Telkom to outsource network division?

By Damaria Senne for Telkom
Johannesburg, 04 Dec 2007

Fixed-line utility Telkom refuses to confirm or deny that it plans to separate and outsource its networking division - one of the biggest units within the company.

This follows allegations by the Communication Workers Union (CWU) that Telkom failed to inform labour of the potential move, which would see the division become an independent entity, to which Telkom would outsource work.

This would impact more than 5 000 employees, who are responsible for the roll-out of network infrastructure, says CWU spokesperson Mfanafuthi Sithebe.

Telkom`s annual report reveals it had 25 864 employees in the year ending March 2007.

The company would not comment on the allegations, with spokesperson Lulu Letlape stating it "has consistently engaged all relevant stakeholders with a view to improving and enhancing internal efficiencies and business strategies and will continue to do so".

Sithebe says talks surrounding the separation are still at an early stage.

Telkom began outsourcing non-core operations in 2000, with its electronic repair workshops outsourced to Molapo Technologies, the restaurant operations outsourced to Fedics, and the fleet management division outsourced to debis Fleet Management. Facilities and infrastructure management and service were outsourced to Telecommunications Facility Management Company.

It seems likely Telkom may want to rid itself of the networking infrastructure division, which was recently the subject of negotiations between the fixed-line utility and cellular operator MTN. The aborted talks concerned MTN eyeing some of Telkom`s fixed-line assets - a deal partly scuppered by the unions.

A source claims Telkom may also wish to cut off this division because the fixed-line operator is putting greater focus on providing converged services, rather than the ownership and management of the network itself.

In a converged environment, it is no longer critical for Telkom to own the network to be successful, and the company simply needs access to the infrastructure at reasonable prices.

Another source says Telkom has lost a large number of employees in the past year, and likely does not have enough staff to manage all its operations, in which case it would make sense for it to cut off a non-core asset.

However, Sithebe says Telkom`s outsourcing moves have a tendency to result in job losses, and that many of the companies formed under that strategy have failed. As a result, the CWU is not in favour of the proposed move and would like to engage with Telkom on the matter, he adds.

Solidarity general-secretary Dirk Hermann says his union was not aware of a possible outsourcing of the networking division.

No longer relevant?

South African Communications Union assistant general-secretary Jannie Volschenk says the union is aware of the outsourcing deal in the context of the aborted MTN/Telkom transaction.

It was evident, that should the merger have gone ahead, it could have led to the outsourcing of certain divisions, he says, adding that more people would have been affected if the transaction had gone ahead.

"The total of 5 000 employees seems too little for the section that would be affected. The ring of 12 000 sounds more appropriate," he says.

Sithebe, however, argues that the outsourcing of the network division is still on the cards. Hermann and Volschenk say they will investigate the matter further.