24 November 2012

Kenya: State to Spend Sh5 Billion to Help Restructure Telkom

THE government has injected Sh2.5 billion in Telkom Kenya and is pushing for reorganisation of the management team to include more locals, Finance Minister Njeru Githae said yesterday.

Githae said that the government's move comes after the firm consistently posted disappointing results since takeover by France Telecom five years ago.

"It was decided that we inject Sh5 billion into Telkom and Telecom France also inject a similar amount and write-off some of the shareholder loans to the company because it was quite substantial," Githae told reporters yesterday.

The restructuring may also result in more job cuts at Telkom which has previously laid of hundreds of staff after the entry of France Telecom. Githae noted that it still had a bloated workforce that was not commensurate to the turnover.

France Telecom had loaned the telecommunications firm Sh30b according to the finance minister. The government has already paid out half of the Sh5 billion amount to rescue Telkom, Githae said.

Cabinet also approved the restructuring plan for Telkom on Thursday during its weekly meeting. Under the plans to rescue Telkom, the government which has 49 per cent stake said an agreement has also been made that a new business plan be drafted to make the firm profitable.

"We need to change the business orientation instead of all top positions being held by people from France...they haven't understood the local business environment," noted Githae.

"The company should look for top Kenyan employees for some of these top jobs because they know local conditions, habits, circumstances of the business and the habits of Kenyans."

Githae added that the new business plan will also have to harmonise the ICT functions of Telkom which he noted were on different platforms that were not synchronised for more efficiency.

He said Telkom neeeds to concentrate on its niche which is mostly landline and avoid "always wanting to compete with Safaricom," which he said was a giant.

On staff layoffs Githae said that as much as the government does not want to micromanage Telkom, it hopes that staff will not be cut in an inhumane manner and result in uproar like the Kenya Airways layoffs.

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