Telkom to retrench 15% of staff, starts internal consultations

South African state-owned telecommunications company Telkom is set to retrench 15% of its workforce.

As the third-biggest mobile operator, Telkom announced the news on Tuesday, saying it would begin workplace consultations on internal restructuring that is expected to affect 15% of its workforce.

Media reports suggest that the Section 189(a) process will impact all business units and subsidiaries as it is intended to ensure the sustainability of the group, it said.

“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 said in a statement.

Section 189 of the Labour Relations Act allows an employer which is considering large-scale dismissals to undergo a consultative process to determine whether such dismissals are deemed necessary to keep its operations going.

Valued at about R20 billion on the Johannesburg Stock Exchange, the company has been battling for years with a steady decline in its legacy fixed-line business, with fixed voice revenue declining almost double digits in its 2022 year.

This resulted in group revenue falling slightly and the telecoms company has been pushing into mobile services and migrating from traditional copper to fibre.

“Telkom employed just under 12 000 people as of the end of its 2022 year, which is down from just over 15 000 in its 2020 year, and over 18 000 in 2018,” said Fin24.

“The company didn’t incur restructuring costs in 2022, but moves to reduce its workforce, including through voluntary severance packages, cost it R270 million in 2021.”