Kenya's third leading telecommunications firm Telkom Kenya plans to lay off 575 employees in the coming month, a repercussion from the joint venture entered into with Airtel Kenya.

The company said that the merger will lead to redundancies in the transferred business.

Group Managing Director Mugo Kibati said, "As a consequence Telkom Kenya will discontinue the transferred business and must terminate the employees that are currently deployed to serve in this function. Other employees who provide administrative and/or supportive services are also likely to be impacted."

The latest development seemingly contradicts a statement the company issued regarding the merger in February 2019, which stated: "there will also be no change to the current respective leadership and management, legal, organisational and staffing structures."

Management added that the new entity "will result in enhanced scale and efficiency, a large distribution network and strategic brand presence and therefore enhancing the range, quality of products and service offering to the market , therefore greater choice and convenience to the customer."

The Communication Authority (CA) approved the merger of the two companies and workers made redundant will be redeployed into new positions within the newly formed venture.

Airtel's losses

Amid discussion of the deal, Airtel Kenya has experienced a loss of Kshs 2.8-billion in the financial year ending 31 December 2018 - although a better result compared to Kshs 5.9-billion recorded in the 2017 financial year.

The company's accumulated loss now stands at Kshs 68-billion, according to its financial records.

Airtel Kenya is relying on lenders and shareholders to provide "any additional funding required to meet its obligations.

According to the company, it has secured commitment from shareholders to this effect.