Cell C, South Africa’s third-largest telecoms company, said 960 positions out of 2 500 might be affected by the restructuring, in line with the new operational structure. Photo: Simphiwe Mbokazi African News Agency (ANA)
Cell C, South Africa’s third-largest telecoms company, said 960 positions out of 2 500 might be affected by the restructuring, in line with the new operational structure. Photo: Simphiwe Mbokazi African News Agency (ANA)

Cell C considers axing 40% of staff in shake-up

By Dineo Faku Time of article published Jun 22, 2020

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JOHANNESBURG – Beleagured Cell C has proposed cutting up to 40 percent of its workforce as part of a new operational structure, only weeks after the Competition Commission approved its recapitalisation transaction.

Cell C, South Africa’s third-largest telecoms company, said 960 positions out of 2 500 might be affected by the restructuring, in line with the new operational structure.

“Cell C can confirm that it has reached a difficult decision and initiated discussions with junior management and semi-skilled staff to implement a restructuring of its operations to align the organisation with its new operating model,” the company said on Friday.

The group said it was in the process of consulting staff. “This current consultation process in terms of section 189A (2) of the Labour Relations Act advises staff of the possibility of redundancy of certain positions and possible retrenchments,” said Cell C.

It said a final decision had not been made and the consultation process with employees was to obtain input for consideration before a final decision.

The organisational shake-up would also affect 30 senior managerial posts, the company added.

Cell C, which was recapitalised in 2017, when Blue Label Telecoms acquired a 45 percent stake for R5.5 billion, is drowning in R9bn debt. It required a debt restructure or recapitalisation to avoid further defaults on its debt repayments.

Cell C has generated losses for many years, and in an effort to become sustainable the company shifted from a build-and-buy strategy to a roaming model. It also implemented a turnaround strategy last year. 

Cell C said on Friday that it had become necessary to review its operating model and organisational structure.

“It is the company’s view that over time the operating model has resulted in several inefficiencies. This is contributing to the operating and financial challenges the company currently faces.”

Last month, the Competition Commission approved the company’s proposed recapitalisation transaction to help the group keep afloat.

The approval gave Gatsby SPV, a shelf company, the green light to acquire certain of Cell C’s assets on condition that Gatsby was not owned by companies that competed with Cell C. 

Thabang Mothelo, spokesperson for the Information Communication Technology Union (ICTU), said the proposed cuts had come as a surprise given the recapitalisation transaction and green shoots in the second half of 2019.

“ICTU is enraged by this unlawful notification because Cell C hasn’t officially notified the union about its plans to retrench and why it is violating the conditions set out in the recapitalisation application…” said Mothelo, adding that job security was one of the key conditions for the recapitalisation.

“One of key conditions was that recapitalisation support by the Competition Commission would include guaranteeing job security of workers,” said Mothelo.

Mothelo said the union understood that Cell C’s financial performance had steadily improved before the lockdown, and it had performed even better under lockdown.  

BUSINESS REPORT

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