Telkom Shares Gain After 4,200 Staff Took Severance Packagesby
Telkom SA SOC Ltd., the former South African phone monopoly cutting costs to counter a decline in its fixed-line business, gained after saying 4,200 employees accepted early retirement or severance packages in the year through March.
The reduction in the workforce cost a one-time 2.2 billion rand ($145 million) plus a tax impact of 500 million rand, the Pretoria-based company said in a statement on Monday. That cut full-year earnings per share by as much as 30 percent, it said.
The shares rose 4.4 percent, the most since April 20, to 56.40 rand at the close in Johannesburg. The stock has declined 12 percent this year, valuing the company at 29.7 billion rand.
The job cuts are part of Chief Executive Officer Sipho Maseko’s effort to reduce the financial burden from Telkom’s older, well-paid workforce while attempting to grow the mobile-data business. The operator, still 39 percent owned by the South African government, had wanted to eliminate 6,000 jobs by July but faced opposition from labor unions.
The drive to cut positions comes as South Africa’s unemployment rate rises to the highest in at least eight years as factories, wholesalers and retailers cut jobs. Falling commodity prices, the worst drought in more than a century and rising wage demands are curbing work opportunities in Africa’s most industrialized economy.
Excluding the impact of voluntary packages, full-year earnings per share are expected to have gained as much as 40 percent, Telkom said.