South Africa's Vodacom plans outsourcing to cut costs - CNBC Africa

South Africa's Vodacom plans outsourcing to cut costs

Special Report

by Reuters 0

South Africa's Vodacom plans outsourcing to cut costs. PHOTOS: mybroadband

South African telecoms group Vodacom is planning to outsource maintenance to cut costs, the company said, raising union concerns amid a strike by workers at competitor MTN.

The domestic cutbacks at Vodacom, which is spending billions of dollars to expand its data network, is part of a wider trend in the mature South African telecoms market, where peers MTN and Telkom are also cutting costs.

Around 2,000 MTN workers in South Africa have been on strike for two months over a pay dispute.

Vodacom, which is majority owned by Vodafone, said there would be no job cuts and that it was consulting with its employees.

"Vodacom is investigating the possibility of consolidating existing outsourced maintenance contracts and potentially outsourcing some of our field maintenance activities," spokesman Richard Boorman said.

"There would be no job losses if the envisaged changes go ahead," Boorman added.

Two company sources said China's Huawei, Alcatel-Lucent, Ericsson and Neotel were among companies shortlisted for a three-year maintenance contract, which would start on Nov. 1.

It was not clear what the value of the deal to maintain radio base stations and the transmission network would be.

Vodacom declined to comment on the potential contracts. 

The Communication Workers Union (CWU), whose members are leading the MTN strike, has expressed concern about Vodacom's plans.

"We are shocked and dismayed again that you are busy outsourcing our members without consultation with the union,” CWU general secretary Aubrey Tshabalala wrote in a July 7 letter to Vodacom seen by Reuters.

Employees said this could be the first step in wider cutbacks that would include job cuts.

“This is just the first phase, the beginning, so we don’t know who is going to be next or what is next," one Vodacom employee told Reuters.

($1 = 12.3897 rand)