Zambia Telecommunications (Zamtel) workers are panicking following the company's announcement that it is laying off more than 800 workers this year to save the company from collapse.

Zamtel acting CEO Mukela Muyunda said the company is operating on a 150 billion kwacha (US$44 million) deficit annually, and urgently needs to lay off 30 percent of the workforce as a cost-saving measure.

Zamtel is a government-run, national communication utility company that employs about 2,700 workers across the country. The company spends 70 percent of its turnover on staff-related payments, according to Muyunda.

The company has already frozen salary increases this year to avoid aggravating the financial position of the company. On Tuesday employees went on strike, demanding a 50 percent salary increase from management.

The company management and the National Union of Communication Workers (NUCW), a union that represents telecom workers in Zambia, have agreed on a monthly program to reduce the deficit through March of next year. The program has not been made public.

But one of the measures that the company has long been talking about to reduce the expenditure of the company is the unbundling of Zamtel and CellZ. CellZ is a mobile-communication service provider operated by Zamtel. Management thinks that if the two companies are separated, Zamtel would once again become viable.

"The staff rewards should correspond with capacity to produce goods and services and not by any other means," Muyunda told the IDG Enterprise Service on Thursday.

NUCW Deputy General Secretary Paul Sunkutu said workers need to be patient, as protests could aggravate the situation.

Sunkutu said the NUCW is aware that Zamtel faces serious financial problems that need to be handled with care. Zamtel management has not explained why the company has not been profitable, despite providing both fixed and mobile-phone services.

Zamtel also collects revenue from competing private mobile-service providers Celtel and MTN for using its facilities, including the Mwembeshi Earth Station, which provides satellite and international gateway services. But there have been accusations in the past that Zamtel management is mismanaging the company's financial resources.

Sunkutu said, however, that it has now become an open secret that there is mismanagement of financial resources by Zamtel management, which should come to an end in order to save the company from collapsing.