Telkom South Africa Delays Outsourcing Over Concern About World Cup Service Delivery

Mergers, Acquisitions and Financial Results

Telkom's goal of saving up to R1.3bn a year by hiring another company to run its core networks has been put on hold, with the Solidarity union saying Telkom fears the move may jeopardise its service delivery for the Soccer World Cup.

The huge outsourcing project has been controversial from the start, inflaming unions by potentially affecting 19,000 of the 26,000 employees. Last year, Telkom agreed to postpone the outsourcing until next month , but it looks unlikely to go ahead then given Telkom's need to be operationally perfect for the World Cup.

Outsourcing had been put on hold for the time being, Solidarity said yesterday, after the managers met the trade unions last week to conclude an agreement. "In terms of the agreement, there will be no retrenchments and no redundancy in Telkom," Solidarity said. "Reportedly, it was decided to put the process on hold due to concern about Telkom's service delivery for the Soccer World Cup."

Solidarity spokesman Jaco Kleynhans said in the past year a storm had erupted over the outsourcing. "This has led to tremendous uncertainty for most Telkom employees. Now employees are being placated with a further agreement that the restructuring plans have been postponed for the time being."

The exact state of play is uncertain, however, with Solidarity unsure of what Telkom is planning to do, and Telkom declining to comment. Solidarity said it wanted to meet the managers again to thrash out crucial details regarding the duration of the postponement, whether or not the agreement might include voluntary severance or early retirement packages, and whether it would be valid only for employees in SA.

The plan to outsource the running of its networks and information technology processes to external parties was initially delayed after Solidarity and the Communication Workers' Union (CWU) threatened to strike.

The tenders attracted various bidders, but controversy raged again when insiders claimed Amdocs, HP and Ericsson would win due to corruption in the processes. The CWU demanded an investigation, claiming to have evidence that officials altered documents to influence who won.

In February, Telkom fired its chief of operations, Motlatsi Nzeku, for behaviour damaging to its reputation, but refused to say if his dismissal related to the allegations.

Business Day