Telkom’s share price up on news of consultation
JOHANNESBURG - Telkom's share price leapt 2.55 percent to close at R35.76 on the JSE yesterday after it said that it had begun the process of consulting organised labour regarding alternatives to its plan to retrench 3000 workers.
Telkom, which is 40percent state-owned, said that rapid changes in technology remained a key challenge for the group. “While Telkom has made the necessary investments in new technologies and revenue streams, particularly in the fast-growing mobile business, this has taken its toll on profitability,” the company said.
It said the management was pinning its hopes on the company’s ongoing investments in the mobile business.
Telkom said that it had seen a sharp decline in fixed-voice and interconnection revenues across the group, as customers shift towards new technologies, such as fibre to the home. Fixed voice had previously made-up more than half of Telkom’s gross revenue.
“This trend will continue. Further, Telkom has been competing in a duopolistic mobile market, in which the two largest players have virtual control over voice and data prices. The group is optimistic that the data services Market Inquiry will yield firm regulatory action to stimulate competition in South Africa’s mobile market,” the company said.
Telkom last Wednesday issued a notice of retrenchment for 3000 employees, citing an increasingly tough operating environment.
It said that the consultation would be facilitated by the Commission for Conciliation, Mediation and Arbitration.
The group said a difficult macroeconomic environment was confronting all companies operating in South Africa, with gross domestic product per capita declining, because economic growth is lagging population growth.
“Telkom is having to reposition itself amid fundamental changes within the telecommunications industry,” it said.
The Communication Workers Union secretary-general, Aubrey Tshabalala, yesterday blamed the government as the majority shareholder in Telkom for dragging its feet concerning Telkom.