Telkom to spend R1.5 billion on cutting staff

The first phase of Telkom’s current retrenchment process will cost the company R1.5 billion.

Telkom made the announcement in a SENS notice this afternoon.

“Telkom has issued Section 189 Notices in terms of the Labour Relations Act to employees and started the process of consultation to restructure the business for future competitiveness,” said Telkom.

“Telkom has also offered voluntary severance and voluntary early retirement packages as an alternative to retrenchments. Telkom initiated the first phase of the process of the VSP, VERP, and Section 189 Notices at a total cost of approximately R1.5 billion, which will have a negative impact on the FY2020 earnings.”

The cash outflow related to the company restructuring is expected in the first half of the new financial year, said Telkom.

Two-phase process

The company went on to state that this is phase one of a two phase restructuring process.

“The restructuring process follows the technological shift to fibre, LTE/LTE-A as new sources of revenue, notwithstanding lower margins. This has been compounded by a rapid decline in our traditional high margin fixed voice business, in line with global trends,” said Telkom.

According to an internal Telkom document seen by MyBroadband in February, 1,677 Telkom Group employees had requested voluntary severance and voluntary early retirement packages.

“A total of 1,677 requests for voluntary severance and voluntary early retirement packages have been received from Openserve and Telkom Consumer employees,” stated the document.

Yellow Pages received 53 requests.

This followed news breaking in January that Telkom would offer employees voluntary separation packages as part of its plan to reduce the number of staff at the company.

Payouts to staff based on the number of years they had worked at Telkom was part of the offer.

Telkom told staff that the cuts will take place in two phases:

  • Phase 1: Openserve, Group IT, and Consumer will be affected between January to April 2020.
  • Phase 2: Corporate Centre and Telkom SOC Support (HR, finance, procurement) will be affected between May to August 2020.

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Telkom to spend R1.5 billion on cutting staff