Telkom Kenya lays off 72 percent of its employees

Telkom Kenya has announced plans to lay off 575 workers, equivalent to about 72 percent of its workforce, ahead of its proposed merger with Airtel Kenya.

The move will leave Telkom, the country’s third-largest, loss-making telco, with a skeleton staff of only about 225.

Telkom, which is majority-owned (60 percent) by UK-based private equity firm Helios Investment Partners and 40 percent by the Kenya government, employed thousands of workers in its heyday.

The latest staff cuts therefore signal a remarkable fall of the former telecoms behemoth whose strategic assets straddle Kenya’s 47 counties.

“We hereby give you one month’s notice, with effect from the date of this letter of our intention to terminate the employment of approximately 575 of our employees on account of redundancy as a result of the intended combination of Telkom Kenya’s mobile, enterprise and carrier services businesses with Airtel Networks Kenya,” said Telkom Kenya chief human resources officer Catherine Olaka in a statement.

The planned redundancies come as a huge blow for the struggling firm’s workers and is set to worsen the country’s already severe labour cuts.

The telco in the memo to workers dated July 31 said the layoffs are intended to make the merged entity more efficient.

Telkom Kenya and Airtel, the Kenyan subsidiary of Indian telecom giant Bharti Airtel, have sought the Communication Authority of Kenya’s (CA) nod and that of Competition Authority of Kenya (CAK) to merge their mobile, enterprise and carrier services to form a single joint venture company to be named Airtel-Telkom.

Telkom Kenya had about 1,600 employees as at 2015. But a layoff affecting 500 workers in that year shrunk the staff size further to below 1,000.

“As a consequence of the transaction, Telkom Kenya will discontinue the transferred business and must terminate the employees that are deployed to serve in these functions,” Ms Olaka told employees.

Telkom Kenya chief executive Mugo Kibati confirmed the retrenchments in a separate memo.

The telco said affected employees would be eligible for severance pay in line with their contracts.

“Employees who will be declared redundant will receive terminal dues in line with their employment contracts, the Collective Bargaining Agreement and Employment Regulations,” said Ms Olaka.

Communication Workers Union secretary-general Benson Okwaro, whose union represents the Telkom Kenya workers, said the union is “ready to negotiate packages” that will cushion the affected workers.

“Negotiations will ensure they will be paid effectively,” Mr Okwaro, who is also the Central Organisation of Trade Unions (Cotu) assistant secretary-general, said in an interview. He added that he was in talks with the Telkom Kenya management over the planned restructuring.

Employees routinely face redundancy after mergers or buyouts as the whole point of the process is to achieve efficiency through cost cutting.

The workers could get some respite, however, if the competition watchdog orders Telkom Kenya and Airtel to retain the workers for a certain period going by the anti-trust agency’s recent directives.

CAK director-general Wang’ombe Kariuki recently ordered soon-to-merge lenders NIC and CBA to retain their workers for a year.

In 2016, the competition watchdog in another ruling ordered listed banking services firm I&M Holdings to retain 108 employees of Giro Commercial Bank that it had acquired, as a pre-condition for approval of the takeover.