Struggling Internet & pay TV provider Zuku sheds hundreds of jobs in major overhaul

Wanachi Group, the parent firm of struggling pay TV and Internet services provider Zuku  is set to shed hundreds of jobs in a major overhaul to stand against stiff competition from broadband only service providers Jamii Telecom, Safaricom home fibre, Liquid Telecom and SEACOM as well pay TV competition from Multichoice’s DStv and GOtv.

Established in 2008, the Wananchi Group Holdings business propositions include ZUKU DTH pay TV services, ZUKU residential fibre broadband , Pay TV and telephone services and ZUKU programming and corporate services under the brands Simbanet, Alldean and Isat across East Africa and beyond.

The restructuring move will see the firm re-integrate its DTH pay TV services and its residential fibre broadband services into one thereby affecting various positions at the firm in move that will save it money for operations, marketing, innovation and consolidating its already gained market share in the residential broadband and cable TV market.

For sometime, Zuku through it’s triple-play services has maintained major control of the Fixed Internet market share at 46.8 percent according to the January-March 2015 Quarterly Sector Statistics Report released by the Communication Authority of Kenya beating Liquid Telecom with a market share of 15.3 percent and Telkom Kenya at 10.1 percent but the increase in mobile broadband subscriptions spelled doom for its hold on the market and an end to satellite subscriptions.

Satellite subscriptions at the firm have also suffered with the increasing penetration of on-demand video platforms such as Netflix, ShowMax, Kwese and Amazon Prime Video among others. Zuku’s marketing teams and the customer care department did a very poor job selling the product and saw subscribers leave one by one. Most of the firms major customers complain of lack of the actual services especially residential broadband which was allegedly oversubscribed above Zuku’s capacity.

Internally, Zuku’s  parent firm Wananchi has had a long running battle between Richard Bell’s East Africa Capital Partners Management LP and its various of its shareholders including US PE firm Overseas Private Investment Corporation, Wananchi Nominees Limited, ISP Kenya Limited and East Coast Telecoms Limited over the sale of the firm’s corporate data arm Wananchi Business Services which operates Simbanet satellite services and Wananchi Telecom.

The failure by Wananchi Group Holdings Limited to sell off Wananchi Business Services has made it difficult for the firm to raise money to fuel it into the expansion of its residential broadband and pay TV services.

In 2014, Wananchi Group had raised $130m financing from Helios Investment Partners to fund its growth and expansion in East and Southern Africa. The firm had planned to use the capital to consolidate the group’s market leadership in East Africa and to extend its services across East and Southern Africa by deploying fiber to the home networks.However, with a huge operational bill, these funds wouldn’t last it long.
Without a new capital injection,  Wananchi Group had to restructure to remain competitive and consolidate its product and services portfolio in the region but the firm’s future is not so bright. Wananchi Telecom would have been the firm to buy out Orange and YuMobile for its leap into mobile telephony. With increasing competition in the residential broadband and cable TV service and the proliferation of on-demand video platforms, it would be a miracle for the firm to survive the next five years without exiting to a new player.

The firm is yet to announce the exact positions that would be affected but the major overhaul is likely to affect sales, back-office and managerial positions to save the firm money and help it expand.

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