Telkom Suspends Plan to Reduce Staff Pending Consultation

Telkom SA SOC Ltd. (TKG), Africa’s largest landline carrier, suspended plans to eliminate part of its 19,000-strong workforce following opposition from the Solidarity union.

The shares declined as much as 4.2 percent, the most since March, and traded 1 percent lower at 47.94 rand as of 1:04 p.m. in Johannesburg. The job cuts are part of Chief Executive Officer Sipho Maseko’s plan to lower costs by 5 billion rand ($468 million) and restore the company’s finances after a decline in fixed-line use contributed to sliding sales.

In a statement yesterday, Pretoria-based Telkom said it agreed to further consultation with unions so that “all stakeholder views are considered and factored into the restructuring process.” The company plans to fire more than 9,500 of its employees, the South African Communications Union said earlier this month. Telkom said it wasn’t planning to remove that number and hasn’t specified a figure for reduction.

The agreement includes halting the process of using race when determining job cuts, according to Solidarity, which has close ties with the predominantly white Afrikaans community. South African companies have to comply with legislation seeking to address racial inequalities that stem from apartheid rule, which ended in 1994.

“The agreement sends a signal to employers all over South Africa that Solidarity will not tolerate race-based layoffs,” spokesman Marius Croucamp said in the statement.

Telkom is the second-best performer on the 164-member FTSE/JSE Africa All-Share Index (JALSH) this year, gaining 71 percent. The company snapped a two year run of losses in the year through March after cost cuts and a surge in demand for wireless data.

To contact the reporter on this story: John Bowker in Johannesburg at jbowker2@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net John Bowker

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