Font Size

- Aa +

Wed 15 Jul 2009 04:50 PM

Font Size

- Aa +

Hits Africa stalls as funding dries up

Ex-employees take legal action over unpaid wages and severance packages

Hits Africa stalls as funding dries up
Hits Africa’s network deployment has stalled and wages have gone unpaid amid a lack of funds, according to former employees.

Former employees of Hits Africa, a subsidiary of Kuwait-based operator Hits Telecom, are taking legal action against the company over non-payment of several months’ wages and severance packages.Ex-employees of the company told CommsMEA that Hits Africa – which is headquartered in Bahrain and holds mobile licenses for Tanzania, Democratic Republic of Congo, Equatorial Guinea and Liberia – had failed to pay them and up to 40 other employees since January 2009.

The former employees, who held senior positions including management and director-level posts at the company, decided to take legal action after Hits Africa failed to fulfill a promise to pay the money owed to them by the end of June.

“There were troubles in December and January with late payments, but post January there was nothing at all. I have not been paid since January and I have been working until June,” one former employee told CommsMEA, under condition of anonymity. “I have been left high and dry. They have not even paid for my return ticket home, so I am left stuck in the Gulf and have had to borrow money from family members.”

He added that he had visited Bahrain’s Ministry of Labour and filed a complaint, along with a few other former employees of the company, and that they are now waiting for the case to go to court.

“They had promised to pay us, but they have no assets and I don’t see how we will get paid. The board needs to do something about it,” he added. “If they couldn’t afford to pay us they should have told us back in January rather than keep us going for another five months with no funds whatsoever. This is the thing with this company, they never deliver.”

Hits Africa’s problems appear to have started in the fourth quarter of 2008 as the effects of the financial crisis reached Africa. The company started to face funding problems, including difficulties with a vendor financing deal with Huawei for the network rollout in Tanzania.

Hits Africa had planned to roll out a mobile network in Tanzania by the end of 2008, but has so far only started a limited “regulation launch” to about 140 people in the country, after rolling out about 10% of the intended network.

According to another of the former employees, who stopped working for the company around May, Hits Africa’s plan also floundered owing to management decisions at the boardroom level, which led to a lack of direction at the company.

He said that the company had originally planned to start setting up operations in Tanzania, DRC and Equatorial Guinea simultaneously, but as funding became tighter in the fourth quarter of 2008, the company decided to concentrate on Tanzania.

But when the vendor financing deal for the deployment of the Tanzanian network became mired in difficulties, the emphasis shifted to Equatorial Guinea, which was deemed to have greater mobile potential owing to the country’s oil wealth and limited competition.

“Around February or March, all of a sudden they decided to put Tanzania on hold and channel all interests into Equatorial Guinea. Several members of staff were supposed to go there, but all stopped because they didn’t even have the money to start flying people,” he added.

“They should have honed in on one market, giving one working operation which could have been used to further justify investment from other investors and show that some revenue was coming in. What happened is a text book example of how things should not be done.”

Talaat Laham, CEO, Hits Africa, declined to comment on the state of the company or the issue of unpaid wages when contacted by CommsMEA.

However, Dr Sultan Abdullah Bahebri, Chairman and CEO of Hits Telecom, the parent company of Hits Africa, admitted that the payment of some wages had been delayed but added that the situation had been resolved. He also added that the issue of severance packages was being “dealt with.”

“We had some delays in certain countries but we have already solved and dealt with it […]. We had a delay of three months for a period of time. We have reached a plan to pay everybody the severance compensation.”

He added that the company would be making an announcement regarding a launch in Equatorial Guinea “very soon”.

“The financial crisis has affected everybody […]. The major vendors and also the local banks in Africa and all the African operators are managing the situation with different tactics in order to overcome this crisis.

“We are about to launch so it is a combined challenge but I am sure we will make the necessary steps in order to pass through this difficult time. We are making the tough decisions to make sure we are able to compete and provide good customer service,” he said.

But for some telecom analysts, the African market could be proving more difficult than expected for some of the smaller operators that have limited experience of running networks, particularly amid an economic downturn.

Federico Membrillera, partner at Dubai-based consultancy Delta Partners, said that while larger established companies such as MTN and Zain would continue to perform relatively strongly in Africa, some of the smaller operators might struggle.

“There is a category of operators that were hunting licences right and left with not that much professional experience, not understanding the market dynamics. They were fuelled by cheap resources, with business plans that supported everything. Those guys will struggle,” he said, referring generally to some of Africa’s smaller operators. However, he added that some smaller players with good strategies are performing well in Africa.

Hits Telecom also has investments in South America, Saudi Arabia and Europe, where it gained a presence after launching an MVNO operation in Spain in 2008. Last month, Dr. Bahebri said the company was also planning to enter France, possibly through an MVNO in 2010.

Hits Telecom Holding which is listed on the Kuwait Stock Exchange and backed by Kuwait-based investment house Al Madina Company for Investment, posted a net profit of KD193,000 ($670,954) for the first three months of 2009.

For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
anonyme 10 years ago

The failure of the project Hits Africa is mainly due to lack of management. And also there are obviously bad choices and a lot of technical overcharging. Many recruitment appears to be by family and friends, with skills or experience non avere

Anonymous 10 years ago

When the first complaints started arriving the ministry of labour came to check the office, the HR departement put his fiancee on a payroll to keep his lid shut.

