This announcement is a departure from an earlier government position that it was not in a hurry to sell Safaricom shares.

"There was no need for having money in Safaricom while Telkom Kenya is still struggling, yet Telkom employs more people than Safaricom," Kagwe said.

Kenya Telkom plans to make 12,000 of its staff redundant may have suffered a setback as the Government has so far failed to get an adequate bid for its 11% stake in its mobile subsidiary Safaricom. Vodafone's bid of Sh7.2 billion (US$ 100 million) for the stake was turned down last year. The decision on the bid has been delayed for well over six months, presumably to allow time for the redundancy package to be determined. The Government will require between Sh10.5 billion and Sh21.9 billion (US$146.8 - 304 million) to fund the package.

Last year, the former Permanent Secretary, James Rege, said Telkom was in the process of eliminating 12,000 of its 18,000 workers. Rege at the time said the move would save the corporation Sh400 million a month in wages. He said Telkom earned Sh1.2 billion a month, but half the amount went to salaries.

Raphael Tuju, who is also the former minister, had said the Government was considering dividing Telkom Kenya into three entities with some of its services outsourced to private operators. He named some of the services to be outsourced as the Kenya Telecommunication Training College (KTTC) and Gilgil Telecommunication Industry (GTI) – GTI assembles telecommunication equipment.

Tuju had said the Government would make its decision based on a report from consultants hired to advise the Government on the future of Telkom. The minister said the Government would not be bound by the recommendations since there could be other options of restructuring Telkom.

Source: The East African Standard - WDR/Intelecon Regulatory News