Telkom SA shedding 15% of workforce

Telkom South Africa has confirmed it is planning to lay off up to 15% of its workforce as part of a new restructuring program to cut costs.

"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," the operator explained in a statement to shareholders.

The partially state-owned operator has started a formal consultation process for retrenchments which it said "will impact all business units and subsidiaries" and is intended to ensure the sustainability of the group in the long term.

Telkom's planned job cuts add to a rising global trend of redundancies in the tech industry. Google, Microsoft and Amazon are planning to cut a combined 40,000 employees this year following thousands of job cuts at companies like Meta and Twitter last year.

Waning workforce

This is not the first time Telkom has implemented a major cut to its workforce; it has been systematically reducing staff over the past few years as the company evolves away from legacy broadband technologies like copper and moves customers over to either fiber or wireless options, which tend to have lower profit margins.

Telkom's staff count in 2013 was a massive 21,209 employees, but by 2017 it had dropped to 18,847. In 2019 it was reduced further, to 15,197 workers.

In 2020, Telkom shed another 3,000 jobs, or a fifth of the workforce at the time.

At the end of September 2022, Telkom had 11,788 staff so a planned 15% reduction in that number would mean around 1,768 jobs are on the line in 2023.

As part of a trading update for the quarter ended December 31, 2022, Telkom reported that group revenue was up just 2.3% year-over-year (YoY) to R11 billion (US$613 million), while group earnings before interest, tax, depreciation and amortization (EBITDA) dropped 13.5% to R2.5 billion (US$139 million).

The EBITDA figure was impacted by increased power cuts in South Africa, known locally as load shedding, which resulted in a YoY increase of more than R150 million (US$8.4 million) in additional costs in the quarter alone.

*Top image source: Image by Drazen Zigic on Freepik.

— Paula Gilbert, Editor, Connecting Africa