Telkom yesterday announced it will consider several cost containment options as the company looks to reorganise itself following the Labour Court's order to halt the issuing of Section 189 notices.

In a statement the telco said it respects the decision handed down on 8 July and immediately withdrew the Section 189 notices on the same day the order was issued, with regard to the technology and centre for learning divisions.

"We have to take decisive action to curtail further business losses and have therefore decided to look at a number of cost containment options. Some of these measures will require engagement with organised labour, which will be initiated as and when required," the company stated.

Measures being considered include a wage freeze, flexi-time, reduction of working hours and potential outsourcing options, as well as voluntary severance packages and voluntary early retirement packages.

The company added that the packages on offer "will be significantly more generous than those required by law" and will be available to all non-unionised staff as of 13 July.

"We must take urgent steps to place the business on a stable footing," said Telkom CEO Sipho Maseko. "My executive team and I believe these measures are necessary as our business is simply not sustainable in its current form. Our revenue to staff cost ratio remains significantly higher than industry norms. Compared to similar-sized telecommunication companies we have up to 30% more full time employees than our peers. This makes it increasingly difficult for us to compete."

"We have to make the difficult decisions now to safeguard the future livelihood of the majority of our employees and to ensure the company remains an important contributor to economic growth, an attractive investment for shareholders, and a vehicle for social transformation. Telkom will only remain relevant if it becomes a more agile, competitive organisation than the one it is now," concluded Maseko.

ICT expert Adrian Schofield said that given the earlier stated intention of reducing the workforce by nearly 8000, it is unlikely that any lesser measures will achieve the desired results.

"The ongoing reduction of Telkom from a bloated employer to an efficient and productive one is a battle that strong-willed management will have to fight for quite some time. The hurdle that needs to be overcome is the opposing forces of workers needing to protect their employment in a market where there are fewer and fewer jobs and a company that has to be more competitive if it is to survive in a market where growth is stagnant," he said.

According to Schofield government's failure to stimulate the market through completing digital migration, reallocating spectrum and delayed rollout of broadband infrastructure makes it impossible for Telkom to succeed.

He suggests the company should never have put themselves in the position of losing the court case. "The correct processes for negotiating with workers have long been in place and well understood by both sides. Whether the company follows those processes correctly for the next round or not, their position has inevitably been weakened."

Technology industry analyst and managing director of World Wide Worx Arthur Goldstuck says from a cost-containment point of view, Telkom is looking like an increasingly efficient business. However, it does run the risk of reducing one of its core strengths, which is an excellent technical team on the ground, resolving customer issues on location he adds.

"The reality, however, is that Telkom has needed strong medicine, and has required strong leadership to administer this medicine. It is the first time we are seeing this combination at work in Telkom, and if it has the political support to carry it through, we are likely to see a stronger Telkom emerge from the process," says Goldstuck.