Telkom announces retrenchments

Telkom has announced that it will begin formal proceedings to restructure the company in terms of section 189 of the Labour Relations Act.

Section 189 (S189) governs how South African companies should conduct layoffs.

“The S189A process will impact all business units and subsidiaries and is intended to ensure the sustainability of the group,” Telkom said in a notice to shareholders on the JSE news service.

Telkom expects the retrenchments to impact up to 15% of employees across the company.

This places 1,768 staff at risk. During its half-year results released in November, Telkom reported that it had 11,788 employees across the group.

“As the group manages the delicate migration of revenue between old to new technologies, it is challenged with managing the costs associated with the different technologies, the competitiveness and sustainability of the group,” it stated.

“For Telkom to navigate the migration to new technologies as well as current economic headwinds effectively, the Telkom Board has supported that management start a consultative process aimed at restructuring the organisation to meet future demands.”

In an internal email to staff MyBroadband has seen, Telkom CEO Serame Taukobong said the impact of sustained load-shedding has put pressure on the company’s costs.

“This is not a decision that was taken lightly,” Taukobong said.

“I am conscious of how unsettling these times can be as we try to work through the consultative processes and continue to service our customers and clients as best we can.”

Telkom released a quarterly trading update today showing 2.3% revenue growth and a 13.5% drop in earnings before interest, tax, depreciation, and amortisation (Ebitda).

The company said it would embark on cost-saving initiatives and hopes to return to a blended group Ebitda margin of 25% in 6–18 months.

It had also warned shareholders about substantial up-front costs related to its cost-cutting initiatives — alluding to pending job cuts and voluntary severance schemes.

Telkom said the once-off costs would impact profitability in the current financial year.

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Telkom announces retrenchments