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Cell C to retrench 40% of semi-skilled workers

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 19 Jun 2020

Some 40% of Cell C’s junior management and semi-skilled staff are facing the chop.

The financially-constrained telco says a “difficult decision” has been reached and it has initiated discussions with the affected parties.

In a statement today, the company says the decision is unavoidable as Cell C implements a restructuring plan of its operations so as to align the organisation with its new operating model.

Cell C has, however, cautioned that “no final decision has been made and the consultation process with affected employees is meant to obtain input for consideration before a final decision is made”.

The ongoing process at the telco follows a similar move last month, when some senior managers and executives were engaged by Cell C with the possibility of redundancy of certain positions and retrenchments.

Cell C said the review of the management structure was based on a detailed analysis of the operating model and “organisational structure which revealed that the current structure has grown over time while the business has stagnated”.

This, it said, contributed to operational inefficiencies, silos and duplication of roles, as well as lack of clarity in terms of accountability for performance and unsustainable costs.

However, Cell C recently received a lifeline when the Competition Commission recommended conditional approval of the proposed acquisition of certain Cell C assets by special purpose vehicle Gatsby SPV.

Gatsby is a ring-fenced newly incorporated special purpose vehicle which was incorporated for the sole purpose of entering into the proposed transaction.

In the Friday statement, Cell C says: “Earlier this year, senior management positions were aligned to this revised operating model and new organisational structure. This process was completed in May and resulted in 30 positions being affected.

“This current consultation process in terms of Section 189A (2) of the Labour Relations Act advises staff of the possibility of redundancy of certain positions and possible retrenchments.”

The embattled mobile operator lost 2.9 million subscribers for the year ended December but was optimistic, saying the margin of its existing customers was better as a result of acquiring profitable clients.

Cell C posted further losses for the period, declaring a loss of R3.94 billion compared to R7.36 billion in 2018.

Notwithstanding the losses, CEO Douglas Craigie Stevenson was upbeat, saying the green shoots of the telco’s turnaround strategy, which was implemented from March 2019 onwards, were now visible.

“For many years, Cell C has under-performed and generated significant losses. A turnaround strategy was put in place in early 2019. One of the pillars of the strategy is a focus on operational efficiencies. Efforts to streamline the business have included cost savings through procurement cuts, a year-long hiring freeze, a review and discontinuation of certain product offerings, all in an effort to turn the business around,” reads today’s Cell C statement.

“Along with these cost-cutting initiatives, together with the revised network strategy the company is adopting and the changing competitive environment, it has become necessary to review Cell C’s operating model and organisational structure.

“It is the company’s view that over time, the operating model has resulted in a number of inefficiencies. This is contributing to the operating and financial challenges the company currently faces.”

Additionally, Cell C says while it has started a Section 189 process, it is looking at a number of outplacement opportunities in the learning and development space, and will introduce a reskilling initiative for some affected employees.

“The reskilling opportunities will empower employees with new emerging skills that will be required by the labour market as the fourth industrial revolution and digital age manifests over the next few years. These include technical, digital and entrepreneurship skills,” says Cell C.