Vodacom and MTN have much higher productivity than Telkom

The latest financial data from South Africa’s largest telecommunications companies show that Vodacom and MTN have significantly higher productivity than Telkom.

Daily Investor used revenue per employee to measure productivity, calculated by dividing a company’s revenue by the number of employees.

Revenue per employee is a valuable ratio that helps organisations determine the efficiency and productivity of their workforce.

A company typically wants the highest possible revenue-per-employee ratio because it shows greater productivity.

Telkom is a good example of a company that has actively used these ratios to optimise performance.

Telkom was founded on 1 October 1991 when the Department of Posts and Telecommunications (DPT) was broken into Telkom and the SA Post Office.

It was saddled with a bloated workforce, which can be expected as it was previously a government department.

For years, Telkom struggled with low revenue per employee, forcing it to reduce its workforce significantly.

Telkom started cutting staff and reduced its workforce from 61,237 employees in 1999 to 23,520 ten years later.

Despite these significant staff cuts, Telkom was still considered inefficient and out of sync with its peers.

Former Telkom CEO Sipho Maseko said local and international benchmarks showed that Telkom was performing far worse than its peers.

“It has become clear that our costs are high, our performance is very poor, and we have a weakness insofar as our retail revenues and revenue per employee,” said Maseko.

“Employee cost as a percentage of revenue for Telkom is around 30%, which is more than two times the benchmark average.”

Under Maseko and his successor, Serame Taukobong, Telkom continued to reduce staff and improve productivity.

Telkom’s latest financial report showed that it had 9,877 employees, down 15% from 11,624 a year earlier.

That means that Telkom, South Africa’s biggest telecommunications employer since 1994, has cut 51,360 jobs over the last 25 years.

However, despite these significant staff cuts, Telkom’s revenue per employee is still much lower than Vodacom and MTN.

MTN, a global telecommunication powerhouse with a workforce of 17,462, has revenue per employee of R12.7 million.

Vodacom, which also has a strong presence across Africa, has revenue per employee of R11.4 million.

Telkom, in comparison, has a workforce of 9,877 employees and revenue per employee of R4.3 million.

This is partly due to Telkom’s product mix, which has a much higher ratio of fixed lines and other resource-intensive services.

Fixed access lines require technicians to install services and fix faults, which require many people and are costly.

Vodacom and MTN, in comparison, have mostly mobile services, which require fewer people to service the network.

Revenue per employee

The table below shows the revenue per employee for Vodacom, MTN, and Telkom for the last financial year.