By all accounts, Telkom must cut its costs, and drastically so. Its latest results show that, without some sort of brave move, that company is going nowhere.
In fact, it's standing so still, were it more immobile it would be going backwards, due to its trend of investing badly and missing out on revolutions - like the cellular move.
No, sadly, Telkom is facing a cost base that has spiralled out of control, while its top line has done nothing for about five years.
In the year to March, Telkom reported flat revenue - at R32.5 billion - and net revenue dropped 0.4%, to R26 billion. However, its bid to remove costs is paying off somewhat, as operating expenses declined 2.1%, and operating income for its core business gained 3.8%.
Has to happen
The most obvious place for a new CEO to start trying to right the ship is by pulling costs out. Telkom has a lot of fat to remove - 6.3 workers to each manager - and I'm sure there are other things that can be pulled: long lunches, meetings in fancy rooms, costly d'ecor - the usual sort of items that can be trimmed.
Telkom has already made moves in those areas: cutting out bottled water, year-end lunches, and trimming its workforce. It is currently looking at retrenching around 650 managers, in addition to a previous voluntary process that saw 1 500 people leave, costing it R753 million, but cutting headcount by 9%.
Yet, there is only so much that can be cut before the knife hits meat, and then bone. That's why I find the speculation - although not reported as such - that it was canning 9 500 jobs a bit tough to swallow.
Field work
That many retrenchments would leave it with less than 10 000 employees, which is an impracticable amount for a fixed-line operator. Granted, Vodacom has 33 million local subscribers, compared to Telkom's less than four million fixed-lines, and only around 5 000 staff.
Yet, Vodacom employees do not need to climb poles to fix a line when a too-tall truck took it out, or repair massive amounts of cable every rainy season, or replace cable when thieves have struck again.
Telkom could probably do with letting some more staff go, but not a whopping 9 500. Maybe it could outsource whatever those guys do - apparently network field engineering - but I doubt the group could find an outsource company with the requisite skills, or staff.
Ironically, its years of monopoly status are now starting to bite it in the butt.
After all, which other company has built up such a large base of skilled workers to service fixed-lines? Nope, I didn't think so. Ironically, its years of monopoly status are now starting to bite it in the butt.
A way forward?
What Telkom needs is not to cut away all the flesh. It needs to do something about its top line. A lot faster than it is. Quad-play sounds great: let's have it, sooner than later.
Oh, wait. DStv pretty much has the pay-TV market sewn up - as what was once called TopTV (now StarSat) discovered to its great dismay.
Fibre to the premises then; that's a service that everyone needs, even if it doesn't come with cool content. Better hurry then, as Neotel, Vodacom and MTN are all eyeing that market keenly, and seem to have a better track record of getting things done than the operator that sold its stake in what was essentially a cash cow for many years.
Telkom will have to get a move on, and fast. I'm glad I'm not in CEO Sipho Maseko's shoes. Regardless of what it does, it will need someone to roll out its vision, someone to get out there and actually plug in cables, someone to do the actual labour.
And that's why I think Telkom can't let go of almost half its entire workforce.
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