Telkom reneges on bonus promise

Telkom employees face a bleak Christmas as the company has not paid them the part bonuses in November that were promised in July, trade unions and employees say.

For the fist time since the company was partly privatised and listed in 2002, no bonuses were paid this year, and employees say the reason given was because the company had not reached its targets.

Employees who wish to remain anonymous say the message from Telkom`s board to them has been that the non-guaranteed bonuses are based on earnings before income tax, depreciation and amortisation (EBITDA), and a customer satisfaction index with respective weightings of 75% and 25%.

They say the board had said it would pay at least 25% of the bonuses if the interim EBITDA targets were met in November, with the balance paid out in the new calendar year.

However, for the six months ended September, Telkom reported that EBITDA has fallen 12.55%, to R6.153 billion, compared to the previous year`s. The company`s revenue had increased by 0.5%, to R16.108 billion, but operating profit had plunged 19.4%, to R4.286 billion.

This news has further dragged down morale within the telecommunications group that has had to weather its share of management storms this year. Easter proved upsetting with the sudden departure of former CEO Papi Molotsane, who has since reached an agreement on his payout.

Increasing competition from more agile companies, the discounting of its pricing and investments in regenerating its network and in new ventures are all beginning to nibble away at its bottom line.

Furthermore, the trade unions are gearing up for wage negotiations because the three-year agreements signed have to be renegotiated due to the rising inflation rate. The key inflation indicator, CPI-X, has risen by 4.5% points this year, to 10.5%.

Jaco Kleynhans, spokesman for trade union Solidarity, says: "Telkom`s profits were down, but the company is still highly profitable and the shareholders have been paid their dividends. The workers are not being treated as equal stakeholders."

He says his union, which represents about 3 500 Telkom employees, will begin negotiations with Telkom soon over the wage negotiations, and the bonus issue will be part of the discussions.

"We have set ourselves a deadline of 15 December to sort out all of this," Kleynhans says.

A Communications Workers Union (CWU) spokesman says that, while his union has not discussed the bonus issue yet, "we are very concerned about it".

However, he points out that some of the workers are Telkom shareholders. About 3% of Telkom`s shares are held in the Uthingo share scheme for the workers.

The CWU, which has about 13 000 members at Telkom, is also due to begin wage negotiations soon, he says.

Despite having been given two days to respond to ITWeb`s e-mail and telephone queries, Telkom has stated that it refuses to comment on the issue.