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Congo-Brazzaville: Incumbent Sotelco On the Verge of Bankruptcy
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Balancing Act (London)
ANALYSIS
29 October 2007
Posted to the web 1 November 2007
Russell Southwood
If you thought Gabon Telecom was in a mess (see issue 365), you ain't seen nothing yet. This week the troubles afflicting Congo-Brazzaville's incumbent Sotelco came into public view. It has stopped paying salaries and is as a result in a dispute with its trades unions and is clearly on the verge of bankruptcy. The Government seems caught like 'a rabbit in the headlights". The unions have also criticised equipment choices and revealed low maintenance levels affecting key services. Russell Southwood lifts the lid.
In early 2005, Sotelco's Administrateur-General Blanchard Oba announced that despite the considerable financial and operational difficulties the company was experiencing, it was "on track" to overcome them. Oba clearly needed to be an optimist because when he made his announcement he revealed that the monthly salary bill was FCFA670 million against monthly revenues of just FCFA150 billion.
Last week the company announced that it had suspended the payment of salaries to avoid complete financial meltdown. After this move, the company's two main unions (of which there are four) Sylipostel et Sytratel called on the Government to find a lasting solution to the crisis and to intervene to protect the interests of its members. The unions also complained that since there had been no audited financial accounts since 2004, there was only a hazy picture of what was happening financially.
That fateful announcement in 2005 by Blanchard Oba perhaps illustrate the scale of the problem. Remember, his monthly salary versus revenue numbers were FCFA670 million and FCFA150 million. The unions are claiming that the current position is a monthly salary bill of FCFA300 million against revenues of FCFA130 million. No staffing figures are currently available but it seems unlikely that the salary bill has been more than halved in two years.
However, the fall in income, although relatively modest, clearly compounds the fundamental problem that that the company is employing too many people and without a plan will go bankrupt. Oba was bought in to address these issues but he has clearly been unable to get to grips with the problem.
Meanwhile earlier in October, Jean Bernard Maloukat, the Sylipostel union rep, was complaining to the press that the company was buying the wrong equipment. Technicians believed that Siemens was preferable as they had already bought from the company.
However, the company went ahead with purchases from Huawei. The most recent purchase was for a switch in Pointe Noire, to replace the rather old Siemens switch. The union technicians made the obvious point that the technicians knew the Siemens equipment. However, the clincher for company was probably that Huawei was will to underwrite equipment purchases with a FCFA2 billion loan.
Maloukat also said that both the switches in Pointe Noir and the capital Brazzaville were showing what he called "weaknesses" because of lack of maintenance and that if this continued, the country ran the risk of being cut off from any international link when they ceased to function. In any other circumstances, you might take these kind of claims with a pinch of salt but in this context they have something of the ring of truth about them.
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The solution? The headline income and salary numbers make it clear that the company needs to reduce its staffing to fit its revenues and laying off a considerable number of staff is the stark reality that faces the Government. Telephone companies are not social enterprises or job creation schemes. Once the pain of sorting out these and other cuts has been carried through, the Government should privatise the company as quickly as possible so that a private investor will come in and run it profitably.
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