Telkom Kenya Battle With Communication Workers Union

By Okuttah Mark

The long-running dispute between Telkom Kenya and its workers’ union has erupted again over plans by the telecom firm to start another round of job cuts, causing the union to threaten strike action.

The Communication Workers Union on Wednesday said it had not been consulted over the cost-cutting measures and it would resist the move.

Telkom Kenya is planning to send home about 400 employees in coming weeks as part of a wider cost-management plan that will see a significant reduction in the earnings of its agents and put billions worth of assets up for sale in different parts of the country.

The company says the cost cutting plans have been informed by rising competition and the vicious price war that has persisted in the telecoms market since mid-last year, which has seen tariffs split by more than half.

“There is no justification whatsoever to retrench or send home more employees in the name of stiff competition. Competition is everywhere and Telkom Kenya should be able to compete like the rest” said Mr Benson Okwaro, the secretary general of the workers union.

“We cannot allow them to go that direction and the union will resist any layoffs with its fullest might.”

He added that the staff cuts also aimed to reduce the influence of the mighty and combative workers union, asking the government which owns a 49 per cent stake to intervene.

Over the past decade, the union has seen its members reduce from 34, 000 to 5,600 due to massive layoffs and the entry of new employment contracts especially at Safaricom and Communication Commission of Kenya.

Once this round of layoffs is completed, Telkom Kenya will have sent home about 15,500 workers in four years in an ambitious turnaround plan that began in the run-up to the 2007 Sh26 billion sale of a 51 per cent stake to France Telecom.

“We are doing this because of the price war and won’t replace them even when things improve as our employee to customer ratio is still high,” Telkom Kenya CEO Mickael Ghossein told Business Daily in an interview on Monday.

Kenya’s telecoms operators have seen revenues thin out since August last year during which the cost of airtime has fallen by more than 50 per cent halving subscribers’ monthly airtime budget. The price wars are expected to wipe out more than Sh26 billion in revenues this year.

France Telecom had hoped to return the loss making firm to the profit zone by 2010 and list at the Nairobi Stock Exchange by 2013 — a target that has been made impossible by its stay in the loss making territory.

It controls 4 per cent of the market share, behind Essar Yu’s 6.7 per cent, Airtel’s 13.5 per cent and Safaricom with 75.9 per cent.

The planned layoffs are bound to open another battle front between the union and France Telecom managers, who have faced off severally with the union since taking over management control of the firm in 2007.

First was the standoff over the delay in the handing of a Sh5 billion cheque that the government paid Telkom Kenya workers’ pension scheme last December, followed by a series of layoffs the firm has initiated in a span of four years and delay in paying workers whose contracts had been terminated.

Besides the staff cuts, Telkom Kenya will also cut back its marketing budget to Sh700 million from Sh1 billion and reduce its dealers commission from a high of 14 to 18 per cent to the range of 12 to 15 per cent to protect its margins in a market that is gripped by vicious price wars

Related posts:

Telkom Kenya To Terminate 400 Jobs. Business Daily Report.Kenyan Workers Reply To COTU Boss.Salaries Paid To Top Bankers In Kenya.Kenya Teachers Want A Salary Review.Federation Of Kenya Employers (FKE) Response To COTU.

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