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Telkom makes provision to spend R591m on retrenchments and voluntary separations

Telkom has made a provision for retrenchment and voluntary severance packages of approximately R591m, according to an operational update from the company on Wednesday.

The telecoms company also said in a trade update that it expected a related tax benefit of about R165m in the current financial year regarding such packages. Telkom indicated earlier this year that it had embarked on restructuring process, affecting the likes of its Direct Stores and resulting in the outsourcing of its call centres, IT Legacy Systems, internal printing and supply chain. The company said it was continuing to focus on restructuring its cost base to help its profit growth.

“Although we managed to further improve on cost efficiencies in certain areas, we experienced delays in the implementation of other initiatives. The delayed initiatives included the workforce reduction initiative and the renegotiation of certain key contracts,” the company indicated. Noting various areas where it had reduced costs, Telkom also indicated that it had reduced expenditure relating to its post- retirement medical aid liability for in-service members, certain pensioners and part time staff. “These savings were partially offset by annual salary increases, higher bad debts and higher electricity costs as the economy and the challenges around energy supply negatively impacted our results.”


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