KDN Inhumanely Sacks 50 as Safaricom Cancels a Ksh 500 Million Annual Contract

Posted In Business - By Tech Mtaa On Thursday, May 31st, 2012 With 6 Comments
KDNs New Headquarters Opened KDN Inhumanely Sacks 50 as Safaricom Cancels a Ksh 500 Million Annual Contract

KDN COO Rikus Matthyser, Naushad Merali of Sameer Africa and Tim Ellis from Altech Group

So Kenya Data Network’s (KDN) problems are just multiplying. After last year’s claims of staff morale problems blamed on discrimination by top management assigned from South Africa’s Altech, the company is in the news again over claims that more than 50 employees have been immediately declared redundant with a further 20 expected to be shown the door by year end.

KDN CEO, Shahab Meshki has already confirmed the retrenchment of 40 employees with a further 12 expected to go by the end of July. Part of statement from Meshki reads:

“This is about ensuring the long-term sustainability of our business, which in turn impacts on our ability to contribute to the future of Kenya and its people. The actions that we have taken will eliminate inefficient duplications that existed in our business. We have had to rationalise operational positions.”

KDN HR boss, Deon Swanepoel issued the sacking letter which required the affected employees to pack and leave the KDN Parkside premises in just hours. The data carrier cited “cost-cutting and high levels of client churn” as the reasons for sacking the local employees. This has greatly affected the morale of staff some of who joined KDN from other ISP and competitors in the country.

What is funny is that KDN continue to absorb more of the so called “foreign technical expertise” brought in by Altech South Africa and some head-hunted by former Essar Kenya CEO, Atul Chaturverdi. Mr Chaturverdi is famously known for running down Kenya’s youngest mobile services operator, yuKenya and later hawking the company to business moguls and telcos in the East African region. Few were interested in buying out the company.

Senior executives at the Mombasa Road based “carrier of carriers” believe that Atul Chaturverdi might be intentionally making the wrong decisions or influencing the current CEO to make the wrong decisions as a strategic move to drive Shahab Meshki from the company and he be appointed in his position. Some also believe that

The imported foreign workforce who draw huge remunerations and allowances mostly stay at the Mimosa apartments.  KDN with the help of Atul Chaturverdi hired an “2 Indian expatriates’” who draw a minimum salary of US $12,000, provided with furnished apartments and get great allowance and even membership at the prestigious golf club close to Mimosa. These are happening more during the same month they are sacking local employees as “cost-cutting measures”.

KDN’s current situation is believed have been worsened by the recent flight of key clients like Safaricom, MTN Business with even Airtel now having one of KDN competitors as its primary data provider. Safaricom is rumoured to have withdrawn an annual contract worth Ksh 500 million as KDN suffers frequent terrestrial cable cuts and power outages at its core data centre.

During the recent release of its yearly results the Altech group made a net loss of 450 Million South African Rands (Ksh 4.5 billion), up from the 56 million Rands (Ksh 560 million) loss in 2010/2011. Altech Group blamed the loss on Altech West Africa and East Africa. With the announcement, the group indicated that they are strongly looking to dispose the West African arm.

Craig Venter, Altech Group CEO said:

“Results from our East and West African operations were disappointing. However, we remain positive that the remedial measures that we have put in place in East Africa will have a positive effect in the future.

We are busy restructuring our East African operations into a more regional-focused business entity to provide regional unity and a single interface into key customers. This close collaboration between the regional operations is already having a positive impact on our business in the region.”

Venter added that the company recently completed its Kampala-Kigali fibre link closing the regional ring network  from Mombasa through Nairobi to Kampala to Kigali and back through Tanzania to Dar es Salaam.

In 2011, Altech Group bailed out KDN to the tune of Ksh 400 million in the case where Soliton Telmec threatened to wind-up KDN if the debt was not paid. The company has previously sued Safaricom over an accrued debt of almost Ksh 5 million with the matter now out for arbitration.

KDN’s woes can also be trace to the entry of the former Chief Operating Officer, Rikus Matthyser, as CEO. Rikus made all the wrong moves before he was later edged out from the company. Rikus is reported to be nowadays based in South Africa with regular flights to Nairobi as a “consultant”. It is not clear what he consults on.

Employees at the company claim that it would make sense if the company changed its name to South African Data Network (SADN) since  in the current arrangement, the most senior most manager from Kenya is some junior HR Officer. The CEO is an Iranian born German, there are two CTOs (one French and another Indian), HR and Finance bosses are South African. Altech even assigned a junior Finance Manager from South Africa going against even the country’s labour laws.

UPDATE:

A source at Altech has indicated that the group is cutting down on KDN and Swift Global workforce with a plan of merging the two companies into one entity. There were over 200 employees at KDN before the downsizing. They have already cut down 52 low level staff and are expected to reduce the number of the senior level managers. That will leave KDN with below 150 employees. The group also plans to sack around 18 employees from the current 30 at Swift Global. So the remaining 12 would join KDN’s 150.

The source also clarified that Safaricom cancelled a Ksh 40 million per month recurring contract as KDN failed to deliver on the Service Level Agreement. Interesting!!!

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  • http://profile.yahoo.com/SJM4UAJ6A6MRBYSYJ2LZL2VERA Muhiiga

    When you see Merali dumping his companies, you know things are gagnagagna there. You best move.

  • Government Chief Information O

    KDN.. Do you think that you can gain or experience financial and organizational benefits if you as Alai says, “Inhumanely Sack” your staff? If you cannot already enhance efficiency and productivity with those staff number how can you pull it off with less? You maybe tightening on earnings but causing unemployment. If you are failing to penetrate market share then you are ill-advised in most cases. Wake up and empower more Kenyans! Not Expats. Kenya has capacity. Your heading the wrong way! Kenya needs to take care of Kenyans!

    “SADN” haha. I like that one!

  • chupacabra

    haha. Naushad Merali gives every company he touches the kiss of death. Typical of South Africans to have useless contacts here. They would have given that guy a wide berth.

  • http://twitter.com/Isa_Tosh Isaa Capaldi

    There ain’t no better medicine than TIME. Let’s just wait and see if KDN doesn’t plunge just like Yu and Airtel who together have the habit of kitchen-managing companies like it’s a “kibanda ya muindi”. Just wait…

  • http://www.facebook.com/profile.php?id=509391166 Charles Kinyanjui

    This is Hazzy!

  • Mugo Evans

    Run run Kenyans from these companies.