Telkom back to the drawing board

May 26, 2011
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, NAIROBI, Kenya May 26 – Telkom Kenya has gone back to the drawing board for a new strategy that is geared towards responding to the increasingly competitive mobile telecoms market.

Chief Executive Officer Mickael Ghossein told Capital Business on Thursday that the new strategy would shift focus to the commercial aspect of the business where they intend to reduce operating costs that have been growing faster than revenues.

"We have a lot to do in turning the company to think commercial and not technical," Mr Ghossein said.

He pointed out that the company had a large workforce that was mainly dealing with infrastructure, but was short staffed with the necessary marketing and product development.

"Our costs are more than our revenues. We need to move up and change the human resource capacity in strategic areas," he said.

As part of the restructuring programme, Telkom Kenya is planning to send home close to 400 employees in coming weeks as part of a wider cost management plan that will see a significant reduction in the earnings of its agents.

However, those plans will have to be put on hold as the Communication Workers Union has challenged the move saying it was not consulted.  Mr Ghossein was cagey in revealing details of how the process was going choosing to let it play out its own course.

Since acquiring a 51 percent stake in the company, France Telcom has been on a turnaround plan to get the company back into profitability. One facet they focused on was cutting down the large workforce.

However, the cutthroat competition in the market has poured cold water on those plans as it has been forced to respond to the market dynamics.

"I think the sector is in a very dangerous situation despite what other people say. Frankly speaking, I think we are making many mistakes," he stressed.

The Communications Commission has been on a quest to bring down call tariffs. In August 2010, CCK cut termination rates by half from Sh4.42 to Sh2.21, and expected to fall further this July to Sh1.44 and then to Sh0.99 in 2013.This has sparked off vicious price war among operators that has seen voice revenues decline.

Mr Ghossein said one aspect the company will be looking into is developing new revenue streams that make it attractive to its customers buy delivering integrated services for both commercial and residential use.

"We came into the market late but we have been making inroads. 0ne area is fibre-to-buildings, which will grow our corporate business segment," he said.

Telkom Kenya has also invested Sh4 billion to construct its 3G network, by partnering with ZTE Corporation, which will enable it offer more Internet services.

"We are optimistic that in this first half we should have rolled our 3G service," he said adding current ongoing tests had shown positive signs.

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