Union remembers Sipho Maseko’s massive job cuts at Telkom

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Outgoing Telkom group CEO Sipho Maseko.
Outgoing Telkom group CEO Sipho Maseko.

Labour body the Communication Workers Union (CWU) says outgoing Telkom CEO Sipho Maseko’s legacy is largely characterised by massive job losses at the company.

The CWU was reacting to today’s announcement by the JSE-listed Telkom that Maseko will step down from his role in June next year.

While Telkom has lauded Maseko for turning it into a profit-making company, the labour union says the CEO prioritised profits at the expense of workers.

Announcing Maseko’s departure, Telkom notes that during his eight-year tenure, he turned the business around and evolved it from a traditional fixed business, to a portfolio comprising the mobile, IT, wholesale infrastructure business and the masts and tower portfolio.

However, Aubrey Tshabalala, secretary general of the CWU, says: “To us workers, particularly in the bargaining unit, Sipho Maseko’s era represents a regress in many areas.

“His era was characterised by massive job losses and selling of the SOE's [state-owned enterprise’s] assets to make the balance sheet look good.”

Telkom is 50.5% owned by institutional investors, 40.5% held by government, 6.4% is owned by non-institutional investors, and the remaining 2.6% is held as treasury share.

The company has been offering voluntary retrenchment packages to employees since 2015 in a bid to reduce its wage bill.

In January last year, the telecommunications firm announced 3 000 jobs will be cut at the company. The process cost Telkom R1.5 billion.

When it announced the job cuts last year, labour unions slammed Telkom’s move to retrench thousands of employees, while paying over R100 million in remuneration to top executives.

In May 2019, Telkom cut over 2 000 jobs after it had also reduced permanent staff by 12.5% the previous year.

Telkom’s total permanent group workforce is now about 15 000, compared to 17 472 at the end of March 2018, which was a reduction of over 2 000 jobs in one year.

Telkom's staff count in 2013 was 21 209 and by 2015 was 18 333.

CWU’s Tshabalala believes these job cuts made Maseko a favourite of “short-sighted” board members and shareholders.

“To us, this was just an artificial profit-making exercise that is not sustainable. This led to an erosion of workers’ benefits and years without salary increases, but massive bonuses for the executives.”

According to Tshabalala, it was under Maseko’s watch that Telkom failed to use its advantage of being a monopoly with a broad customer base by failing to manage a transition from ADSL to fibre.

“It’s a fact that Telkom lost many of its long-time customers to new players in the market because the focus was on an artificial profit [rather] than to look at the business sustainability and the future.”

Furthermore, Tshabalala says opportunities for small, medium and micro enterprises (SMMEs) that were promised when Telkom created a concept called FutureMakers were squandered within two years of its existence.

“This was mainly because the big players stood to benefit at the expense of poor workers.”

When Maseko unveiled FutureMakers, the company’s enterprise and supplier development initiative, in 2015, he said the company was ploughing over R100 million into the development programme, focused on driving innovation in the ICT sector.

The initiative has reportedly supported more than 2 500 SMMEs by providing incubation, investment, connectivity and business development support services.

Tshabalala adds Telkom’s R2.67 billion acquisition of BCX in 2015 was not a well-calculated move.

The Telkom subsidiary has failed to make profit over the years. In its financial results for the year to 31 March 2021, Telkom said BCX continued to under-perform as it saw a 10% reduction in revenue.

BCX said the severe financial pressure experienced by customers led to reduced IT spend and delays in capital expenditure.

“The buying of BCX was another failure which, to date, has not made any profit. We trust the incoming group CEO will understand that Telkom has a major role to play in this country on a number of issues, including access and affordable Internet for all. Transformation, job creation and organised labour has a major role to play in building a sound a viable business,” Tshabalala concludes.

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