BCX’s scary warning to employees
BCX has informed employees and unions that it has started a Section 189 process, which is a fancy way of saying they plan to cut staff.
According to the company around 790 employees across all job categories and in all divisions will be impacted.
These planned staff cuts follow an exodus of senior BCX executives in recent months, which include CEO Ian Russell, CFO Refilwe Nkabinde, and COO Mike Buttner.
BCX lost its entire top structure in a matter of months, which creates uncertainty in a company.
The planned staff cuts will add further to employees’ worries, and BCX now runs the risk of losing its most productive employees who are not keen to hang around to find out if they will be fired.
The scary message from BCX
While staff retrenchments and replacing a full management team are just about as bad as it gets for a company, this is not the scariest part of BCX’s message to employees.
In its communication to employees and unions, BCX painted a picture of a struggling company without a clear way to dig itself out of this hole.
BCX said it has historically provided telecommunications and IT services, where its voice business constituted 50% of revenue in the telecoms division.
A decline in voice revenue has negatively impacted the financial position of the company, and this is not likely to stop.
The weak South African economy is also hurting the company, with a decline in demand for the products it offers.
The changing operating environment has further seen the company’s cost-to-income ratio increasing to a very high 82%. And it is set to increase even further to 87% in the next financial year.
It gets even worse
As if the decline in voice revenues and a decline in demand for its products are not enough, it is facing even bigger problems.
BCX admitted that its facing competition in all areas of the business, with its competitors offering comparable services at more competitive prices.
The proposed regulatory changes related to call termination rates will also hurt BCX’s financial position.
These problems, BCX said, forced it to restructure the company and cut staff to become more competitive and sustainable.
The restructuring process and dismissals are expected to take place in a phased approach.
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