Johannesburg: Tata Group led Neotel telecommunications consortium in South Africa plans to retrench some of its employees, as it battles to find a foothold in the highly competitive telecom market here.
The move comes as a part of the company’s move to evaluate its business strategy, operational performance, efficiency and competitiveness with a view to ensuring that long-term sustainability is achieved, Neotel said in a statement on Friday.
Neotel chief executive Ajay Pandey was not available for comment, but the company issued a statement on the planned retrenchments and restructuring
“The executive committee and the board are working to ensure that Neotel is sufficiently geared to meet the challenges brought on by the highly competitive marketplace in which it operates.
As a consequence, the company is considering realignment and restructuring options in order to achieve optimal growth, operational efficiency and improved service delivery to customers,” the statement said.
In a letter to its staff reported by news website Techcentral, Neotel HR Head Lucky Ndwalaza said Neotel will consult with staff in January and the first three weeks in February, with retrenchments likely to follow on 30 April.
The company proposes to pay retrenched staff one week’s remuneration for every year of service completed. There was no detail on the number of staff that might be affected, the release added.
Ndwalaza said: “The company is of the preliminary view that it is not sufficiently geared to meet the challenges brought on by the global recession and the highly competitive marketplace in which it operates.
Despite huge expectations of Neotel in the marketplace, especially after the Seacom cable linking Mumbai to South Africa and other parts of the continent went into operations some months ago, it has failed to make a serious dent in the telecommunications sector.”
At the time of its launch four years ago, Neotel, 56% of which is owned by Tata Communications, was lauded by the industry for facing up to state-owned monopoly Telkom after a four-year licensing fight.
But now the provider of fixed-line and wireless voice and data services has warned staff that there may be layoffs in the new year to ensure the company’s long-term sustainability.
Research firm World Wide Worx managing director Arthur Goldstuck told Techcentral: “I can’t see anyone at Telkom shivering in their boots about Neotel’s positioning in the market.
Neotel has not demonstrated a clear vision for being a national network operator.” He added he believed the company could be turned around with the right focus.