Financially distressed mobile operator Cell C expects to close 128 retail stores around the country, with 546 jobs on the line, as it moves to reduce costs and become a more sustainable business.
The company said it has expanded a section 189 process in terms of the the Labour Relations Act (LRA) to include the retail store footprint. Cell C operates about 240 stores nationwide, so just over half of these are set to be closed under the plan.
In June, Cell C said it had begun a consultation process under the LRA that would probably result in 960 employees — or almost 40% of the company’s workforce of 2 500 people — being retrenched. The job cuts were expected to affect mainly junior management and semi-skilled staff.
The retail environment has changed, and this has been fast-tracked by the impact of Covid-19 and the evolving purchasing habits of consumers
Earlier this year, senior management positions were aligned to Cell C’s revised operating model and new organisational structure. This process was completed in May and resulted in 30 redundancies.
The company said on Friday in response to a query from TechCentral that part of its turnaround strategy includes “evolving its business strategy and operating model in order to run a more efficient and competitive business that is aligned to customer needs and behaviours”.
“The retail environment has changed, and this has been fast-tracked by the impact of Covid-19 and the evolving purchasing habits of consumers,” it said.
“The section 189 process has been expanded to include the retail footprint. It is anticipated that 128 stores will be closed over a period of time and this will affect 546 positions. However, new digital ways of engaging and servicing customers will be deployed based on customer insights,” it added.
The consultation process commenced on 30 July and the company has since made a voluntary severance package offer to affected employees. “The process is still under way and no final decisions have been taken,” Cell C said.
The plan to close more than 50% of the company’s retail stores comes a week before Cell C’s largest shareholder, Blue Label Telecoms, reports its financial results for the year ended 31 May 2020. Those numbers will be presented to investors next Thursday.
Earlier on Friday, the Information Communication Technology Union (ICTU) called on Cell C’s management team, led by CEO Douglas Craigie Stevenson, to address workers on a range of issues, including the planned store closures, the recapitalisation of the company and why it is not meeting its debt repayment obligations.
On 4 August, Cell C said it was making “good progress” in what it called a “complex recapitalisation” aimed at ensuring it survives the debt noose around its neck.
“Discussions to seek alignment among all stakeholders are being held and term sheets must still be concluded, the operator said in a statement at the time.
“The focused company strategy and correctly capitalised balance sheet will lead to better leveraging of assets,” it said.
Craigie Stevenson said: “There is a belief in Cell C’s long-term prospects, and the new leadership team is focused on the journey to turn the company into a profitable, innovative player in the local telecoms industry and is confident the organisation will overcome its challenges.”
Duncan McLeod is Editor of TechCentral.
This article was first published on TechCentral, here.