TELKOM has hired one of South Africa’s top labour mediators to resolve the impasse with trade unions over its restructuring programme, CE Sipho Maseko said on Thursday.
The group’s communication to unions on the restructuring had been "misunderstood", he said.
Telkom is undertaking an urgent turnaround plan to prop up its slipping market share and streamline its cost structure, which will result in job cuts. Now the company has hired labour mediator Charles Nupen to oversee the consultation process with unions over job cuts.
Mr Maseko said the consultation process could be completed in the next two weeks.
"I think we misunderstood each other along the way.
"The company called them (trade unions) to workshops, which in fact were supposed to be the consultation processes."
The fixed-line company’s plan to cut its employee cost-to-revenue ratio by an estimated 33% was stalled after unions successfully challenged the process the company had followed on initiate job cuts.
Telkom’s employee cost-to-revenue ratio is about 30%; global best practice for fixed-line telecoms companies is 20%.
Mr Maseko hopes to achieve a 25% level over the coming five years. One way to do that is to grow revenue, but the intense competition from more nimble competitors in the domestic telecoms and data market limits the possibilities this option offer. "The absolute employee numbers will become irrelevant if revenue rises," Mr Maseko said.
The other lever is staff cost cuts. Staff costs are one of a number of costs the company is reviewing.
But Telkom needs to act fast as its revenue is declining while employee expenses were R9.3bn for the year to March, down 2.7% from R9.5bn. The drop was attributed to a 9.5% fall in employees to 19,197.
Telkom has 2,650 managers, 1,000 of whom might lose their jobs, according to trade union Solidarity.
Mr Maseko would not comment on the number of managers who might be retrenched.
The head of equities and portfolio manager at JB Busha Asset Managers, Farai Mapfinya, said Telkom faced a tough balancing act. "Assuming flat revenue and average staff costs remain the same, they will need to cut more than 3,500 jobs to achieve their target ."
Telkom is also reviewing its fixed costs, unprofitable products, telephone exchanges, and property portfolio, including the possibility of moving its headquarters to Centurion, where it already has some offices.
Mr Maseko said the company had high fixed costs. This was caused in part by instances such as its continued maintenance of telephone lines it owned but that were not in use.
Further, Telkom was renegotiating agreements with suppliers and would launch "better" bundled offerings that included voice and data. The company hoped that would bring back customers who did not use their fixed lines.
The mobile infrastructure-sharing deal with MTN is another area that will reduce costs for Telkom.
"The size of our costs is not a problem, but they are fixed relative to the revenue that we get," Mr Maseko said. While the facilitation process would delay the restructuring process, he would rather not rush into reducing staff numbers.
Solidarity spokesman Marius Croucamp said the facilitation process, which started this week, might take longer than the two weeks Mr Maseko was hoping for. "In fact, legally, it may take three months ."
The consultation process has started from scratch. The trade unions and Telkom will have to present alternatives to save jobs, as part of their obligations under section 189 of the Labour Relations Act.
"We want to tell our members that we have done everything possible," Mr Croucamp said. "We are also mindful of the sustainability of Telkom."
The agreement to appoint a facilitator came after Solidarity successfully interdicted Telkom’s "flawed consultation process".
Mr Maseko said the issue of employment equity was not "adequately articulated". Employment equity would be used as a "tie-breaker" where managers were vying for the same posts and all met key requirements.
Telkom CEO Sipho Maseko. Picture: ARNOLD PRONTO
TELKOM has hired one of South Africa’s top labour mediators to resolve the impasse with trade unions over its restructuring programme, CE Sipho Maseko said on Thursday.
The group’s communication to unions on the restructuring had been "misunderstood", he said.
Telkom is undertaking an urgent turnaround plan to prop up its slipping market share and streamline its cost structure, which will result in job cuts. Now the company has hired labour mediator Charles Nupen to oversee the consultation process with unions over job cuts.
Mr Maseko said the consultation process could be completed in the next two weeks.
"I think we misunderstood each other along the way.
"The company called them (trade unions) to workshops, which in fact were supposed to be the consultation processes."
The fixed-line company’s plan to cut its employee cost-to-revenue ratio by an estimated 33% was stalled after unions successfully challenged the process the company had followed on initiate job cuts.
Telkom’s employee cost-to-revenue ratio is about 30%; global best practice for fixed-line telecoms companies is 20%.
Mr Maseko hopes to achieve a 25% level over the coming five years. One way to do that is to grow revenue, but the intense competition from more nimble competitors in the domestic telecoms and data market limits the possibilities this option offer. "The absolute employee numbers will become irrelevant if revenue rises," Mr Maseko said.
The other lever is staff cost cuts. Staff costs are one of a number of costs the company is reviewing.
But Telkom needs to act fast as its revenue is declining while employee expenses were R9.3bn for the year to March, down 2.7% from R9.5bn. The drop was attributed to a 9.5% fall in employees to 19,197.
Telkom has 2,650 managers, 1,000 of whom might lose their jobs, according to trade union Solidarity.
Mr Maseko would not comment on the number of managers who might be retrenched.
The head of equities and portfolio manager at JB Busha Asset Managers, Farai Mapfinya, said Telkom faced a tough balancing act. "Assuming flat revenue and average staff costs remain the same, they will need to cut more than 3,500 jobs to achieve their target ."
Telkom is also reviewing its fixed costs, unprofitable products, telephone exchanges, and property portfolio, including the possibility of moving its headquarters to Centurion, where it already has some offices.
Mr Maseko said the company had high fixed costs. This was caused in part by instances such as its continued maintenance of telephone lines it owned but that were not in use.
Further, Telkom was renegotiating agreements with suppliers and would launch "better" bundled offerings that included voice and data. The company hoped that would bring back customers who did not use their fixed lines.
The mobile infrastructure-sharing deal with MTN is another area that will reduce costs for Telkom.
"The size of our costs is not a problem, but they are fixed relative to the revenue that we get," Mr Maseko said. While the facilitation process would delay the restructuring process, he would rather not rush into reducing staff numbers.
Solidarity spokesman Marius Croucamp said the facilitation process, which started this week, might take longer than the two weeks Mr Maseko was hoping for. "In fact, legally, it may take three months ."
The consultation process has started from scratch. The trade unions and Telkom will have to present alternatives to save jobs, as part of their obligations under section 189 of the Labour Relations Act.
"We want to tell our members that we have done everything possible," Mr Croucamp said. "We are also mindful of the sustainability of Telkom."
The agreement to appoint a facilitator came after Solidarity successfully interdicted Telkom’s "flawed consultation process".
Mr Maseko said the issue of employment equity was not "adequately articulated". Employment equity would be used as a "tie-breaker" where managers were vying for the same posts and all met key requirements.
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