Telkom to Cut 24% of Workforce to Catch Up With Vodacom, MTN

Telkom SA SOC Ltd. plans to eliminate at least 24 percent of its workforce as Chief Executive Officer Sipho Maseko seeks to make Africa’s dominant landline provider more competitive against Vodacom Group Ltd. and MTN Group Ltd.

About 4,400 staff will leave Pretoria-based Telkom through voluntary severance and early retirement, according to spokeswoman Jacqui O’Sullivan. Telkom employed 18,333 people as of March 31. The carrier also plans to outsource as many as 3,400 positions, although some of the workers affected may receive Telkom contracts in the future, she said. Telkom shares fell as much as 2.6 percent in Johannesburg.

Telkom confirmed the numbers, which were disclosed in a Tuesday statement by the unions after a meeting with managers. Telkom is revamping its operations to revive earnings as consumers switch to data-enabled smartphones and tablets from landlines. The phone company is also trying to increase profit at its mobile service, South Africa’s fourth-biggest, and boost sales of its Internet offering.

“These are critical actions we need to take to ensure the long-term sustainability of our business,” O’Sullivan said.

Telkom’s average revenue per employee was 1.7 million rand ($140,000) in the most recent fiscal year, according to data compiled by Bloomberg. That compares with 15.7 million rand for Vodacom and 6.7 million rand for MTN, Telkom’s largest rivals in South Africa.

Telkom said it will have about 4,000 full-time workers in its new wholesale and networks business.

“We remain committed to collaborating with organized labor in the best interest of Telkom and its people,” O’Sullivan said.

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