Troubled Telecom Cuts Jobs

TELECOM Namibia plans to cut jobs this month in an exercise the company calls a “voluntary separation exercise”.

A memo sent to the staff gave workers interested in the offer until 29 August 2014 to inform the company, and that the date for ‘separation’ is 30 September 2014.

By yesterday, however, The Namibian could not establish the number of workers who had taken up the offer. It could also not establish how much the ‘separation’ exercise would cost the company.

Both company spokesperson, Oiva Angula, and chief human resources officer, Andrew Kanime, could not be reached for comment.

Kanime was said to be out of town, according to an official from his office, while Angula did not respond to calls yesterday.

According to the memo Kanime sent to staff last month, the job-cutting exercise will “enable the company to relentlessly manage its labour costs levels”.

Kanime said, in the memo, that the other reason was to give a chance to those occupying redundant positions to leave the company and speed up the re-organisation of the company by offering early retirement packages.

The exercise excludes workers due to retire in 12 months.

The memo said those in redundant positions would be given preference during the exercise and also those who are 50 years and older.

Job cuts will also get priority in areas where employees’ skills are not aligned to their current position or the company’s medium term skills requirement.

“Employees, whose skills are not aligned to their current position or to the company’s short to medium term skills requirements. Employees whose positions are likely to be redundant but would not be easily transferable to other departments for training,” the memo said. Last month, Fitch Ratings downgraded Telecom’s long-term local currency Issuer Default Rating to BB from BBB and its long-term rating to A-from ‘A. “The outlooks are negative. The downgrade reflects our view that state support for Telecom has weakened. Telecom’s standalone credit profile has deteriorated with no significant evidence of government support. We also note that so far this year Telecom has not requested additional government support,” Fitch said.

The agency said Telecom’s cash flow generation looks to continue into the rest of 2014, given a decline in fixed-line revenue and high capital expenditure.

Fitch noted Telecom’s mobile network rollout has been delayed by approximately nine months with severe revenue implications. So far, 190 base stations have been deployed compared with a planned target of 253 by this month.

Fitch noted that Telecom has lower mobile coverage and data capacity than expected, limiting subscriber take-up and revenue growth. A new billing and customer service support system installed in November last year has been affected by technical problems.

Telecom had negative free cash flow of N$223 million in 2013. Fitch said it expects cash flow to remain negative for the next two years. In 2013, Telecom faced declining fixed-line revenue, which was 35% of total revenue, compared with 42% in 2012.

Telecom has sold its shareholding in Mundo Startel and expects to receive N$20 million this year. Telecom is expected to receive N$180 million for selling its stake in Neotel of South Africa.

Source : The Namibian