Fixed-line operator Telkom is mulling further possible voluntary retrenchments, as its gears up to enter the “execution” phase of its turnaround plan.
However, Telkom's growth plans will further fracture its already precarious relationship with the three trade unions represented at the company, which will oppose any further job losses.
Telkom has already voluntarily retrenched 186 managers, which cost the company R144 million in the half-year to September. Telkom needs to implement its turnaround strategy as voice revenue is dwindling, and although data use is growing, this is at lower margins.
For the first six months of the year, Telkom reported revenue down 5.4%, to R17.6 billion, while profit from continuing operations was down 9.3%, to R1.4 billion. Acting CEO Jeffrey Hedberg said in the results commentary: “Telkom's results for the six months ended 30 September 2010 paint a picture of an organisation under pressure.”
Hedberg says growing Telkom's revenue is a challenge and containing costs continue to be an area of focus. He says Telkom will not invest any cash in entities that are “burning” and will exit poor performers such as its Multi-Links CDMA business.
Speaking during a presentation to analysts and investors yesterday, Hedberg highlighted the need for the company to move into the “execution” phase of its strategy. “What's really important now is that we focus on execution.”
Not decided
However, while Telkom will invest in the people it needs to move into its growth phase, those that cannot - or will not - move into positions to aid growth may find themselves without a job.
Hedberg says the telco is in a process of engaging with staff that “aren't willing or able to step into the growth plan”. He adds the company has been in talks with unions to “find a solution”.
He says Telkom may look at more voluntary retrenchments during the rest of the financial year, if it finds it is overstaffed in some areas.
Telkom has an agreement in place with the Communication Workers Union (CWU), South African Communications Union (SACU) and Solidarity, which places a moratorium on forced retrenchments of permanent staff until the end of March next year.
Fredericks says Telkom is more focused in terms of spending on growth areas and will immediately start implementing its growth strategy.
However, Telkom may look at forced retrenchments in the new financial year, if the business plan points to the need to trim staff, he adds. If this happens, the telecoms giant will consult with unions.
Totally opposed
Telkom's potential move will anger unions, especially as relationships between the parties are only just starting to improve under Hedberg's watch.
The fixed-line operator was hit with strikes and industrial action recently over salary discrepancies and wage agreements. An August 2009 strike, when 2 000 staff members embarked on industrial action, saw customer service faults increase 30%, and sabotage to the network cost Telkom millions of rands.
CWU spokesman Richard Poulton says the union will oppose any retrenchments at Telkom, forced or voluntary. He says “ultimately it is the worker who has to suffer” for Telkom's bad investment decisions in recent years.
Poulton says the union's relationship with Telkom has improved recently, especially after Hedberg took over as acting CEO. However, more retrenchments will dent this precarious situation, as the CWU will oppose any job losses, he adds.
SACU president Michael Hare says the union will oppose any retrenchments at the telecoms company. He says it is not fair to retrench local staff because Telkom's forays into Africa, such as the wasted Multi-Links investment, have been unsuccessful.
Hare says the union held discussions with Telkom in August and September this year over voluntary retrenchments, but opposed these because of the moratorium in place. No numbers were put on the table, he adds.
In April, trade union Solidarity lambasted Telkom's plans to go through with voluntary retrenchments, before consulting with trade unions, as an act of bad faith. Solidarity insisted Telkom first enter into comprehensive consultations before continuing the process.
Solidarity's complaint was based on the fact that almost 2 530 managers received memorandums indicating that staff would be invited to apply for voluntary retrenchment before unions were involved in any discussions.
“The mere fact that Telkom is considering retrenching employees, whether or not it is voluntary, means that, in terms of legislation, they first have to consult with trade unions,” spokesman Jaco Kleynhans said at the time.
According to Telkom's annual report for the 2010 financial year to March, it has more than 23 000 staff members.
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