Numsa gears up to fight Telkom

The National Union of Metalworkers of SA (Numsa) has added its voice to mounting calls from labour groups looking to stop proposed retrenchments at fixed-line operator Telkom that could cost up to 1,800 jobs.        

Numsa says it is preparing to defend jobs and fight against retrenchments at Openserve, the group’s fibre subsidiary.

Openserve is the country’s largest telecommunications infrastructure provider with the biggest fixed broadband network. The business operates the largest fibre network in SA. 

Numsa’s concern comes a week after the Communication Workers Union condemned Telkom’s plan to shed jobs as part of a cost-cutting exercise.

Last week, Telkom indicated it could shed 15% of its workforce as it announced it had begun a consultation process with affected employees as part of a wider effort to reduce costs and increase profitability.

The latest staff number is from September 2022 at 11,788 employees. 

The group is also looking to firm up its cash position by selling a portion of its device receivables book to financial institutions for R1bn, another piece of its cost-cutting exercise.  

According to Numsa, the state-affiliated company has served recognised unions at Telkom with a section 189 and 189A notice. In the notice, management says it is contemplating retrenching about 1,073 employees out of 5,679.

The first consultation with unions will take place on February 24 under the supervision of the Commission for Conciliation, Mediation and Arbitration (CCMA).

The union is blaming the government, as the largest shareholder in Telkom, and the ruling ANC for the problems at Telkom. 

“It is clear that job losses and high unemployment are synonymous with the ANC, and this is why we have such high levels of unemployment. You cannot separate the suffering of the working class from the governing party because they are one and the same,” Numsa said.

“This government has no vision to create jobs, and it has no plan to retain the few jobs that exist. The job-loss bloodbath is continuing unabated under their leadership, and this is happening against a backdrop of 43.4% expanded unemployment, coupled with the highest inequality in the world.

“At the same time, it is worth noting that the contemplated retrenchments are as a result of load-shedding, which is another reminder of the dire impact that rolling blackouts are having on the economy and on all aspects of business. The unavailability of electricity has a direct impact on productivity. There can be no economic growth without a regular supply of electricity.”

The partially state-owned operator announced a raft of cost-cutting measures as it reported earnings for the third quarter to end-December. The group’s profitability has been hit by rising living costs, which have lowered demand for some products, while consumers have had to bear the increased operating costs due to ongoing power cuts in the country. 

Telkom’s overall performance continues to be hit by the group’s migration from the legacy and voice revenue businesses, which have been declining in recent years as people favour newer technologies such as fibre.

However, these new technologies come with lower margins for Telkom, resulting in more pressure on earnings.

Group revenue grew 2.3% to R11.031bn for the December quarter, largely driven by growth in active subscribers — mobile and fibre, increased data traffic, and higher handset and equipment sales to retail and enterprise customers.

Group earnings before interest, tax, depreciation and amortisation were down 13.5% to R2.492bn as a result, driven by the drop in legacy revenue, a restructuring of the mobile business to bring in more annuity revenue, and higher operating costs due to load-shedding.

Telkom shelled out an additional R150m in the quarter to mitigate the effects of load-shedding.

gavazam@businesslive.co.za