Tough call as Airtel sends home a third of its employees in bid to remain afloat

Airtel shop along Kenyatta Avenue. (Photo: Willis Awandu/Standard)

There was a somber mood at Airtel offices in Parkside Towers, Nairobi yesterday as the telecom firm laid off a third of its workforce. The Indian-owned firm which has unsuccessfully tried to cruise into profitability in the Kenyan market said it was undertaking a ‘strategic organisational restructuring’ aimed at improving efficiencies.

“Airtel Kenya is undertaking strategic organisational restructuring to improve efficiencies across functions with an aim to enhance customer experience. This initiative will impact some roles that will be merged or become redundant,” said Airtel in a statement.

“To assist the affected staff members during the transition, the company will compensate the employees over and above what is prescribed as per the prevailing laws. Airtel Kenya is also working with a leading talent search firm to offer job search services, and provide the necessary training required to find new opportunities. The company will bear the full cost of this support service.”

One of the dismissal letters seen by Weekend Business, read in part: “Pursuant to the provisions of the Employment Act (2007) the company hereby gives you a one month’s notice of intention to terminate your services by reason of redundancy. Your service with the company will therefore cease with effect from February 13, 2017 prior to which you will as agreed, proceed on paid leave for one month from January 13, 2017.”

In the termination letters, Airtel said sacked workers will be paid salary and allowances of up to February 13, 2017 and they will also be paid unutilised annual leave days accrued to date. Also, the telco will give one month notice pay and severance pay equivalent to 15 days’ pay for every completed year of service. Sources said the firm is sending home 84 workers in this phase. In the past two years, Airtel Kenya, which has about 300 staff, retrenched more than 60.

Acquire the firm

Some insiders who spoke to Weekend Business on condition of anonymity said the company which has since sold most of its masts is just preparing to exit the Kenyan market, having failed to make incursion into a market which is under the stranglehold of Safaricom.

Safaricom controls over 65 per cent market share in voice, data, SMS and mobile money. Airtel’s drive to have the most powerful corporation in the region declared dominant fell through, dealing a blow to their only hopes of a comeback.

An Airtel employee, who spoke to Weekend Business on condition of anonymity fearing reprisal said there was a feeling of uncertainty at Parkside Towers. “Even as we speak, some of the guys had already gone in January. Today, we are actually waiting for more letters, they were to be dispersed by 12 noon,” said the employee. He said there were unconfirmed reports that an investor would acquire the firm. Airtel did not respond to this.

Sources said some departments such as Airtel Money, Enterprises, Customer Service and Sales and Distribution will be merged. The firm is also said to be planning to abandon its warehouses in Nakuru, Kisumu, Eldoret, Mombasa and Nyeri with everyone now being served from Nairobi.

“Majority of Airtel’s woes were internal. For example, there was a time Airtel wanted to reduce distributors so they cut costs and ‘streamline’ the department. The plan fell through as distributors went on strike occasioning a stock-out countrywide for almost a month,” said the source adding that they went to court, settled out of court where they were required to pay Sh500 million.

The going has been tough for Airtel which between April and June lost more than 130,000 subscribers. According to data from the Communications Authority (CA), Airtel’s subscriptions dropped from 6,722,412 in March 2016 to 6,588,825 as at end of June 2016, as the operator relinquished 0.9 per cent of its market share.