South Africa’s Telkom slashes jobs despite surge in profits


South Africa’s Telkom SA has cut 12.5% of the group’s permanent jobs, it said on Monday after posting a 22.6% surge in full-year earnings as upbeat performance in its mobile business offset declines in the traditional fixed-line unit.

Telkom, which runs South Africa’s biggest fixed-line telecom network, said the group had 15,296 permanent jobs on March 31, down from 17,472 in the year ending March 2018 due to voluntary severance packages, voluntary early retirement packages and other layoffs under the country’s labour law.

Some job cuts came from Telkom’s information and communications technology business BCX, where the number of permanent employees fell 13.4% to 5,782 under a cost reduction program.

“We expect the savings from this programme to come through in the next financial year,” Telkom said in its result statement.

At 0806 GMT, shares in Telkom were down 1.43% to 85.22 rand ($5.90).

Headline earnings per share (HEPS), the main profit measure in South Africa, came in at 722.4 cents for the year until the end of March compared with 589.3 cents a year earlier.

HEPS excludes 728 million rand in costs from voluntary severance and retirement packages and layoffs related to section 189 of the labour law.

Telkom, 40 percent owned by the state, is seeking to transform the business with heavy investments in its mobile phone unit and by rolling out fibre internet packages.

Mobile service revenue climbed 58.3% to 8.2 billion rand, while fixed service revenue fell 8.8%.

“The significant growth in mobile service revenue was supported by an 85.9 percent growth in active subscribers to 9.7 million,” Chief Executive Officer Sipho Maseko said.

Group earnings before interest, tax, depreciation and amortization rose 8.5%, benefiting from the revenue growth of 5.3% and ongoing sustainable cost management, it said.

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