Telkom says court order is ‘temporary delay” to restructuring

By Gugu Lourie

Telkom said on Wednesday that the interim order granted by the Labour Court in Johannesburg to stop retrenchments is a “temporary delay” in its much-needed restructuring process of the business.

“We will study the full detail of the judgement to allow us to determine our next steps,” Telkom spokesperson Jacqui O’Sullivan said on Wednesday.

“While the judgment is disappointing, this is a temporary delay in the restructuring of Telkom, which remains a key business requirement for the future sustainability of the organisation.”

The judge has ordered that the dispute, which relates to information sharing, must be referred to the CCMA within five days.

The judge also ordered that the resolution should be expedited.

O’Sullivan added: “We will certainly adhere to that order and would agree with the judge that a swift resolution of the dispute would be beneficial. Once the ordered dispute resolution has taken place, Telkom will be in a position to continue with the very necessary business turnaround process.”

“Telkom has engaged extensively with organised labour and will continue to follow all required processes to ensure we continually seek to serve both the best interest of the business, as well as our people.”

Sipho Maseko, Telkom chief executive
Sipho Maseko, Telkom chief executive

Telkom – the lifeblood to the country’s banking industry that enables Absa, FNB, Nedbank and Standard Bank to operate their automatic teller machines (ATMs) – has endured a decade of declining business, during which time some observers have predicted its demise.

The company is also central to South Africa’s economic growth story – it provides telecoms solutions to the country’s big corporates among its other important functions.

At the heart of  Telkom’s decision to reduce the number of employees is the obvious desire to make the business leaner, agile and more competitive.

A leaner, agile and more profitable Telkom is good for the whole country.

During the year to March, Telkom reduced its net debt by 92.8% to R151 million and free cash flow increased to R3.9 billion.

CEO Sipho Maseko has been working on a turnaround for quite some time, but fortunately results are starting to show up in Telkom’s latest earnings.

The turnaround is gathering speed, Telkom recorded a normalised profit after tax of R2.7 billion versus R1.2 billion in 2014 and EBITDA of R8.97 billion compared to R7.79 billion in 2014.

Telkom has to follow through on its rightsizing of staff numbers while at the same time pursuing its other objectives that will make it a world class businesses capable of attracting highly-skilled global talent.


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