JSE-listed Altech has cut back on the cost of operating Kenya Data Networks (KDN) by retrenching 51 staff members. The unit, which has battled for some time, recently lost a contract with Safaricom, which terminated its dark fibre deal, although it is still a KDN client. Altech is a majority shareholder with a 60% stake.

Altech’s group executive for converged services, Tim  Ellis, says KDN began a collective consultative process at executive committee level in May, to discuss plans for a reduction in staff in which KDN identified 51 affected employees. The unit now has more than 200 staff.

Ellis says the aim of the reduction was to reduce the company’s operational expenses in light of current business conditions in the region. The telecoms industry in Kenya is going through a challenging period, which had a knock-on effect on KDN as there was reduced demand for services, because of regional and international competition for local and international bandwidth services, he notes.

“The staff reduction is one of the many initiatives within KDN to align the revenue and cost base and to build a stronger, leaner and more competitive business.” Ellis adds that the changes will ensure KDN achieves its growth strategy. “KDN is adapting to market changes and conditions by becoming leaner and more agile in order to take advantage of market opportunities as they arise and to play a leading role in the East African economy.”

Ellis says the retrenchments were part of a larger strategic initiative to rationalise KDN’s operations by reducing non-critical positions and restructuring the operation so it is more regionally focused. The unit is forming closer alliances with other Altech operations in the region, such as Altech Swift Global and Altech Infocom, which is already having a positive impact, he says.

In April, the group said revenue for the year to February was higher, at R9.97 billion, from R9.65 billion, but its net loss widened to R435 million, from R56 million, as its African entities weighed on the company.

Altech’s East African operations saw a tough trading period with financial performance below expectations, because of a number of challenges, including currency fluctuations, high inflation rates and interest costs, sharp drops in broadband pricing, and network instability due to fibre and undersea cable breaks.

At the time, CEO Craig Venter said the company was restructuring its East African operations into a more regional-focused business entity to provide regional unity and a single interface.