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SA Telkom halts retrenchment process, to start new negotiations with unions [IntelliNews - Weekly Reports]
[July 20, 2014]

SA Telkom halts retrenchment process, to start new negotiations with unions [IntelliNews - Weekly Reports]


(IntelliNews - Weekly Reports Via Acquire Media NewsEdge) South African telecoms group Telkom has suspended its current restructuring and retrenchment process following an agreement with trade union Solidarity on Thursday, South African media reported, quoting a statement by Solidarity. The parties have agreed to start on Monday (July 21) new negotiations, managed by an independent facilitator, to discuss new criteria for the restructuring process. Last week, Solidarity, whose members are mainly whites, initiated legal proceedings against Telkom, alleging the company intended to use race as a criterion for layoffs.



In a statement on its website, JSE-listed Telkom has rejected allegations that race is being considered as the only criteria for the placement of employees in its new structure. It claims that the focus is on retaining the right skills for its turnaround strategy and will consider several criteria throughout the restructuring process, including qualifications and experience, the employee's potential, the last in, first out principle, as well as employment equity, which is required by the Employment Equity Act.

Telkom has also denied allegations by another labour union, the South African Communications Union (Sacu), that it plans to lay off 9,500 out of its 19,000 employees within the next six months, calling them "unfounded".


The majority state-owned company has not disclosed exactly how many jobs it will cut. It has only said that it plans to reduce its management staff, which currently comprises 2,650 employees, but is not targeting specific numbers of individuals. The goal is to reduce the number of management layers and lower the employee cost-to-revenue ratio to 25% over the next 5 years from 30% presently.

In May, Telkom's CEO Sipho Maseko said the company intends to cut ZAR 1bn (USD 93mn) in costs each year within the next five years in a bid to restructure its business and make it more profitable, adding that the initiative will affect all aspects of the business, including job cuts. The former fixed-line monopoly has previously failed to push through forced retrenchments due to fierce opposition from labour unions.

In addition to job cuts, Telkom's massive turnaround strategy includes expanding and diversifying revenue base, reducing costs and divesting from non-performing investments. Under it, the company has agreed to transfer the management of its mobile network infrastructure to MTN and has sold its loss-making internet service business iWayAfrica. It has also bid to buy out local information and communication technology group Business Connexion (BCX) for ZAR 2.7bn.

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