Airtel Kenya’s Losses are an Obstacle to its Financial Obligations

3
Shares

Kenya’s second mobile phone service provider Airtel is deep into a KES 45 billion debt according to new information that has been published on the website of its Indian mother company, Bharti Airtel. The debt is based on the 2016/17 financial results and that figure means that the telecommunications company will not have the muscle to sustain its financial duties. This is what the company has come to amid stiff competition from Safaricom that holds the lion’s share of mobile phone subscribers of up to 74.9 per cent according to sector stats for the quarter that ended in March 2017. Even if the telco wanted to sell all of its Kenyan assets, there is no way it is going to stay afloat in a fiercely competitive service provision business.

According to the report, Airtel Kenya recorded a loss after tax of KES 8.1 billion as of December 2016, which is over KES 1 billion for the KES 7.1 billion it recorded back in 2014. This adds up to the Airtel’s current liabilities that are at KES 55.3 billion with assets worth KES 9.7 billion. Ideally, this makes Airtel Kenya technically insolvent owing to these genuine financial woes.

The firm’s parent company Bharti Airtel is not doing very well, sadly. In its financials that ended in June 30, 2017, Bharti registered a 75 per cent drop in profits, marking the lowest point the organization has seen in almost half a decade. At the same time, Bharti Airtel saw its revenues decline by 14 per cent.

It is no secret that Airtel Kenya is struggling to make a mark in the country, and these financial results are a clear indicator of a failed business model. The telco blames Safaricom’s dominance, which it states curtails it from having a fair, competitive ground. For the record, Airtel Kenya comes second with 18.1 per cent in market share. While this might be the case, there are several questions that have to addressed, and one of them is whether Airtel’s management has a plan to change this loss narrative and if there is hope to turn things round.

Shares