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Communication Workers Union alarmed by job losses at Telkom

The Telkom Group has issued section 189 notices to recognised trade unions representing employees of the company. Picture: Simphiwe Mbokazi

The Telkom Group has issued section 189 notices to recognised trade unions representing employees of the company. Picture: Simphiwe Mbokazi

Published Feb 16, 2023


The Communication Workers Union has said it is alarmed by the scale of job losses in the information, communication and technology industry as a whole. This comes after the Telkom Group issued section 189 notices to recognised trade unions representing employees of the company.

The planned retrenchments will affect jobs in Telkom SOC, Openserve, and Gyro, but will also have an impact on a number of subsidiary companies within the group, including Perx and Smollan.

The union has condemned and rejected the decision by the company to slash jobs that will affect over 2 000 workers in a few months’ time.

Since the arrival of former Telkom Group CEO Sipho Maseko, the union has consistently warned against the euphoria surrounding the appointment of Maseko, who was widely hailed as the right person for the job.

The union said Maseko’s performance had been well masked in a revenue-driven era, but the truth was that there had been a decline in business at the telecoms giant. However, retrenchments and the disposal of property at intervals had created the perception that the company was doing well. Every two years there had been retrenchments, and every other year bonuses and dividends had been paid to the executives and board members at the entity.

However, the union said reports now indicated that this strategy was not sustainable and was detrimental to the very existence of the company. For example, while in 2014 the company had a net debt of R545 million, when Maseko left the company in 2022 this figure had ballooned to R16 billion (Daily Investor, January 4, 2023).

The union added that Telkom’s tactical move to acquire BCX and its neglect of its fibre rollout programme when there had been erosion of the copper network were clear indications nothing had been done to improve the company’s business performance and allow it to compete effectively in the telecoms space. In particular, the fibre-rollout project would have led to Telkom dominating the market.

The union said it had seemed that the appointment of new Group CEO Serame Taukobong would be a breath of fresh air, but unfortunately he appeared to be following in the footsteps of his predecessor, which would bring about disastrous end results that could lead to the complete closure of Telkom.

The company had been making job reductions every two years in the following sequence: 2014, 2016, 2018, 2020, and now 2023. The rationale behind the jobs bloodbath was always the same, although in recent years the losses had been justified by references to the release of spectrum, load shedding, and the effect of Covid-19 lockdowns.

The union said the reasons provided for the retrenchments were just feeble excuses to create “artificial profits” for the benefit of the executive, board members, and shareholders.

The union pointed out that during the Covid lockdowns the telecoms industry was in fact thriving, as most businesses relied on network (communications) to conduct the day-to-day running of their operations. This contradicted Telkom’s rationale for cutting jobs.

The champion and architect of the retrenchments process had been former CEO Sipho Maseko, who in the union’s view had implemented a Bain Consulting project at the entity. This led to the institution shrinking from being one of Africa’s telecoms giants to just an entity in South Africa.

The union said there had been consistency in the reasons behind the retrenchments since the arrival of Maseko, as they always adhered to the following pattern: (1) a decline in operating revenue, (2) a decline in voice revenue, (3) a decline in the EBIDTA margin, (4) increases in negative press cash flow, and (5) increased competition from global cloud providers (hyperscalers) and the over-the-top services.

This effectively meant Telkom management had been unable to surmount these challenges for almost 10 years, but continued to award themselves bonuses at the expense of workers.

The union said it intended to challenge the retrenchment process once again using all the available legal avenues.

It said it would also meet with its membership to decide on the mass-based action to be taken going forward.