WINDHOEK – Telecom Namibia is aggressively pursuing “voluntary retrenchment” or bluntly put getting rid of excess staff, for the same reason the company has placed its business focus on corporate clients and government ministries.
The reason is that Telecom lost out on N$70 million that Namibian households would have spent on voice calls last year, because very few, if any, households today make phone calls using the Telecom fixed landline. And figures are expected to continue increasing yearly.
Thus, the other part of Telecom Namibia’s aggressive strategy for survival is anchored squarely on corporates’ need for customised telecommunication solutions, which would be served a cocktail of fast secure mobile and fixed voice and data offerings.
Government ministries is the other business target because their need for fixed lines would persist, thanks to the bureaucracy that demands faxing signed Portable Document Format (PDF) communications and instructions phoned over fixed land lines.
It is a strategy that Telecom’s managing director Frans Ndoroma, speaking to New Era yesterday, said is “already being pursued – everything is in place [along with ensuring investments in] connectivity to our neighbouring countries and Europe and the Americas.”
Although seemingly a simplistic narrative, the decline in fixed voice revenues, along with the need to aggressively cut operational costs, do significantly define how Telecom Namibia would survive to establish its place as a telecommunication company in future.
Hence the adoption of what Ndoroma, termed “a continuous strategy [towards] 2016/2018 financial year,” that looks at among others to cut operational expenditures by slashing “the two main elements of rent payments and labour costs”.
Ndoroma points at the Telecom group’s annual turnover of N$1.312 billion for last year, versus the group’s N$21 million labour costs for 1 300 employees and asks the public to compare that to the costs of Namibia’s largest mobile telecommunication operator, and Telecom’s sister company, MTC, which posted N$1.8 billion turnover in the same period and what would be its labour costs for about 450 employees.
However, Ndoroma is at pains to explain that “voluntary retrenchment is a natural separation.” “We are a parastatal [and as such] we have an obligation not to dump our people on the street. We have to assist government in managing social upkeep of the country, that is why we are not going about it aggressively but embarking on voluntary separation. We are not replacing those who retire or those who leave or are dismissed unless it is critical. By doing that we are reducing costs,” he said.
Besides labour costs, a peek into Telecom’s financial silos indicate seriously stretched finances, with a loss of N$166 million for the group and N$86 million for the company, during the 2012/2013 financial year, which is a reflection of a nearly N$60 million annual loss in fixed voice revenue.
The actual profits from the fixed voice segment decreased by N$69.32 million to N$325.313 million. The N$21 million in staff costs amounts to 34.64 percent of the revenues generated in the year, relatively short of the 34 percent target the company has set for itself.
This is while the state-owned utility telecommunications company still must continue to invest billions of dollars in next generation backbone, while still fighting to offload the millions of dollars trapped in investments that went sideways in Angola’s Mundo Startel, and South Africa’s Neotel.
In fact, Telecom has recorded Mundo Startel investments of US$12 million (about N$134 million today) which is listed as an impairment.