Retrenchments unavoidable in evolving telco industry – Telkom

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Last week Telkom informed unions that it would cut as many as 3 000 jobs.

Telkom has said that it will begin a consultation process as follows in Section 189 of the Labour Relations Act. The firms adds that it approached the Commission for Conciliation, Mediation and Arbitration (CCMA) to facilitate the process.

While many hoped that Telkom may have avoided the need for retrenchments, the firm states that to ensure its stability and sustainability, retrenchments must take place.

“Telkom is having to reposition itself amid fundamental changes within the telecommunications industry,” the telco said in a statement.

In addition to the shifting sector, the firm has seen revenue slip from traditionally lucrative services such as fixed-line voice and interconnection fees.

Shoe changes foot

The most alarming statement from Telkom is that it has to compete in “a duopolistic mobile market in which the two largest players have virtual control over voice and data prices.”

While the telco stops short of naming Vodacom and MTN, following recent reports from the likes of the Competition Commission, it’s clear who the mysterious “two largest players” are.

While we recognise that Vodacom and MTN are the largest in the country, Telkom is not wholly innocent.

The telco had a strangle hold on fixed-line voice and internet for years. Blaming firms like Vodacom and MTN then for being forced to adapt and then thriving in spite of Telkom, seems like a low blow to us.

Naturally we don’t support Vodacom and MTN’s current hold on the market either, but the fact that Telkom is now complaining about another company’s strength in the market is just too beautiful to ignore.

That having been said Telkom’s declining fixed-voice and interconnection revenues are not set to change and that means jobs must be cut.

As for the future of Telkom, the telco appears to be hedging it hopes on mobile.

“Telkom management is confident that ongoing investments in the mobile business and other future growth areas will bear fruit into the future, but the reality is that certain other segments of the business are operating in declining market segments, including the fixed-voice business,” the firm concluded.

Brendyn Lotz

Brendyn Lotz

Brendyn Lotz writes news, reviews, and opinion pieces for Hypertext. His interests include SMEs, innovation on the African continent, cybersecurity, blockchain, games, geek culture and YouTube.