In the same week South African telecommunications services company Telkom posted its annual results for the year ended 31 March, with the firm's leadership claiming its "turnaround was on track", an announcement has been made of the intention to shed 7 800 jobs within two months.

On Wednesday 10 June 2015 the South African market woke up to news that the telecommunications company plans to shed 4 400 jobs through voluntary severance packages or voluntary early retirement packages. An additional 3 400 employees will be transferred to outsourced companies.

The news confirmed the contents of a statement released a day earlier by trade union Solidarity.

It is understood that Telkom and Solidarity are scheduled to meet on 18 June to discuss the way forward.

In a statement released by Telkom, Jacqui O'Sullivan, Telkom's managing executive for group communication and public relations, said " We expect to exit around 3400 staff but importantly, Telkom will seek to retain these skills, through outsourcing to other companies or through Enterprise Development (ED). The ED option is where Telkom will seek to assist existing employees to develop their own new businesses. These businesses, which will be owned and managed by former Telkom employees, would then be able to contract their services back to Telkom along with any other service providers in this growing and competitive industry."

She added that the company is now in the second year of its multi-year turnaround strategy and initial cost savings, major management restructuring and efficiency actions have delivered important improvements.

"However, these next restructuring actions, which will effectively reshape Telkom's operating model for the future, are critical to ensure the long term commercial sustainability of our business. We remain committed to collaborating with organised labour in the best interest of Telkom and its people," said O'Sullivan.

ICT expert Adrian Schofield said the rapid change in the telecommunications environment has been a challenge for Telkom over the last 20 years, especially as its ability to respond to the new dynamics has been hampered by the government's policies and the constraints of large scale reductions in workforce within a unionised framework.

"21st century communications technologies are nowhere near as labour-intensive as the old copper wire analogue networks, so it is inevitable that Telkom would have to slim its workforce to manageable proportions. Although some of this has been achieved by transferring skills to outsourced suppliers, much of the reduction has resulted in redundancy. This is not good news in a country desperate to create new jobs, even though it makes for a better business model for Telkom. The slowing growth in the telecommunications market and the move away from fixed line services has not helped," said Schofield.

"There is still untapped demand for mobile services and the country needs an aggressive extension of its broadband network. These are not high-margin activities but we must hope that the more efficient Telkom can meet these needs while generating sufficient income to sustain its future," he added.

Dobek Pater, managing director of Africa Analysis and telecoms analyst, said the impact on Telkom, overall, should be positive.

He said Telkom still carries more staff than many of its global counterparts in more developed/ peer markets, in relations to the scale of its operations."Despite having gone through one round of (voluntary) retrenchments in the past FY, it still has the same number of employees on a per fixed line basis as it did a year ago (due to the fact that the number of lines has decreased). Telkom is moving to new technologies (e.g., more fibre and wireless / LTE access deployment) which will allow Telkom to maintain its infrastructure with fewer technical staff. It is also outsourcing many of its non-core functions, which further reduces the need for large numbers of employees on its books. The downsizing should positively reflect on Telkom's financial performance and should not negatively impact its performance when done properly."

Pater added that most telcos have been going through retrenchment exercises as part of their cost-cutting measures and this may create greater competition in the labour market in telecoms. "...and possibly result telcos being ultimately able to access lower-cost labour (technical / other) in the future or in the form of consulting / outsourced services. A portion of the retrenched personnel will no doubt remain in the telecoms sector and provide external services to the telcos / service providers."

Head of communications at trade union Solidarity Marius Croucamp was not available for comment at the time of publishing.