Kenya Data Networks (KDN) has announced more than 50 redundancies, as a result of the loss of key clients and stiff competition.

KDN, which is 60% owned by South Africa’s Altech, has 3000 kilometres of fibre optic cable networks in the East African country.

The company leases these networks to large corporate firms such as MTN Business, Equity Bank, Airtel and Barclays.

But KDN’s business has come under intense pressure, as the firm reported a fall in revenue from $37 million to $24.6 million for the six months ended August 31.

Moreover, Kenya's largest telco, Safaricom, has withdrawn a contract from KDN to partner with Bharti Airtel to lay its own fibre network.

And MTN Business is reportedly building its own fibre optic network in the country, in a move that is expected to reduce the number of lines it leases from KDN.

Increased competition from Wanachi Telecoms has also eaten into KDN’s market share.

According to the Communications Commission of Kenya (CCK), KDN’s dominant market share fell from 36.2% to 33.4% in December last year. Wananchi Telecoms, on the other hand, increased its market share to 23.5% by December, from 14.25% in September.

Shahab Meshki, KDN’s chief executive officer, said the decision to lay off staff was made after market analysis to “reduce the company’s cost base in light of the current demanding market conditions”.

“This was a very difficult decision for KDN as it affects our colleagues and friends,” said Meshki.

“But it is absolutely essential that we do so in order to remain viable in these very challenging times, and we are doing all we can to minimise job losses,” said Meshki.

Atul Chaturvedi, the chief commercial officer of KDN, said the firm is speaking to international partners to inject money into the business.

“This business requires a lot of capital,” said Chaturvedi.

“We are talking to 3 to 4 international partners to invest,” he added.

The talk of further potential investment in the company has also been echoed by the chief executive of Altech, Craig Venter, in a statement.

“Altech will retain its investments in Kenya, but is looking at equity partners to inject money into the business in order to take it to the next level of positive growth.”

KDN's poor performance has particularly hurt Altech.

The financial results of Altech indicate a pre-tax loss of $28.4 million for the year ended February 2012, from a prior profit of $54.4 million.

This loss was attributed to the poor performance of its East and West African businesses.