Airtel Kenya’s net loss widens to Sh1.7 billion
Monday November 07 2022
Telecommunications firm Airtel Networks Kenya made a larger net loss of Sh1.7 billion in the year ended December 2021 on higher costs, according to disclosures by its ultimate parent firm Bharti Airtel Limited.
The company’s net loss grew 7.7 percent from Sh1.6 billion a year earlier despite a strong growth in sales.
Airtel’s turnover increased 21.1 percent to Sh15.2 billion from Sh12.6 billion. New Delhi-based Bharti Airtel did not provide a breakdown of the local subsidiary’s costs.
Previous disclosures have shown that the business has been saddled with high finance costs as it relies heavily on loans while racing to break even in a market where only Safaricom is profitable.
Airtel’s revenues are about five percent of Safaricom’s sales, highlighting the large gap between the market leader and its two rivals in the telecoms sector.
Safaricom reported total revenue of Sh298 billion in the year ended March when its net income stood at Sh67.4 billion. Telkom Kenya’s overall performance has not been disclosed in recent years but the company said it was in losses, according to a 2020 legal dispute.
Telkom is the smallest operator by several measures including subscriber base and market share.
Reading: Telkom surrenders helped of sales to Safaricom
Bharti Airtel’s disclosures show that its local subsidiary is weighed down by a heavy debt load. It held assets of Sh22.1 billion in the year ended December 2021 when its liabilities stood at Sh44.4 billion, leaving it with a negative book value of Sh22.2 billion.
Its assets in the prior year were Sh19.2 billion against liabilities of Sh38.9 billion, resulting in a negative equity of Sh19.6 billion.
Airtel’s intermediate parent firm, Airtel Africa Plc, says it is confident about its future prospects and continues to invest heavily in the business.
In May, Airtel Networks Kenya paid the sector regulator Communications Authority of Kenya (CA) $5 million (Sh606 million) as part payment for its operating and spectrum license running from 2015 to 2025.
The initial payment was an outcome of an out-of-court settlement with the government following a protracted dispute over license fee claims, where the telco agreed to pay $20 million (Sh2.4 billion) in four installations over three years.
Reading: Why telcos struck out-of-court deal on mobile calls connection charges
The telco has also been paying for additional capacity in recent months, starting with a $10 million (Sh1.2 billion) payment in March for a network license it will be allowed to use for 10 years to cater for the increased demand for its mobile data services.
On July 25, Airtel Africa disclosed that its Kenyan unit had paid the CA $40 million (Sh4.8 billion) for a license on additional fourth-generation (4G) Internet services in the country — 60 MHz of additional spectrum in the 2600 MHz band .
The license is valid from July 2022 for 15 years, the telecoms firm said, deepening the pivot toward data services as a driver for growth in the market.
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