More job cuts at Telkom

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 28 May 2019
Sipho Maseko, Telkom Group CEO.
Sipho Maseko, Telkom Group CEO.

Telkom cut over 2 000 jobs last year and reduced permanent staff by 12.5%. This is according to the JSE-listed group’s financial results, for the year ended 31 March.

The results revealed Telkom’s total permanent group workforce at the end of March 2019 was 15 296, compared to 17 472 at the end of March 2018, which is a reduction of 2 176 jobs in one year.

Telkom said the reduction was primarily due to staff taking voluntary severance and voluntary early retirement packagesand layoffs related to section 189 of the labour law, which cost the group R728 million.

A chunk of the job cuts came from the group’s ICT business, BCX, which reduced its permanent employee numbers by 13.4% to 5 782, in line with its “employee optimisation programme”.

“We expect the savings from this programme to come through in the next financial year. The employee optimisation programme was managed to ensure daily operations were not disrupted, and key skills were retained,” the group said.

Last November, BCX confirmed it would retrench some staff, but at the time did not confirm how many.

BCX, formerly Business Connexion, has taken a different business approach since it was acquired by Telkom in 2015 in a R2.67 billion deal.

Co-founder Isaac Mophatlane left the company in 2017 and was replaced by Ian Russell, who made his exit in June 2018, being replaced by Jonas Bogoshi. Prior to his departure, Russell told ITWeb there would be no forced retrenchments at BCX, as the company moved to consolidate its multiple subsidiaries.

Telkom yesterday reported headline earnings per share had increased by 22.6% year-on-year to 722cps, excluding the costs of the voluntary severance and retirement packages. Group operating revenue increased by 5.3% to R41.8 billion and mobile service revenue grew 58.3% to R8.2 billion.

However, a 14.3% drop in fixed voice and interconnection revenue negatively impacted the overall performance of both Openserve and BCX.

BCX reported revenue decline of R683 million. This was, however, an improvement on the R1 billion revenue decline it reported in the prior year.

Job cuts at Telkom are nothing new, as the group has been offering voluntary retrenchment packages since 2015 to try and reduce its wage bill.

In fact, its financial results for the year ended 31 March 2016 were negatively impacted by the high number of retrenchments taken up. Telkom saw a 25% drop in full year profit after tax as the company spent almost R2.2 billion on voluntary early retirement and severance packages for 3 878 employees that year, while a further 437 were affected by outsourcing.

A year later, group CEO Sipho Maseko said he did not foresee further staff cuts over the next year but "when the environment changes on you, you need to be able to respond".

Telkom's staff count in 2013 was 21 209 and by 2015 was 18 333, while it is now down to 15 296.