Airtel’s $170m loss in Africa triggers downsizing in Nigeria

Airtel- image source, itnewsafrica

Airtel- image source, itnewsafrica

THE aftermath of losing about $170 million in it Africaís operations may have triggered the sack of some staff of Airtel telecommunications firm in Nigeria in a bid to manage cost.

Though, a statement made available to journalists and signed by the Director of Corporate Communications and Social Responsibity at Airtel, Emeka Opara, claimed that the telecommunications firm was repositioning for next growth phase and as such had to embark on a strategic restructuring process that will reposition the business and reinforce its competitiveness in the market place, but report has it that close to 30 per cent of the companyís staff were asked to go earlier in the week.

It was also gathered that the affected staff were however, given three monthsí salaries in lieu of notice and an additional one-month pay for every year they had worked.

The Guardian had reported in July that the parent company, Bharti Airtel was planning to reduce its African workforce by 20 per cent. The paper also reported last week that the telecommunications firm also claimed to have recorded about $107 million loss in its African operations.

Bharti Airtel was founded by Indian billionaire, Sunil Bharti Mittal on July 7, 1995 in India and currently operates in 20 countries across South Asia, Africa, and the Channel Islands.

It reported a total customer base of 247 million worldwide by March 31, 2015, including 188 million mobile customers and 16 million fixed broadband customers.

The firm, which is the third largest telecommunications operator in Nigeria, after MTN and Globacom, currently enjoys 20 per cent market share and over 31 million subscribers. It has about 17.6 million Internet subscribers in the country.

Bharti Airtel snapped the assets of Kuwaitís Zain in the continent for $9 billion in 2010.

The telecommunications firm according to Times of India, last week, claimed that despite beating estimates with a 10.1 per cent rise in its global net profit in the second quarter of the fiscal year; its Africaís operation has suffered $170 million losses.

The firm, which recently cancelled some deals to sell more than 3,500 towers it owns in six African countries, said the 10.1 per cent rise in net profit was helped by rising data usage but continued losses in Africa, sustained competitive pressure on its voice business and fall in interconnect and roaming charges continued to drag.

Commenting, the Managing Director and Chief Executive Officer, India and South Asia, Gopal Vittal, said: “Airtel’s revenue growth in India has accelerated to 13.3 per cent in Q2 on an underlying basis, the highest in the last 12 quarters.”

He was referring to revenue adjusted for termination rates reduction and Africa tower assets divestment over the corresponding quarter last year.

The firm disclosed that Africa net loss widened to $170 million from $124 million a year ago, adding that its overall net interest costs rose to Rs 1,053 crore from Rs 687 crore a year earlier.

“Adverse currency movements resulted in forex and derivative losses of Rs 809 crore, significantly higher than Rs 219 crore in the corresponding quarter last year,” the company said.

Meanwhile, Opara said the exercise, which is focused on aligning the companyís structure with its operating model, also entailed a right sizing that will impact a section of the telecommunications current workforce.

“We wish to assure that, in accordance with best practice, a robust plan has been put in place to cushion the effect of the exercise on the impacted employees and ensure that the process is seamless.

“One of the key objectives is to create a high performing organisation, which satisfies the needs of all of our stakeholders, especially our customers, as we step into the next growth phase of our operation.”

According to The Guardian, earlier report on the planned downsizing, the telecommunications firm had planned to reduce its headcount in Africa by between 15 per cent and 20 per cent this year, including the departure of 20 senior executives in the region.

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