The economic landscape has been tough in South Africa for several years now. Not even one of the main competitors in the telecommunications industry is immune, with Cell C announcing that it will retrench almost 40 percent of its employees – or 960 of the total 2,500 workforce.
While the company has been in financial trouble for some time, it has been able to hold off large scale retrenchments up until now. Various promotions and new data products has not been enough to stave off their woes. A notice was sent out to employees on Friday morning, after which Cell C confirmed to media:
“Cell C can confirm that it is has reached a difficult decision and initiated discussions with junior management and semi-skilled staff to implement a restructuring of its operations so as to align the organisation with its new operating model. Earlier this year, senior management positions were aligned to this revised operating model and new organisational structure. This process was completed in May and resulted in 30 positions being affected.”
A spokeswoman at the company said that over the last several years Cell C has generated significant losses and has underperformed for an extensive period of time. On Friday morning Cell C’s largest shareholder, Blue Label Telecoms, traded 7.8 percent higher.
“A turnaround strategy was put in place in early 2019. One of the pillars of the strategy is a focus on operational efficiencies. Efforts to streamline the business have included cost savings through procurement cuts, a year-long hiring freeze, and a review and discontinuation of certain product offerings, all in an effort to turn the business around,” the spokeswomen said.
“Along with these cost-cutting initiatives, together with the revised network strategy … and the changing competitive environment, it has become necessary to review Cell C’s operating model and organisational structure. It is the company’s view that over time the operating model has resulted in a number of inefficiencies. This is contributing to the operating and financial challenges the company currently faces.”