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8 July 2014

Telkom states facts on restructuring process

8 July 2014
 
Telkom would like to place on record the facts surrounding its restructuring process to dismiss the baseless allegations by labour unions regarding the process and criteria under consideration.
 
Prior to and throughout the restructuring process Telkom has consulted with all stakeholders including representative labour unions to ensure that the facts are consistently communicated.
 
The company rejects allegations that race is being considered as the only criteria for the placement of employees in Telkom’s new structure. The fact is that Telkom’s focus is on retaining the right skills for its turnaround strategy and will consider several criteria throughout its restructuring process.
 
These criteria include qualifications and experience; the employee’s potential; the last in, first out principle when more than one employee qualifies for appointment into the same position and employment equity. It is important to note that employment equity is only one of the four criteria applied to this process and that Telkom, as any South African company, is required in terms of the Employment Equity Act to comply accordingly.
 
Allegations that Telkom will target 9500 employees in the next six months are also unfounded.
 
In fact, the entire management pool that Telkom seeks to reduce from, in the consultative process currently underway, is made up of 2 650 managerial staff. The company is not targeting specific numbers of individuals; it aims to reduce the number of management layers and achieve an employee cost : revenue ratio of 25% over the next 5 years. Employee costs currently make up 30% of revenue.
 
The objective is to bring leadership closer to customers by removing unnecessary layers of management, which will improve customer service and experience. Alternatives such as outsourcing and joint ventures may also be explored as part of the business and organisational restructure in the future.
 
Telkom undertook a thorough review and investigation of all options before deciding to issue a Section 189 notice these include offering voluntary separation and early retirement options, expanding and diversifying revenue base, reducing costs and divesting from non-performing investments.
 
This restructuring process is an imperative for the survival of the business into the future and its success.
 
Telkom has underperformed for several years as its share of market in fixed voice and data continues to decline and fixed to mobile substitution has intensified competition. The fixed voice market makes up more than half of Telkom’s revenues, and is in decline.
 
The intention is to build the right organisation for the future by improving the business performance and unlocking efficiencies. The company will continue to explore other avenues that can assist with cost reduction in all areas of the business.

For further enquiries, please contact:

Pynee Chetty

Senior Specialist: Media Relations

Group Communication

Tel:+27 12 642 1716

Mobile: +27 81 389 7874

Email: chettpr2@telkom.co.za

 OR

Leigh-Ann Francis

Specialist: Media Relations

Group Communication

Tel: +27 12 642 1728

Mobile: +27 81 391 4780

Email: francilm@telkom.co.za

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ABOUT TELKOM:

Telkom is a leading communications services provider in South Africa. We had consolidated operating revenue of R16.8 billion and normalised profit after tax of R1, 683 million for the period ended 30 September 2015. Total assets amounted to R41.9 billion and equity attributable to the owners of Telkom to R23.5 billion as of 30 September 2015. The group generated normalised free cash flow of R1.4 billion for the period ended 30 September 2015.

As of 30 September 2015, we had approximately 3.3 million telephone access lines in service and 1,030,441 ports connected via MSAN access. We offer business, residential and payphone customers a wide range of services and products, including:

  • fixed-line retail voice services using PSTN (Public Switched Telephone Network) lines, including ISDN (Integrated Services Digital Network) lines, and the sale of subscription based value-added voice services and calling plans;
  • fixed-line customer premises equipment rental and sales services both voice and data needs and these include PABX, Computers, Routers, Modems, Telephone handsets and other ancillary equipment;
  • interconnection services, including terminating and transiting traffic from South African mobile operators, as well as from international operators and transiting traffic from mobile to international destinations;
  • fixed-line data services, including domestic and international data transmission services, such as point-to-point leased lines, ADSL (Asymmetrical Digital Subscriber Line) services, packet-based services, managed data networking services and internet access and related information technology services;
  • Data Centre Operations includes e-commerce, application service provider, hosting, data storage, e-mail and security services;
  • W-CDMA (Wideband Code Division Multiple Access), a 3G next generation network, including fixed voice services, data services and nomadic voice services;
  • mobile communication services, including voice services, data services and handset sales through our mobile navbar-brand called Telkom Mobile;
  •  information and communication services including cloud services, infrastructure services, workspace services, global service integration management and hardware and network equipment sales locally, in seven African countries, the UK and Dubai through Business Connexion Group; and
  • other services including directory services, through Trudon (Pty) Ltd, wireless data services, through Swiftnet (Pty) Ltd.

Convergence is one of our key strategic initiatives in building a sustainable future for Telkom.  We will lead the provision of converged services in South Africa in support of our mission statement: Seamlessly connecting people to a better life.