Technology

Telecom firms shed jobs to hedge against hard times

CCK

The Communications Commission of Kenya headquarters in Nairobi. Data from CCK shows that telecommunications industry shed thousands of jobs in the past 12 months as operators moved to shield their revenues. Photo/FILE

The telecommunications industry shed thousands of jobs in the past 12 months as operators moved to shield their revenues from market pressure arising from stiff competition, the latest industry report says.

Telecommunication and mail firms cut their workforce by between four and five per cent as the market conditions changed the operators’ fortunes – mostly for the worse, according to the industry regulator, the Communications Commission of Kenya (CCK).  

Mobile operators cut the number of people working for them to 5,542 employees from 5,827 or 5.6 per cent a year ago as Internet Service Providers (ISPs) cut their workforce by 4.4 per cent to 7,154 from 7,482.

The surface mail monopoly, the Postal Corporation of Kenya shed more than 800 jobs to close the year with 4,900 down from 5,720 in the previous year.

The report shows that telecoms giant Safaricom tightened its grip on the voice market, helped by its subscribers whose ranks did not grow but talked more in the year to give the operator 80.7 per cent share of the 23.9 billion call minutes made during the year.

“Safaricom continues to have the largest market share by voice traffic since a large percentage of off-net traffic from other networks terminates to its network,” the CCK report says.

Airtel closed the year with 10.9 per cent share of the voice call market, Essar’s Yu 7.7 per cent while Telkom Kenya trailed its rivals with 0.8 per cent of the total minutes.

Safaricom’s market share by subscriber base however continued to dip as its rivals lured its customers with cheaper call tariffs and promotion offers.

READ: Safaricom subcriber marketshare drops marginally as rivals gain

Safaricom’s market share by revenue partly exceeds its market share by subscription and traffic because of the comparatively higher voice tariffs it charges particularly on off-net calls.

Industry insiders said the job cuts in voice and data market are linked to stiff competition that pulled down tariffs and ultimately the revenues.

Telkom Kenya led its mobile telecoms rivals in sending home more than 400 employees, the highest in the industry while Airtel severed links with 51 employees. Kenya Data Network also axed 50 employees during the same period.

READ: KDN sends staff home in cost-cutting drive

CCK said total revenues earned by the four mobile telecoms operators rose to Sh116 billion from Sh104 billion in 2010 helped by increased investment in network expansion to reach the uncovered areas and to build capacity in the data market.

The operators spent Sh34 billions to establish or upgrade their 2G and 3G networks, Sh7 billion more than the previous year’s Sh27 billion.

Safaricom and Orange stood out as the only operators whose market share by subscriber base dropped.

Safaricom shed four percentage points to close the year with 64 per cent of the market or 19 million from the previous year’s 68 per cent.

Kenya’s leading telecoms operator attribute the decline to the high cost of living in the period under review that negatively affected customers across the board.

“Generally there was a decline on the number of minutes of usage across the board which we think is as a result of increased cost of living, however we increased our market share due to reliable customer support, wide network coverage and availability of our products and services in all corners of the country,” said Nzioka Waita, director corporate affairs Safaricom.

Safaricom increased its charges for calls within its network to Sh4 per minute from Sh3 and Sh5 from Sh4 for calls across networks in the year under review.

Telkom Orange closed the year with 3.1 million subscribers or 10.5 per cent of the market from the previous year’s 10.8 per cent.

The two Indian operators Airtel and Essar’s Yu increased their subscriber base by different margins.

Airtel closed the year with 4.9 million customers or 16.5 per cent market share having grown by 2.3 percentage points over the previous year.

The company attributed the growth to increased investment in its people, product innovation and improvement in quality of service that has made it the network of choice for more customers. 

“The decline in the Safaricom and Telkom’s market share was taken up by Airtel and Essar whose share of the market rose by almost similar margins,” the CCK report says.