Telkom Kenya To Terminate 400 Jobs. Business Daily Report.

Telkom Kenya has embarked on a fresh round of business realignment that will see a fifth of its Kenyan workforce lose their jobs, significantly reduce the earnings of its agents and put up billions worth of assets for sale in different parts of the country.

People familiar with the plan told the Business Daily that the telecoms operator plans to terminate 400 job contracts in coming weeks, leaving it with 1,700 workers In Kenya.

The move is part of a wider cost-management plan that also comes with a Sh300 million cutback in the company’s marketing budget to Sh700 million.

Telkom Kenya’s dealers are also expected to record lower earnings following the reduction of their commissions from a high of 14 and 18 per cent to the range of 12 to 15 per cent.

Telkom reduced the commissions to protect its margins in a market that is in the grip of vicious price wars.

Though the company says the sale of large swathes of land spread across Kenya’s major towns is meant to boost its cash reserves that have been eroded by rising competition and fall in tariffs, analysts warned that it risked being seen as an asset stripping exercise coming barely three years after the company was sold to France Telecom.

Mr Mickael Ghossein, Kenya’s  chief executive, confirmed the turnaround efforts and attributed it to the vicious price war that has persisted in the telecoms market since mid last year.

“We are looking for a lean team and are in talks with the workers union to do it professionally before making a formal announcement,” said Mr Ghossein. “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.”

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 Sh6 billion in revenues this year.

“It was just a matter of when for the operators to start the laying off exercise and as I have said before, the drastic cut in tariffs were not going to be sustainable and Telkom’s Kenya move has just opened a lid into the whole issue,” said Information Permanent Secretary Bitange Ndemo.

He said the country should expect more job cuts.

Once this round of layoffs is completed, Telkom Kenya will have sent home about 15,500 workers in four years.

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