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
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.