Telkom is set to cut its workforce by up to 15%.
The company stated today that it has entered a formal consultation process with relevant stakeholders in terms of section 189 of the Labour Relations Act (S189A process) regarding the restructuring of certain operations.
The S189A process will impact all business units and subsidiaries and is intended to ensure the sustainability of the group.
“As the group manages the delicate migration of revenue between old to new technologies, it is challenged with managing the costs associated with the different technologies, the competitiveness and sustainability of the group,” according to the statement.
“Management has therefore embarked on a restructuring programme, which includes the S189A process, to optimise group costs in line with evolving technology capabilities and demands.”
The S189A process is expected to impact up to 15% of total employees across the group.
The news comes as Telkom issued its trading update for the quarter ended 31 December 2022, with group revenue up 2,3% to R11 031-million and group EBITDA down 13,5% to R2 492-million.
Telkom Mobile experienced growth, with mobile revenue up 7% to R5 685-million. mobile service revenue up 4,5% and handset and equipment revenue up 17%.
Mobile data traffic and subscribers were up 25,6% and 12,9% year-on-year (y-o-y) to 309 petabytes and 18,6-million subscribers respectively, while mobile broadband customers increased 9,9% to 11,5-million, comprising almost 62% of active mobile customers.
Openserve’s new generation revenue growth was sustained, with fixed data traffic up 15% to 492 petabytes, and a fibre to the home (FTTH) connectivity rate of 45,9%.
IT business revenue at BCX was up 8,8% to R1 587-million. The company acquired cloud consulting services business to increase capacity and drive growth in line with increased cloud demand.
Meanwhile, Swiftnet continued commercialising at healthy margins, with revenue increasing marginally despite terminations, an additional 14 towers and three IBS sites being constructed, and a total EBITDA margin of 69,5% achieved.
Group CEO Serame Taukobong comments: “Our mobile and broadband strategies continued bearing fruit. We saw good growth in broadband as our data-led and connect-led strategies continued to drive growth in mobile and fibre subscribers along with data usage.
“Mobile broadband customers now comprise almost 62% of total active mobile subscribers, while Openserve’s open-access network gained traction as external channels advanced to contribute more than 30% of its total revenue.
“Telkom navigated challenging trading conditions in the quarter and grew group revenue by 2,3% driven by continued growth in new generation technologies and increased data consumption,” Taukobong adds. “We focused on offering attractive value propositions to customers in our Mobile business which advanced subscribers, while the focus on the smart deployment of the fibre infrastructure saw Openserve record a sustained increase in the broadband base.
“Demand for information technologies solutions and equipment by enterprise customers continued at BCX as the IT hardware and software business improved the fulfilment of backlogged and new orders.”
However, despite good top line growth and the ongoing optimisation of roaming costs, the migration of legacy products to NGN offerings, Telkom’s investment in post-paid to drive higher annuity revenue from this base, and the impact of sustained nationwide load shedding put pressure on costs, EBITDA and cash flows, Taukobong adds.
“We are mindful of these impacts on the future of our businesses and we have thus embarked on cost saving programs to be implemented with sustainable benefits materialising over the next six to 18 months to mitigate cost pressures and improve the group’s medium-term profitability.”