The country’s biggest telecoms group, Econet Wireless Zimbabwe, has given retrenchment notices to 100 workers as it moves to cut costs in the wake of falling revenue.
BY BUSINESS REPORTER
The latest job cuts brings to over 130 the number of employees who have lost their jobs since the beginning of the year, Econet chief executive officer Douglas Mboweni said in a statement.
Mboweni said the fall in revenue was created by a directive from the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) which the company is contesting in court.
The Potraz directive led to a 35% reduction in tariffs effective January 1, this year which resulted in a corresponding fall in revenue for mobile operators. Potraz plans further reductions in December and next year.
Mboweni said the affected employees had been informed of the decision and would receive shares on top of retrenchment packages.
“The shares are not part of the retrenchment package but are an incentive for speedy closure of the retrenchment process that will reward long service with the company. This award will only be available to those employees who have been identified for retrenchment, who voluntarily agree to abide by the process and time-frames outlined in the retrenchment process. The award of shares will be done after the retrenchment process is completed,” he said.
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Mboweni’s statement followed a memo written to staff by Econet’s human resources department on the impending job cuts due to the deteriorating operating environment.
In the letter to staff dated October 2, Econet said the introduction of 5% excise duty on airtime sales had affected Econet’s revenue after Potraz prohibited operators from recovering the excise duty from subscribers. This, Econet said, had the effect of lowering tariffs by 5%.
Econet told staffers that it had suffered disruption of revenue due to an uneven playing field as it was the only operator that had paid the $137,5 million licence fees.
“The company had to incur debt to be able to make this payment. A significant part of the company’s revenues has to be applied to servicing this debt, something that competitors are not burdened with,” Econet said.
“Furthermore, TelOne and NetOne have been failing or reluctant to pay their interconnect obligations which has put a huge strain on the company’s cash flows.”
The latest job cuts come after the company said it had saved $70 million through various cost-reduction measures.
