Telkom Kenya has sent home 575 workers in yet another round of restructuring by the cash-strapped telecommunications company.
This will see the number of workers laid off by the telco increase to over 1,000 in less than a year.
Telkom said the latest job cuts were informed by the impending merger between it and Airtel Kenya, another telecommunications firm.
Already, termination letters have been sent to affected employees after the two companies entered into an agreement to combine the Mobile enterprise and Carrier Services businesses in Kenya, according to an internal memo from Telkom’s CEO Mugo Kibati seen by The Standard. These businesses will henceforth operate under a joint venture company to be known as Airtel-Telkom.
“In accordance with the provisions of Section 40 of the Employment Act, 2007, we have notified the Communications Workers Union (COWU), and sent out individualised letters of staff where applicable as well as to the County Labour offices,” said Mugo.
The affected employees have been given “one month’s notice with effect from July 31, 2019, of [Telkom’s] intention to terminate the employment of 575 of our employees, on account of redundancy as a result of the Transaction.”
In the next 30 days, the management will hold consultation meetings aimed at ensuring transparency of the process.
However, those employees whose lines of business have not been affected will be retained in a “redefine Telkom organisation.”
The Joint Venture Company, Kibati said, might consider offering employment to some sacked employees “subject to positions being available in the new organisation and those individuals meeting the recruitment criteria.”
Airtel and Telkom have already signed an agreement on the merger, and are expected to begin operating as Airtel-Telkom.
However, a National Assembly committee recently opposed the merger noting, without elaborating, that the process might have been hijacked by private individuals out to cheaply acquire Telkom’s stake.
In February, Telkom put another 500 workers on the chopping board as the telco tried to turn around its dwindling fortunes.
The job cuts were part of the company’s turnaround strategy since UK private equity firm Helios Investment Partners bought a 60 per cent controlling stake from France’s Orange in 2015.
“Telkom has today issued the requisite 30-day notice to relevant authorities and company stakeholders of an intended workforce-restructuring exercise,” said the company in a statement.
Both Telkom and Airtel Kenya have been struggling to stay afloat in an environment dominated by Safaricom.
Latest data shows that while Safaricom saw its net profit for the financial period ending March 2019 increase to Sh63 billion, other reports showed that Airtel Kenya’s financial position worsened.
Last month, the Central Bank of Kenya (CBK) raised concern over Airtel Kenya’s operations due to mounting losses and failure to meet regulatory standards.
According to filings by Airtel Africa in preparation for listing at the London Stock Exchange, the CBK recently took several regulatory actions including levying a fine against Kenya’s second largest mobile service provider over the past year.
Initial concerns over the company’s ability to remain afloat were raised last year with the regulator carrying out an inspection on the company’s books and preparing a compliance report.