Dim view of Telkom exec pay

Trade unions have taken a dim view of Telkom's payments to past and present CEOs.

This comes as Telkom offers employees a 10.5% pay increase, and indicates that up to 14 000 staff may be outsourced.

Yesterday, Telkom released its filing with the US Securities and Exchange Commission (SEC), in which it says it paid axed CEO Papi Molotsane a R12 million severance package and his replacement Reuben September R19.1 million. Telkom's board members received payments totalling R35 million during the financial year ended 31 March.

This news comes on the back of Telkom's negotiations with staff and trade unions over its "Capability Management Strategy". This plan aims to make the country's dominant, and arguable most inefficient, telecommunications operator more agile to meet the demands of increased competition.

Part of the strategy will see Telkom appoint a long-term strategic partner, who will take over the responsibility of employing up to 14 000 of the company's 24 879 staff on an outsourced basis.

Telkom spokesman Pynee Chetty says the company cannot comment as it is trading under a cautionary related to the change in ownership of cellular network operator Vodacom, which is 50%-owned by Telkom. This cautionary was renewed on 14 July.

Molotsane refused to comment due to the confidentiality agreement he has with Telkom, but did say his payment was a total that included past performance bonuses.

According to trade union Solidarity spokesman Bennie Blignaut, Telkom will announce its strategic partner in August.

"From what we understand, the idea is that the strategic partner will employ these staff members and will essentially run a large chunk of the business, including parts of its core network," he says.

A source familiar with Telkom's strategy has confirmed this and says the plans have been laid for some time.

"Initially, Telkom was looking at outsourcing between 4 000 and 6 000 staff positions, but the number has increased. Areas include its field service force (this includes those who repair line faults), IT and OSS services. Let's face it, there are many companies out there who can just do those jobs better than Telkom," the source says.

Blignaut says Solidarity is not totally opposed to the Capability Management Strategy, as the union's first objective is to ensure job security and it recognises that Telkom is not as competitive as some of the new entrants in the telecommunications sector.

"We will be having another meeting with Telkom next week over this issue and the wage negotiations. The news of the SEC filing will be taken into account at this meeting," he says.

Patrick Craven, Congress of South African Trade Unions (Cosatu) spokesman, says the union is unhappy with the levels of pay that executives of organisations are receiving.

"Once again, it is the workers who are having to pay the price," he says. Craven adds that Cosatu wants Telkom to revert to being a public utility.

"When it was state-owned, it was inefficient, but at least then it did not pursue profits above all else," Craven says.