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Telkom to cut 24% of workforce

To be more competitive against Vodacom, MTN.
Telkom SA SOC Ltd. plans to eliminate at least 24% of its workforce as Chief Executive Officer Sipho Maseko seeks to make Africa’s dominant landline provider more competitive against Vodacom Group Ltd. and MTN Group Ltd.
About 4,400 staff will leave Pretoria-based Telkom through voluntary severance and early retirement, according to spokeswoman Jacqui O’Sullivan. Telkom employed 18,333 people as of March 31. The carrier also plans to outsource as many as 3,400 positions, although some of the workers affected may receive Telkom contracts in the future, she said.

Telkom shares fell as much as 2.6 percent in Johannesburg.

Telkom confirmed the numbers, which were disclosed in a Tuesday statement by the unions after a meeting with managers. Telkom is revamping its operations to revive earnings as consumers switch to data-enabled smartphones and tablets from landlines. The phone company is also trying to increase profit at its mobile service, South Africa’s fourth-biggest, and boost sales of its Internet offering.

“These are critical actions we need to take to ensure the long-term sustainability of our business,” O’Sullivan said.

Telkom’s average revenue per employee was R1.7 million in the most recent fiscal year, according to data compiled by Bloomberg. That compares with R15.7 million for Vodacom and R6.7 million or MTN, Telkom’s largest rivals in South Africa.

Telkom said it will have about 4,000 full-time workers in its new wholesale and networks business.

“We remain committed to collaborating with organised labor in the best interest of Telkom and its people,” O’Sullivan said.

©2015 Bloomberg News

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Good luck convincing the unions…. you’ll need it. Wonder what the PIC and government will say about this? Highlights the contradictions inherent in having the government (and gov pensions) owning a large chunk of a business. Theoretically they should want the best return on their investment but in reality they are more concerned with employment and will apply pressure on Telkom to keep many inefficient/redundant employees.

The PIC will welcome this move … it boosts the profitability of Telkom, allows the PIC to sell its stake in the short term and then invest the money in Eskom. The people who are being shown the door are unlikely to find alternative employment, they will draw down on their pension funds to survive, the Govt Pension fund who will probably also “invest” in Eskom will become strapped and the whole thing will collapse …. it cannot happen soon enough. Before we can start to fix this economy I think that the ANC needs to have properly stuffed it up, get voted out and then we can start.

The anc properly stuffed it up years ago. Right now the country is running on fumes.

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