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Telkom to cut half 19 000 workforce

Job cuts in an attempt to reduce Costs – union.

Telkom SA SOC Ltd. will cut about half of its workforce as Africa’s largest fixed-line operator seeks to reduce spending and help stabilize the business, according to a labor union.

Telkom will start the process of firing more than 9,500 of its 19,000 employees within the next six months and will focus on the field-services division, South African Communications Union General Secretary Karriem Abrahams said by phone today. The Pretoria-based company had planned to cut a third of its employees, Chief Executive Officer Sipho Maseko said late last year. Telkom is meeting unions on July 10 and 11, the union said in an e-mailed statement.

“We are going to court,” Abrahams said. “Last year Telkom made an 11 billion-rand ($1 billion) loss; this year there’s a 3.9 billion profit. Last year there wasn’t a need to retrench.”

The company plans to reduce its costs by 5 billion rand through job cuts after it halted years of sliding sales partly caused by falling fixed-line usage. Maseko said earlier this month that he predicts stable revenue through 2017.

“Telkom dismisses the speculation that it intends to retrench 9,500 employees,” spokesman Pynee Chetty said in an e- mailed response to questions. “The company is not targeting specific numbers of individuals. The aim is reduce the number of management layers and achieve an employee cost-revenue ratio of 25 percent over the next five years.”

Telkom gained 0.4 percent to 48.62 rand by the close in Johannesburg. The stock has increased 74 percent this year, the best performer on the FTSE/JSE Africa All-Share Index after Sibanye Gold Ltd.

©2014 Bloomberg News

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