Remgro-controlled telecommunications company Dark Fibre Africa (DFA) has informed staff that it will embark on a restructuring programme that will include retrenchments.
CEO Andries Delport confirmed to TechCentral late on Monday that the company has initiated a consultation process under the Labour Relations Act that will lead to a not-insignificant reduction in DFA’s 660-strong headcount.
Delport declined to say how many employees will be affected by the restructuring, saying exact numbers will be determined through the consultation process.
The move comes just two months after Vodacom Group agreed to acquire a co-controlling interest, along with Remgro and New GX Capital, in a new entity made up of assets including DFA and its sister company, Vumatel.
Delport, who was previously Vodacom’s group chief technology officer, denied that Vodacom’s investment is the driver behind the cost-cutting exercise. “It’s unrelated to Vodacom or anything else. This is a plain business decision [by DFA],” he said.
The simple fact, Delport said, is that DFA has too many employees and its cost structure is too high in what has become a highly competitive market. Internal benchmarking against competitors has borne this out, he added.
Delport said the restructuring won’t simply be about retrenching staff. Rather, employees will be given the opportunity first to apply for voluntary separation packages. He emphasised that the company will not let go of key skills. It will also work at providing “mutual separation agreements”. Only after this will DFA retrench employees in terms of section 189 of the Labour Relations Act.
TechCentral can reveal that DFA will issue a media statement on Tuesday that states the following:
DFA must continue to evolve its business operations to ensure that the company is able to enhance its competitive ability, focus on its core capabilities and optimise its organisational structure.
This will enable the company to continue to deliver high-speed connectivity infrastructure in an efficient and competitive manner to the market.
This evolution towards a leaner and more agile organisation, which is significantly more efficient, has been largely dictated by the ongoing impact of Covid-19, a contraction in economic growth and the addressable market for services, as well as inflationary cost pressures, coupled with aggressive price competition in the market.
We will continue to review our processes and efficiency levels and align organisational structure to ensure increased network expansion opportunities. This will allow us to meet the changing needs of our clients who operate in a highly dynamic and competitive environment.
Considering these factors, DFA will be rationalising its headcount complement. We will be engaging and consulting with the affected employees on a range of restructuring options, that are expected to be concluded by the end of March 2022.
In November last year, it was announced that Vodacom would acquire a 30% equity interest in a newly formed entity, provisionally called InfraCo, that would house the DFA and Vumatel assets as well as certain fibre assets that Vodacom would contribute into the new business.
DFA and Vumatel parent CIVH would hold a 70% co-controlling interest in InfraCo and existing CIVH investors including Remgro and New GX Investments would remain invested in CIVH.
The proposed deal must still be approved by regulators, including the Competition Commission.
For the year ended 31 March 2021, CIVH reported net assets of R8.7-billion and an attributable loss to shareholders of R1.1-billion. – © 2022 NewsCentral Media