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Retrenchments not just about race: Telkom