State-owned telecommunications firm TelOne has officially confirmed that it has cut staff salaries by 15% in a bid to align its business’ operating model to productivity and lower operating costs.
TelOne Corporate Communications manager Melody Harry said salary cuts were part of a broader strategy to lower operating costs by 20% and align staff costs to 32% of revenues.
“All these initiatives will help TelOne cut operating costs by over 20% compared to last year and realign staff costs to 32% of revenues instead of 36%,” she said on Wednesday.
In letters to workers on August 18, TelOne CEO Chipo Mutasa said the telecoms firm had been hard hit by the operating environment. TelOne recorded US$160 million in revenue in 2014. It is owed US$100 million by customers, although it inherited a US$322 legacy debt.
Harry further dispelled speculation the company had wielded the axe on members of staff older than 55, saying those in the bracket had been lured by the attractive benefits offered by the Communication and Allied Industries Fund.
“TelOne has not embarked on any job-cutting exercise including for those aged 55 and older. In terms of the Communication and Allied Industries Pension Fund (CAIPF) Rules and Regulations, to which TelOne is a member, an employee is eligible to go for early retirement at the age of 55 years,” harry said.
“TelOne employees aged 55 and older have therefore been utilising this facility to voluntarily apply to be considered to for early retirement due to the lucrative nature of the retirement benefits structure under CAIPF. This is not new to TelOne as eligible employees have been utilising this opportunity for years. Since the beginning of this year, we have a total of 140 employees in this bracket that have voluntarily come forward to go for early retirement.”
She said salary cuts began in August. TelOne’s peers in the telecommunications sector also pursued the same route.
Econet Wireless, Zimbabwe’s largest mobile network operator, also cut staff salaries by 35% across the board starting in July.
The cuts were effected at Econet’s subsidiaries, Steward Bank, Mutare Bottling and Liquid Telecom.
Harry added that TelOne was able to save jobs by exercising its right in terms of Section 12D of the Labour Act, which allows companies to explore other possible options to rationalise staff costs without embarking on a retrenchment exercise. “This exercise was effected with the consent of our unions and works council resulting in individual employees consenting in writing. The implementation was done on an across board basis including executive management,” she said.
Harry said TelOne has redefined itself into a modern ICT company, which is offering converged telecommunication services and products under three main brands, Broadband, Satellite and Voice. “TelOne has redefined itself into a modern ICT company, which is offering converged telecommunication services and products under three main brands namely Broadband, Satelite and Voice. A number of new products and services under these brands have been introduced. These coupled with our new emphasis on customer service excellence have seen the company reach competitiveness in the ICT market,” she said.
“We have moved to operating profitability since 2013. Fresh capital however remains suppressed owing to the company’s balance sheet which continues to be weighed down by legacy loans inherited at the unbundling of the Postal and Telecommunication Corporation. We are confident that with the new projects the company is looking to roll out in the next few months, our prospects are brighter.”
TelOne posted an operating profit of US$1,6 million in the six months to June 30 despite a fall in revenue. The government–owned telecommunication provider said it was seeking a shareholder hand to extinguish legacy loans.
The legacy loans amounting to US$322 million were inherited after the unbundling of the then Postal and Telecommunications Corporation (PTC). PTC was unbundled into TelOne, NetOne and Zimpost.
In its interim results, revenue was down 9% to US$69 million from US$76 million in the same period last year.
Cost of sales were US$37 million from US$42 million. Administrative expenses were down to US$32 million from US$33 million last year.