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Trade union fears jobs bloodbath in MTN, Telkom merger

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 25 Jul 2022

Plans are afoot by the Communication Workers Union (CWU) to approach anti-trust authorities to block MTN’s bid to take control of Telkom.

The union is opposed to MTN, Africa’s largest telco, taking control of the telephony group, saying it will disrupt competitiveness in the telecoms sector and lead to redundancies.

This follows recent confirmation by both companies that discussions are under way, which may result in a tie-up of the two operators.

Discussions are at an early stage and both Telkom and MTN say there is no certainty the transaction will be consummated.

News of this development came as industry leaders have been lamenting the growing competition in the sector, which they say makes consolidation of the telecoms sector in SA inevitable.

“Having a market that is saturated by a number of players is not sustainable. There is simply not a big enough profit pool to meet the return and other financial objectives of a number of industry players,” said Ralph Mupita, MTN Group CEO, in April.

Nonetheless, CWU says the selling of Telkom “is in fact a daylight robbery, where assets of South African citizens are shared amongst old comrades and their business cronies”.

For this reason, CWU general secretary Aubrey Tshabalala says: “We call for the state to be on the side of the South African citizens and workers [and] not to allow for few individuals to rob the poor and the country of what is theirs. The union is also considering to approach the Competition Commission.”

If the deal is allowed to proceed, Tshabalala says, it will “finish off the remaining carcass” of the company and lead to massive job losses.

He explains: “The slaughtering and ambushing of workers has commenced even before a deal is finalised. In a rather odd than usual manner of engagement with the union, MTN approached the CCMA for the initiation of section 189 (retrenchments) in the financial department. Simultaneously, Telkom has invited the union into a virtual meeting to discuss section 197 (transfer of business) at the Openserve business unit into a separate legal entity.

“In our view, this is to avoid and/or navigate legal challenges that might arise in the process. The bottom line on both processes/companies will result in massive job losses with fat pockets for few individuals. However, the union is aware this is just the beginning; if nothing is done, the floodgates will be opened for workers to be displaced.”

Spectrum headache

In addition, the CWU is questioning the timing of MTN’s takeover bid, which comes on the back of the recently-concluded spectrum allocation process by the regulator.

The Independent Communications Authority of SA held the spectrum auction on 10 March, which comprised 58 rounds of bidding between the six bidders.

MTN successfully secured the 2 x 10MHz in 800MHz, 40MHz of 2 600MHz and 40MHz of 3 500MHz band.

Telkom picked up the 20MHz at 800MHz and 22MHz at 3.5GHz bands, Rain clinched the 20MHz at 700MHz and 20MHz at 2.6GHz, while Cell C settled for the 10MHz at 3.5GHz.

Vodacom’s spectrum portfolio includes 2 x 10MHz in the 700MHz band, 1 x 80MHz in the 2 600MHz band and 1 x 10MHz in the 3 500MHz band.

“It is strange that this move is now in the open after a spectrum auction that surpassed a projected R8 billion has just been concluded, and the beneficiaries by great margins were Vodacom and MTN, leaving the supposed real beneficiaries which are the new players and SMEs out in the cold,” says Tshabalala.

“And again, this process was concluded with minimum of labour participation. It goes without saying that cheaper data tariffs remain a fanciful hope for the masses.”