South Africa’s third-largest mobile network operator Telkom says that almost 1,200 employees have accepted its voluntary retirement or severance packages as it continues to restructure its business.
The group recently posted a massive R10 billion loss in its latest annual results, driven by impairments and other investment costs. Telkom’s business operations have come under massive pressure from a highly competitive market and an adverse trading environment brought about by overall weaker economic conditions in the country.
The group announced a restructuring process in February 2023, where it extended voluntary early retirement packages and voluntary severance packages to all employees in the group.
More than 1,700 employees were affected, and as a result, restructuring costs of R1 billion were recorded during FY2023. To date, 1,165 employees have accepted voluntary severance and early retirement packages, Telkom said, adding that the consultation processes are continuing and are expected to be concluded in the first half of FY2024.
The costs associated with the voluntary packages were included in Telkom’s pro forma adjustments and contributed to the reported R10 billion loss. The packages carry a related tax impact of R277 million. According to the group, it currently employs 11,624 workers across all its operations, down 2.3% from 2022.
Following the retrenchment and retirement process, this will be down significantly. Telkom Company saw the most significant employee shift, with Openserve being spun off independently, taking 5,647 employees out of the basket and listed separately.
At the time of announcing the retrenchments, Telkom said that it was one of several measures it was initiating to bring down its cost base.
The impact of ongoing load shedding for the quarter and the increased mobile network footprint resulted in a higher cost base for the Group. This, coupled with the required investment in working capital to optimize the Mobile subscriber base mix, negatively impacted Telkom’s profitability for the current financial year to date.
A number of initiatives are already in progress to address the group cost base. These are aimed at rebasing our cost structures. The benefits of these initiatives are expected to be visible in the medium term from FY2024 onwards.
Telkom
