Telkom sets staff cost target - TechCentral

Telkom sets staff cost target

Telkom's head office complex in downtown Pretoria

Telkom’s head office complex in downtown Pretoria

Telkom wants to cut its ratio of staff expenses to revenue to 25% in the next five years, its acting chief financial officer Deon Fredericks has revealed.

In the 2014 financial year ended 31 March, the ratio was 28,6%, down from 29,8% in 2013, a decline of 3,7%.

The telecommunications operator, which employs in the region of 20 000 people, reported earlier this month that employee expenses had declined by 2,7% to R9,3bn on revenue that rose by 1,1% to R32,5bn. Total operating expenses fell by 2,1% to R18,2bn.

In 2014, salaries and wages cost Telkom R7,1bn, up by 2,5% on 2013, while benefits paid amounted to R2,3bn, an increase of 6,6%. There was a R710m cost associated with voluntary severance and early retirement packages and an additional R75m for “workforce reduction expenses”.

The company has begun engagements with labour unions about further rationalisation, which includes removing management layers from the organisation in a bid to cut costs further as competition in the telecoms industry intensifies.

The Communication Workers Union has already vowed to resist the latest round of job cuts, which involves more than a thousand employees. “This public asset has already shed thousands of jobs and cannot afford another major jobs bloodbath,” the union’s acting general secretary, Thabo Mogalane, said recently.

But Maseko says it’s unlikely that job cuts will become a permanent fixture at Telkom. He hopes government directs a large amount of spending to the company to roll out broadband infrastructure to underserviced parts of the country. “The national broadband plan is coming and that will be a huge capital programme,” he says. “We have the people and the capability to do that.”

He says, too, that outsourcing Telkom services could also help save jobs. “Instead of being done in-house, can’t we get some services supplied externally?” he asks. “We are looking at the owner/driver scheme that [brewing giant]SAB has implemented. We can get the right levels of productivity, and respond to the country’s challenges around enterprise development. It’s empowering because it’s giving people an opportunity to run and manage their own businesses.”

This forms part of “a range of options” that Telkom is considering that “don’t necessarily lead to job losses”, Maseko says.  — © 2014 NewsCentral Media

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