Telkom Reduces Workforce by 51,360 Jobs Over 25 Years Amid Restructuring

Telkom, South Africa’s largest telecommunications employer since 1994, has significantly reduced its workforce over the past 25 years, cutting 51,360 jobs. According to Telkom’s annual results for the year ending March 31, 2024, the company now has 9,877 employees, a 15% decrease from the previous year’s 11,624.

The recent job cuts are part of a restructuring process initiated in February 2023 to lower costs. This process included voluntary early retirement packages and voluntary severance packages, impacting over 1,700 employees and resulting in restructuring costs of R1.065 billion, with a related tax impact of R288 million.

Post-restructuring, Telkom’s workforce distribution is as follows: Openserve has 4,532 employees, BCX has 4,032, Gyro has 95, and the core Telkom Company has 1,218. The reduction in staff has led to a 4% decrease in employee expenses, from R8.2 billion to R7.9 billion. Additionally, there were no salary increases for management, and a 5.0% average salary increase was given to bargaining unit employees.

Telkom’s workforce reduction is part of a long-term trend. The company reduced its employee count from 61,237 in 1999 to 9,877 in 2024, an 84% decrease. This reduction reflects not only the company’s performance but also significant changes in its operational environment and business model.

Founded in 1991 following the split of the Department of Posts and Telecommunications into Telkom and the SA Post Office, Telkom initially enjoyed a legally protected monopoly. This allowed it to maintain a large workforce, similar to other state enterprises like Eskom.

However, the landscape began to shift about two decades ago as Telkom lost its monopoly and prepared to list on the Johannesburg and New York stock exchanges. Investors demanded a more efficient operation, prompting the company to reduce its workforce from 61,237 in 1999 to 23,520 by 2009.

Despite resistance from trade unions, Telkom continued to cut staff as it transitioned its operations. Even with substantial staff reductions since the early 2000s, Telkom was still seen as inefficient compared to its peers. Metrics such as revenue per employee and subscribers per employee showed Telkom lagging behind competitors like Vodacom and MTN.

A significant driver of the workforce reduction has been the shift in technology. The launch of Telkom’s mobile operator in October 2010 and the investment in wireless technologies reduced the need for a large number of technicians required for fixed-line services like ADSL and POTS. As fixed access lines declined from 5.1 million in 1999 to 609,000 in 2024, the need for technicians diminished, leading to widespread job cuts.

Telkom has continued to offer voluntary retrenchment packages and early retirement options to streamline its workforce. These efforts have made the company more sustainable and significantly increased its revenue per employee—a key productivity and efficiency metric. Over the last 25 years, Telkom has increased its revenue per employee from R376,000 to R4.4 million, demonstrating a substantial improvement in workforce productivity and efficiency.

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