South African part state-owned telecommunications provider Telkom has announced its plans to cut ZAR1 billion (US$96 million) in costs annually for the next five years, inevitably resulting in job losses, according to a report.
Business Day reports the cost cutting measures are part of the company’s attempt to unlock shareholder value and recover its fortunes.
The company has been undergoing a restructuring process that began in June last year, starting shortly after the appointment of chief executive officer (CEO) Sipho Maseko.
The new CEO was able to increase the company’s profits by 41 per cent in the six months following his appointment.
Maseko told Business Day job cuts are a politically sensitive issue for the company since it has failed to reduce staff numbers through forced retrenchments after receiving opposition from labour unions.
“It’s clear in my mind that Telkom will shed a bit of weight. We are way out of shape in so far as revenue to staff is concerned. We will have much more thorough conversations,” he told the publication.
The company’s management has been scrutinised recently after Jacques Schindehutte, Telkom’s chief financial officer (CFO), was suspended at the end of last year resulting from allegations of personal misconduct.
The CFO was further embroiled in controversy after Telkom admitted it had loaned him ZAR6 million (US$575,000) to illegally buy shares in the telecom.
