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14 October 2014

Telkom update on organisational restructuring

Telkom’s turnaround strategy and organisational restructuring has attracted much attention in recent days. This journey is informed by a number of complex and demanding considerations that are key to the successful execution of the process.
In April this year, as part of the larger Telkom turnaround strategy, the company began specific discussions with representatives from organised labour. These discussions focused on the initiation of an organisational restructuring process that would result in some headcount reduction.
Telkom’s commitment, throughout these discussions, has been to conduct this difficult process with respect to both the letter and the spirit of South Africa’s labour laws. An independent mediator has been used to facilitate all the discussions, in the best interest of all affected parties.
The staff that have been affected by this organisational restructuring, has been limited the management and specialist layers. Telkom engaged with labour on all elements of the process, including the timelines to be followed.
In line with these agreed upon timelines, each affected individual was given two opportunities to apply for positions, with the new structures. Staff were also engaged to suggest alternate options, such as the voluntary severance packages and voluntary retirement options.
At the end of September, the “Section 189” process was concluded, for the affected staff. As per the agreed upon process, staff whom had not been appointed into a new role by the end of September, were at the end of the “Section 189” process and were therefore issued with notices of termination. The period of service, for those affected individuals, concludes at the end of October.
Throughout this difficult time, Telkom has always sought to pursue any reasonable measure to retain qualified and experienced staff.
To this end, Telkom has also informed all affected staff that they are eligible to apply for any roles that may become available through normal staff movement processes, such as resignations or transfers, during their notice month of October. This offer is not part of the “Section 189” process but is a separate action by the company as a final attempt to place affected candidates.
The intention of the Telkom turnaround strategy is to secure the future commercial sustainability of the business. There should be no doubt, the sustainable success of this company is largely dependent on both the attraction and retention of qualified, competent and experienced professionals.
Simply placing people into positions, regardless of their competencies, qualification or experience just to avoid their retrenchment, would be a huge disservice to the business. While we respect labour’s right to protect their members, Telkom must place the right people in the right structures and roles. The organisational restructuring has not been driven by headcount reduction targets, but rather by business imperatives that will shape the long-term commercial sustainability of the company. Telkom will therefore not be withdrawing the Notices of Termination that have been legitimately issued in line with the agreed upon process.
“This turnaround is a tough journey. These staff reductions have resulted in high levels of anxiety and we remain committed to doing all we can to limit the impact of these changes on our people. We do, however, need to remain focused to deliver on our collective future success”, said Sipho Maseko, Telkom Chief Executive Officer.

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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.