Telkom to lay off 4,400 staff, and tackle Sh69b debt
By John Oyuke
Telkom Kenya plans major debt and project swaps to rid it of liabilities amounting to Sh68.8 billion as part of restructuring before privatisation.
The parastatal says it has finalised plans to lay off a further 4,421 employees as part of the process before the end of this year.
Managing director, Mr Sammy Kirui said Phase III of staff rationalisation, whose criteria has been defined by an external human resources consultants, Pricewaterhousecoopers, is scheduled to be completed by the end of September 2007 at an estimated cost of Sh3.8 billion.
Chief Finance Officer, Mr David Muriithi said Telkom Kenya is determined to have a debt-free balance sheet before the entry of a strategic investor with the expectation that this will increase the company’s value.
"As a consideration of the acquisition (transfer) of the 60 per cent shareholding held by Telkom in Safaricom, the Government will support the funding and swapping of various liabilities and projects in Telkom Kenya," he said.
They were speaking during the ongoing Telkom Kenya Privatisation Bidders Conference in Nairobi.
Funds available
Mr Solomon Kitungu, Director of Reforms in the Ministry of Finance, said the Government has already factored the funding initiatives in the current budget, with Sh41 billion made available towards the process.
Seven bidders have shown interest in the Telkom privatisation, which would see the Government sell 51 per cent of its interest in the utility.
The firms are British Telecom, France Telkom, and Reliance Communications, Tata Holding and MTNL, all of India, Alcazaar of Kuwait and Telkom SA.
Muriithi said support from the Government as a result of the unbundling of Safaricom will come in form of cash injections and debt swaps.
This, he pointed out, would help Telkom deal with issues of tax liabilities, pension fund deficit, staff restructuring, loans and Government debtor balances, new Telkom mobile licenses and bridging finances.
In clearing its liabilities, Telkom Kenya would have to pay Kenya Revenue Authority (KRA) Sh36.3 billion in principal tax of Sh15.4 billion and outstanding interest and penalties on tax amounting to Sh20.9 billion.
It would also need to settle a pension liability of estimated at approximately Sh10 billion and repay bridging finance – phase II of Sh5.8 billion. Other liabilities include retrenchment phase III financing of Sh3.8 billion, Safaricom loan principal Sh2.2 billion ($33m) plus interest of Sh3.8 billion.
This in addition to Safaricom interconnection interest of Sh1.3 billion, Paris Club and other loans paid by Government amounting to Sh3.8 billion. There is also the Government debt on telephone and data lines amounting to Sh3.4 billion, new mobile license (US$55m), which requires Sh3.9 billion and liquidity and investment support of Sh3.5 billion.
Telkom Kenya plans major debt and project swaps to rid it of liabilities amounting to Sh68.8 billion as part of restructuring before privatisation.
The parastatal says it has finalised plans to lay off a further 4,421 employees as part of the process before the end of this year.
Managing director, Mr Sammy Kirui said Phase III of staff rationalisation, whose criteria has been defined by an external human resources consultants, Pricewaterhousecoopers, is scheduled to be completed by the end of September 2007 at an estimated cost of Sh3.8 billion.
Chief Finance Officer, Mr David Muriithi said Telkom Kenya is determined to have a debt-free balance sheet before the entry of a strategic investor with the expectation that this will increase the company’s value.
"As a consideration of the acquisition (transfer) of the 60 per cent shareholding held by Telkom in Safaricom, the Government will support the funding and swapping of various liabilities and projects in Telkom Kenya," he said.
They were speaking during the ongoing Telkom Kenya Privatisation Bidders Conference in Nairobi.
Funds available
Mr Solomon Kitungu, Director of Reforms in the Ministry of Finance, said the Government has already factored the funding initiatives in the current budget, with Sh41 billion made available towards the process.
Seven bidders have shown interest in the Telkom privatisation, which would see the Government sell 51 per cent of its interest in the utility.
The firms are British Telecom, France Telkom, and Reliance Communications, Tata Holding and MTNL, all of India, Alcazaar of Kuwait and Telkom SA.
Muriithi said support from the Government as a result of the unbundling of Safaricom will come in form of cash injections and debt swaps.
This, he pointed out, would help Telkom deal with issues of tax liabilities, pension fund deficit, staff restructuring, loans and Government debtor balances, new Telkom mobile licenses and bridging finances.
In clearing its liabilities, Telkom Kenya would have to pay Kenya Revenue Authority (KRA) Sh36.3 billion in principal tax of Sh15.4 billion and outstanding interest and penalties on tax amounting to Sh20.9 billion.
It would also need to settle a pension liability of estimated at approximately Sh10 billion and repay bridging finance – phase II of Sh5.8 billion. Other liabilities include retrenchment phase III financing of Sh3.8 billion, Safaricom loan principal Sh2.2 billion ($33m) plus interest of Sh3.8 billion.
This in addition to Safaricom interconnection interest of Sh1.3 billion, Paris Club and other loans paid by Government amounting to Sh3.8 billion. There is also the Government debt on telephone and data lines amounting to Sh3.4 billion, new mobile license (US$55m), which requires Sh3.9 billion and liquidity and investment support of Sh3.5 billion.
posted by Mwananchi at 7:12 PM
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