Over 3 500 Telkom employees have appealed to the Competition Commission to take their job security into account before imposing the proposed R3.5 billion fine on the company.
The commission wants Telkom to pay the hefty fine for allegedly abusing its dominant position and cutting downstream service providers out of the market. Both parties presented closing arguments to the Competition Tribunal last month.
Advocate Martin Brassey, for the commission, alleged Telkom abused its monopoly over the access and backhaul aspects of the network to the detriment of competitors. "Telkom has behaved very badly from a competition point of view and that needs to be corrected."
Tragic consequences
The employees' written pleas were presented to the commission yesterday. Trade union Solidarity has been conducting a campaign among Telkom employees for the past two weeks, encouraging them to make their voices heard over the possible fine.
It asked the commission to take heed of the pleas of more than 3 500 Telkom employees and their families (more than 17 000 people) before announcing the fine. “It would be a tragedy if thousands of Telkom employees had to suffer the consequences of something they had nothing to do with,” says Marius Croucamp, Solidarity spokesperson.
“The reality is that a huge fine would deal a serious blow to Telkom's profitability and the possibility of large-scale retrenchments cannot be ruled out. Although the trade union believes that justice must be served, it may not be at the expense of Telkom employees' job security.”
Telkom's share price was down at the close of business on 13 February by 1.4% and at around 11am on 14 February, it was down 2.4%. This was immediately after the first parts of the closing arguments were heard by the tribunal and the commission stuck to the figure of R3.5 billion.
Scaring investors
The trade union is also concerned about the impact the fine could have on the possible KT transaction. “It is important that foreign investors are not scared off.” In October, Telkom said it was in talks with Korea-based KT, which may see the JSE-listed company sell a 20% stake to the Korean company.
“The Competition Commission showed little sympathy for Telkom during the closing arguments in the inquiry into Telkom. While the Competition Commission and the telecommunication giant are fighting in the media, Telkom's employees are faced with an uncertain future. Solidarity's campaign is an attempt to give a voice to those who will receive the full force of a huge fine,” says Croucamp.
The penalty figure of R3.5 billion or 10% of turnover proposed by the commission is jaw-droppingly inappropriate, and 5% of turnover of R410 million would be more acceptable, said Telkom in February. It added that any penalty now will not act as a deterrent, because the market has opened up so much since the period being discussed and will only bring dire consequences for the South African economy.
Brassey said the impact on the economy is exaggerated, because in cases where a substantial penalty is imposed, it can be paid over time.
The commission could not be reached for comment by the time of publication.
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