Anonymous 10 years ago

the funny thing about Bahebri, you see him grabing media attention by suggesting that he may have an MVNO in france by 2010 and by buying licenses in Peru, when really the company is trying to sell desperatly one of its "operations" to pay salaries. But the Bahebri are not the only ones to blaim, I wonder why Bank El Madina who owns a major part of Hits Telecom and who sits on the board cannot put enough money in the company to pay the salaries. Both partners give a bad reputation to any kind of career move or investment into the gulf, they have been open for almost 2 years now and they have not fully launched any operation.

Former Employee 10 years ago

I was there working @ HITS africa , and i can tell that was the worst experience i have ever had on both personal and profissional level. The CEO Tallat Lahham and his mafia have wasted and abused a huge ammount of money on fake bounuses , flights , hotels , fancy specs .....etc. at the end of the day , and tell now we didnt get paid , and waiting for the court in bahrain to decied

Allan 10 years ago

I was one of the management team in Hits Africa. The biggest surprise for me was that the CEO, Mr. Talaat Al- Laham was spending plenty of hours of his valuable time to check and approve the travel expense claims of all employees and to run the daily operations. He could not delegate these tasks to anyone within the finance function! Why he did not concentrate on the strategic issues instead? Another big surprise for me was the deputy CEO, Mr. Macchindra Deokar. I think he had got this job only because he was a friend with the CEO, definitely not for his very poor qualifications!! But Hits Africa had as well a lot of qualified employees, who were hired with help of the recruitment agencies. Yes, the management of Hits Africa was very, very bad. I definitely agree that firing three CEO’s in Equatorial Guinea during a period of 6 months was a huge mistake. To fire two of HR directors in the DRC and Bahrain was a big mistake and finally, to fly the first class, to hire private jets, to hire famous consultants as Cap Gemini etc for very simple tasks was also a big mistake! I remember one director who spent 6 hours a day doing just nothing! It was the Revenue Director, Mr. Abdul Mia. There was no revenue in this company, but he could keep the job the whole year anyway just doing NOTHING AT ALL! Why? And the CFO of Hits Africa Mr. Ross Clewley was really a very weak personality. When the CEO said “It is white” he always answered: “ Yes, it is white”, even if it was very black! The problem now is that Hits Africa WLL Bahrain registred company has no founds to pay its debts. Even the Gulf Hotel Bahrain or Regus, or the travel office and other Bahrain based companies have not been paid yet. We, who have not got paid our salaries, we have to make our claim against the main shareholders of HITS TELECOM: Al Madina for Finance and Investment and Ekttitab Holding Company, both based in Kuwait. They have shares in Al Sohba for Contracting & General Trading Company, Hits Africa in Cayman Islands, Hits Du Brasil, ExcellentCom in Tanzania, Qanawat in Saudi Arabia, Sema Telecommunication in DRC, Unicel Do Brasil, Atlantic Wireless in Liberia and the responsible officers Mohammed Salah Al Ayoub ( Chairman), Khaled Yaacoub Al Moutawaa, Hashem Nader Ibel, Ahmad Asil Takieddine, Sheikh Sobah Salman Al Sobah and the CEO Mr Carlos Riera.

In the Dark 10 years ago

One would of hoped that an article of this magnitude would have prompted or even shamed the board into paying the salaries that have been due for such a long period. Even now in the wake of this article they continue to refuse and acknowledge the desperate attempts from its former loyal employees to get what is rightfully theirs!!

paul thornton 10 years ago

I have to say after reading the article and hearing first hand from a close friend of mine, i think its an utter disgrace that the expat community can be lied to so easily as to the point it can only be described as a crime. These employees have been made to work, loyally i may add!! . for no financial gain whatsoever.

somone.... 10 years ago

Its a big shame to hear that my dear friend Talat and Dr Sultan have behaved in such a disgraceful way. Guys wake up and fear the last day!

I.T Consultant 10 years ago

As an international consultant and one who formerly considered helping HITS to get off the ground, I am disgusted that the executives can believe they can get away running their business in this way. News travels fast amongst the telco consulting community and HITS will receive the treatment it deserves. I'm so glad I never got involved with this shambles of a company and the idiots who run it.

Former Senior Employee 10 years ago

I fail to understand how the same men who own and operate this same company can have money for all of the European expansions and more. Yet can leave his staff stranded in 3rd world Africa and then withhold salaries. An act that not only caused us great problems, (Can Dr. Baharbi even imagine what it means to be stuck in a place like Kinshasa or Malabo with no money and non way out? Because that is what he did to a great many employees!) But to add insult then caused us to lose even more money as we had to cover the various late fees and other expenses this in turn caused. No one ever asked any of us if we agreed to having our salaries withheld and becoming the company’s newest creditors. NO, The operators of this company simply took our salaries, and left us stranded in 3rd World Africa and used every last penny they could to keep bring in more equipment, that they had no way to pay for or operate. NO the message was clear people did not matter only material and the desperation to get the network built any way possible, even if it meant over the bodies of the employees. Do not fool yourselves; this is literally what this company did! Shame on you! If people really are judged by their actions, then your actions clearly demonstrate that you are not good people by any stretch of the definition. What you did to your staff is more than a crime it’s a sin! Shame on you!