BCX joins Telkom, MTN in cutting jobs

Johannesburg - Technology firm Business Connexion (BCX) [JSE:BCX] has become the latest high-profile local ICT firm to plan to cut jobs.

The Johannesburg-based JSE-listed group joins Telkom [JSE:TKG] and MTN [JSE:MTN] in seeking to cut costs by retrenching its employees.

MTN, South Africa’s second-biggest mobile phone operator, is planning to retrench about 850 managerial positions owing to tough competition in the country.

Fixed-line telephone group Telkom is also engaged in a process to restructure the business through reducing the number of employees. The company says the entire management that it seeks to reduce from in the consultative process currently under way, is made up of 2 650 managerial staff.

Telkom aims to reduce the number of management layers and achieve an employee cost-to-revenue ratio of 25% over the next five years compared to the current 30%.

BCX spokesperson Fred-Arthur Fish explained on Tuesday that the technology firm has consulted with management regarding the retrenchment of about 31 employees.

“This is a result of addressing internal operational inefficiencies. Business Connexion has endeavoured to minimise the regrettable impact of potential retrenchments. We will assist with outplacements within the group for the affected employees should this be required.”

Meanwhile Telkom, which is cutting costs, is in the process of buying BCX for R2.7bn. Last month BCX investors voted overwhelmingly in favour of the deal, and are now awaiting approval from communications watchdog Icasa and competition authorities.

Asked whether these retrenchments were related to the Telkom deal, Fish said: “The retrenchments impact employees at multiple levels in the organisation, as they specifically relate to business operational efficiencies. They are not related, in any way, to the proposed transaction between Business Connexion and Telkom.”

BCX is on an African foray – the technology firm is snapping up assets across the continent. As part of its growth plan, the company recently bought a 30% stake in Nigeria’s IT solutions provider to the financial services sector in Lagos.

BCX has operations in Botswana, Kenya, Namibia, Nigeria, Mozambique, South Africa, Tanzania and Zambia.

It is a leading IT service provider in South Africa, provides strong presence in East Africa and has an established presence in West Africa, which it continues to grow through aggressive acquisitions.

BCX is also the largest employer of ICT skills in Africa with close to 7 000 employees, who have vast experience in delivering large projects on the continent.

The pending retrenchments at BCX are fuelling market talk that Vodacom [JSE:VOD], which is in the advanced stages of buying Neotel, is likely to chop managers in both companies when the deal is finalised and approved by regulatory bodies.

Meantime, smaller cellular operator Cell C is believed to be retrenching quietly, away from the scrutiny of the markets.

One wonders whether other JSE-listed and unlisted ICT firms are not also retrenching quietly.

 - Fin24

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