South Africa's Telkom could cut 3,000 jobs: letter to unions

JOHANNESBURG (Reuters) - South African telecoms company Telkom SA TKGJ.J told unions on Wednesday it could cut up to 3,000 of more than 15,000 staff as it struggles with declining performance in fixed voice and fixed data services.

FILE PHOTO: A shopper walks past a Telkom shop at a mall in Johannesburg February 26, 2016. REUTERS/Siphiwe Sibeko

Like other African telecoms firms, Telkom, in which the government holds a stake of about 40%, is trying to keep pace with a surge in demand for the internet and data with growing smart phone usage.

It is also grappling with organizational and operational inefficiencies linked to fixed voice and data services, which require more staff to install, maintain and market, it said in a letter to unions seen by Reuters.

The telecom provider said it will consider voluntary severance and early retirement packages for employees affected by phase one of the job cut, which will affect employees at Openserve and the Consumer divisions from January to April.

The affected jobs include support employees, specialist, operational employees and supervisory and management levels in its wholesale division Openserve, the consumer unit as well as in its corporate center.

The announcement comes two days after retailer Massmart Holdings MSMJ.J, majority owned by U.S. retail giant Walmart WMT.N, said it could cut up to 1,440 jobs under a plan to close some stores as it struggles to grow sales in a tough economy.

Telkom, which runs South Africa’s biggest fixed-line telecom network, is migrating customers to mobile voice and data as well as fiber, where it is one of the small players in a market dominated by Vodacom VODJ.J and MTN Group MTNJ.J.

“The deterioration in the economic climate, increased operational, regulatory and competitive constraints, coupled with continuing rapid migration from fixed voice and data business have all had a major ongoing negative operational and financial impact on Telkom,” it said.

“For Telkom to survive the current and anticipated tough trading conditions, it is imperative to seek and implement measures which will drastically reduce costs, eliminate inefficiencies and improve operational and financial performance in the interest of securing its continued commercial viability and employment for the majority of the employees.”

Telkom said it wants a leaner structure in its Openserve and group IT division and a focused skills set in line with the new business demands of a mobile focused business. While in consumer, the unit needs to be more market driven and customer focused.

Reporting by Nqobile Dludla; Editing by Susan Fenton and Elaine Hardcastle