Telkom Kenya has announced its intention to terminate the employment of approximately 575 of its employees, on account of redundancy following the merger transaction with Airtel Kenya.
According to Telkom, as a consequence of the Transaction between the two companies, it will discontinue the transferred business and might terminate the employees that are currently deployed to serve in certain functions. Other employees who provide administrative and/or support services are also likely to be impacted.
“In accordance with the provisions of Section 40 of the Employment Act, 2007, we have notified the Communications Workers Union (COWU), and sent out individualized letters to staff where applicable as well as to the County Labor offices, giving one-months’ notice with effect from July 31, 2019, of our intention to terminate the employment of approximately 575 of our employees, on account of redundancy, as a result of the Transaction,” said Telkom in a notice.
Telkom issued a statement that there will be a thirty-day consultative period to enable dialogue between the business and staff, ensuring that any ideas, suggestions, and queries are received and given due consideration.
In the meantime, the Airtel-Telkom merger will retain non-transferring business activities in a redefined Telkom organization along with human resources that will be required by the organization. This would mean that the HR department won’t be declared redundant.
However, the redundant employees would be offered chances in the joint venture company if there would be available positions and provided, they meet the required standard recruitment criteria.
Airtel Kenya and Telkom Kenya Limited had signed a binding deal on February 8, 2019, that would have them combine their respective Mobile, Enterprise and Carrier Services businesses in Kenya to operate under a joint venture company (JV Co) to be named Airtel-Telkom.
The finalization and closure of the Transaction are subject to approval by the relevant authorities, which approvals are still on considerations.
Some analysts argue that the merger will have a little impact in presenting a strong challenge to Safaricom who are currently having the market leadership.
“Both Airtel and Telkom Kenya have focused primarily on pricing as their main customer acquisition strategy, ignoring the impact of product diversity,” argues a Sterling Capital analyst.
“Although this has been somewhat effective in the short-term, it has not delivered the desired impact in terms of business revenue growth and profitability.”