Telkom today announced the next steps in its strategy to position the company for a more competitive environment and to ensure its sustainability over the long term.

Telkom respects the decision of the Labour Court handed down last week (8 July 2015). In line with the judge’s order, Telkom immediately withdrew the Section 189 notices on the same day the order was issued, with regard to the technology and centre for learning divisions.

We have to take decisive action to curtail further business losses and have therefore decided to look at a number of cost containment options. Some of these measures will require engagement with organised labour, which will be initiated as and when required. The measures include but are not limited to:

• A wage freeze
• Investigating flexible working hours (flexi-time)
• New methodologies to improve productivity
• Upgrading employees’ skills
• Reduced working hours in the form of a shorter work week
• Potential outsourcing options
• Voluntary severance packages (VSPs) and voluntary early retirement packages (VERPs)

Packages on offer will be significantly more generous than those required by law and will be available to all non-unionised staff as from today. Telkom will engage with organised labour and will be seeking the consent of the unions to extend the offer to union members as well.

“We must take urgent steps to place the business on a stable footing,” said Telkom CEO Sipho Maseko. “My executive team and I believe these measures are necessary as our business is simply not sustainable in its current form. Our revenue to staff cost ratio remains significantly higher than industry norms. Compared to similar-sized telecommunication companies we have up to 30% more full time employees than our peers. This makes it increasingly difficult for us to compete.”

In the last eighteen months, Telkom has successfully delivered on a number of areas of focus within its multi-year turnaround strategy. We have renegotiated contracts worth over R10bn, sold properties worth more than R750m, and have consolidated our head office into a single location.

“We have to make the difficult decisions now to safeguard the future livelihood of the majority of our employees and to ensure the company remains an important contributor to economic growth, an attractive investment for shareholders, and a vehicle for social transformation. Telkom will only remain relevant if it becomes a more agile, competitive organisation than the one it is now,” concluded Maseko.

From the outset of this turnaround strategy we have consistently committed to engage fully with organised labour and this position has not changed. We want to see progress in our discussions with organised labour.