Telkom claims court victory is vindication on job cuts

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 10 Mar 2020

Buoyed by its court success against labour unions last week, Telkom says it is proceeding to offer voluntary severance packages and voluntary early retirement packages to employees, as an alternative to possible retrenchments.

The Communication Workers Union (CWU) approached the labour court, trying to prevent Telkom from implementing a plan to cut at least 20% of its workforce.

In January, Telkom announced 3 000 jobs will be cut at the company. This is not the first time it will reduce staff numbers, as it has been offering voluntary retrenchment packages since 2015 in a bid to reduce its wage bill.

In May last year, Telkom said it cut over 2 000 jobs in 2018 and reduced permanent staff by 12.5%.

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 was a reduction of 2 176 jobs in one year.

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

Urgent application

With this background in mind, the CWU approached the courts on an urgent basis, arguing that Telkom was rushing the process and hadn’t considered other alternatives to job cuts that could affect as many as 3 000 employees.

However, Justice Robert Lagrange dismissed the application on 5 March.

SA’s fourth mobile operator is cutting jobs because of its dwindling revenue. Telkom has previously been criticised for failing to transition quickly from fixed voice and fixed broadband to fibre.

Analysts recently told ITWeb that Telkom was the incumbent operator with the most fixed-line infrastructure and even Neotel couldn't challenge it in the fixed-line business until it got bought out by Liquid Telecom.

Now, in a statement to ITWeb yesterday, Telkom welcomed the court’s decision to throw out the union’s application, saying: “Telkom is pleased with the affirmation from the court that it is conducting itself in the best interest of Telkom employees.

It added: “The South African Communication Workers Union and the CWU approached the Johannesburg Labour Court requesting the court to direct Telkom to withdraw the offer to employees for voluntary severance and voluntary early retirement. The court dismissed the application.”

The unions will meet today to explore grounds for appeal.

On Friday last week, the CWU took aim at Telkom senior management, saying it is “stubborn” by continuing with plans to retrench staff as well as sell properties.

CWU general secretary Aubrey Tshabalala laid into the executives, arguing there is limited economic benefit for the carrier to sell more properties or retrench employees.

Telkom has endured challenges with declining revenue in fixed voice and fixed data services over several years and now it is selling off some properties, saying the proceeds will be used to modernise the company’s network.

In an interview with ITWeb on Friday, Tshabalala said the union is discussing the rationale for Telkom to retract its decision to cut jobs.

“Telkom has been making profits, what is left is for the company now is to migrate to new technologies. They are selling properties and cutting jobs; our agreement is that Telkom must respond to the new demands of technologies,” he said.

According to Tshabalala, the union “will continue to fight; we are confident they will see the rationale; we are just facing stubborn people at Telkom. Cutting jobs and selling properties is a recipe for disaster.”

Property disposal

Telkom confirmed to ITWeb that its property division Gyro is disposing of 53 properties and it is aligned with the strategy of unlocking value in the Telkom property portfolio.

“Telkom has been undergoing a process of modernising the network for some time now. Technological advancements in telecommunication necessitated the need to optimise space requirements for both operational and exchange needs,” said Telkom.

Additionally, it said: “Telkom, through Gyro and Openserve, has embarked on a decommissioning and disposal of properties programme for properties that are deemed to be non-core to operations and have no commercialisation potential (redevelopment or development potential).

“We sold 22 out of 34 properties – a 65% success rate. Twelve properties from the previous auction form part of the 53 properties, therefore going back for auctioning.”