Telkom Kenya to lay off 500 employees in fresh retrenchment wave

NAIROBI: About 500 employees of Telkom Kenya will lose their jobs in a new round of retrenchments that will see the mobile company send home over a third of its current work force.

The mobile company said Thursday it had notified relevant authorities and company stakeholders of an 'intended workforce-rationalisation plan.' "In the statutory notification to the Ministry of Labour, Telkom Kenya has indicated that this exercise, intended for implementation in the first quarter of 2016, will affect about 500 employees from its 1,600-strong workforce," the company said in a statement.

The retrenchment comes weeks after Telkom Kenya announced the exit of the French majority owners--France Telecom which sold its 70 per cent that France saw Private equity firm Helios acquire the entire 70 per cent stake it owns in the Kenyan firm.

The government of Kenya owns a 30 per cent stake in the company through Treasury and is still a shareholder in the company after exit of the French owners who failed to turn round the company. The Telco said it retrenchment is as a result of a Sh1billion investment in IT, adding that it had also notified the Communication Workers Union of Kenya (COWU) of the planned exercise. Out of the 1,623 employees, about 400 are support staff, 188 are classified as commercial staff, while the remainder are technical staff.

The retrenchment is set to bring back the painful retrenchment exercise at the Telco that saw thousands of staff sacked from the 6,816 it had in December 2007 when France Telecom bought a 51 per cent stake in the firm for Sh26 billion "This plan, approved by the company's board, is as a result of a Sh1 billion investment in technology and innovation that has transformed the company's operations within the last three years," the company said.

"Following its transition into a fully integrated telecommunications service provider, Telkom Kenya decommissioned obsolete infrastructure that was no longer in line with its growth strategy."

It explained that the decision was arrived at after a 'thorough review of the business's product and solution offering as well as the infrastructure supporting the company's network, with the long term view of ensuring viability and further improving the quality of service to its customers.' It appears that the sackings may have been part of the acquisition deal given that the new players seem keen on cutting costs.

Recently, the operator put up for sale 17 properties across the country estimated to be worth Sh1 billion. "This transformative exercise has changed its entire business outlook and infrastructure, impacting the required size of its workforce, as the company positions itself to become a future-fit telco," it added.

The sackings are set to compound trouble at the company, which has been struggling to grow its market share in the competitive mobile market currently dominated by Safaricom. The French's eight-year expedition in the Kenyan telecoms market left a limping company, going against what it promised during its entry into Kenya in 2007.

Orange admitted its failure to turn the telco around. In its 2014 financial report, Orange says it lost control of Telkom Kenya, referring to wrangles with its co-shareholder, the Government of Kenya.

"In 2014, Orange intended to implement certain solutions, allowing it to respond to Telkom Kenya's financial difficulties. During the fourth quarter, due to continuing disagreements with the government of Kenya, its co-shareholder, Orange concluded it was contractually unable to implement these solutions without the latter's agreement. This led the Group to conclude that it had lost control over the entity."

Following the privatisation in December 2007, France Telecom was expected to steer Telkom Kenya to profitability in three to five years in preparation for listing at the Nairobi Securities Exchange (NSE). Under the terms of the sale to a consortium involving France Telecom and Alcazar Capital, the telecoms services provider was to be listed within three years at the earliest, which was December 2010.