Telkom freezes salaries amidst ongoing financial challenges

08 September 2023

Telkom and two unions representing most of its workers have failed to reach an agreement over salary increases for the 2023/2024 financial year.

An alliance consisting of the Communications Workers Union and South African Communications Union informed their members that they failed to agree with Telkom and Gyro Group following two dispute resolution meetings. The alliance originally sought a 15% wage increase but had reduced this to 9% during the last meeting.

Telkom is facing financial challenges due to the prevailing economic environment and could not afford any increases in fixed costs. CEO Serame Taukobong has reportedly said recently that the company will not offer increases or bonuses until it started performing well.

“We need to earn and make sure that delivery, and focus on delivery, is what we pay for,” said Taukobong. “It is a tough decision that we had to make, but it highlights that at the new Telkom, execution is first above everything.”

In the year that ended 31 March 2023, Telkom reported big declines in EBITDA and profit. The company’s free cash flow also dropped by a further R644 million during the period, to a negative R2.72 billion. Telkom has instead offered some improvements on variable cost items, and terms and conditions of employment. These include a 9% increase in the standby allowance from R1,166 to R1,266 per week, and converting the current ten days of unpaid paternity leave to paid paternity leave. It has also offered to increase long-service bonuses, paid out every five years, by roughly 10%.