Airtel Kenya Struggling to Remain Afloat as it Runs on Shareholder Loans

By Korir Isaac / Published January 10, 2022 | 10:28 am




KEY POINTS

Financials show that Airtel Kenya is unable to service the loans from Bharti Airtel Kenya BV, which increased from 46.6 billion shillings in the year ended December 2019 to 52.2 billion shillings in the year ended December 2020.


Airtel Kenya

KEY TAKEAWAYS


  • Airtel Kenya also owes other international banks amounts totaling 10.9 billion shillings, which rose from 7.88 billion shillings in 2019.
  • The negative equity position combined with deepening losses raise doubts over Airtel Kenya's ability to continue operating.

Airtel Kenya is struggling to remain afloat by depending on shareholder loans it is unable to service from its holding firm, Bharti Airtel.

The telco’s financials show that Airtel Kenya is unable to service the loans from Bharti Airtel Kenya BV, which increased from 46.6 billion shillings in the year ended December 2019 to 52.2 billion shillings in the year ended December 2020.

The shooting up of the loans was a result of additional lending, capitalization of interest, and losses from forex due to a weakening shilling.

The postponement of interest by Kenya’s second-largest telco (due to be paid 1.34 billion shillings) is what hints of the financial troubles the firm is going through.

Since Airtel Kenya couldn’t settle the interest, the parent company was forced to add the dues to the principal loan amount.

The firm had also capitalized interest amounting to 1.29 billion shillings in the previous year on top of converting 2.88 billion shillings worth of loans to equity. The equity was used to fund cash injection into its mobile money unit.

The telco acknowledged that the shareholder funds are fundamental in ensuring it remains afloat in addition to the revenue generated from operations and other borrowings from external lenders. But its dependence on them is a growing concern.

“The company will be able to obtain from the shareholders any additional funding required to meet its obligations as and when they fall due. A commitment to this effect from the major shareholders has been obtained by the company,” said Airtel.

“The directors are confident that the funds… will be available to the company to support its obligations as required.”

The dollar-denominated loans obtained from Bharti Airtel Kenya BV are payable on demand, and are unsecured, carrying an interest charge of 3 percent annually.

ALSO READ: T-Bills Still Wobbled Last Week But Above The Previous Week

Airtel Kenya’s dependence on the parent company to remain operational speaks much about its tough and current financial position.

Airtel Kenya sunk into losses for the financial year ended March 2021 with a loss of 5.9 billion shillings. The company now has a cumulative loss of 77.41 billion shillings.

These losses deepened on the back of increased operating costs, which stood at 24.82 billion shillings in 2020.

This was a rise from 21.27 billion shillings in expenses the previous year. In addition, the firm incurred financing costs of 3.12 billion shillings and forex losses worth 4.48 billion shillings.

The net liability for Airtel Kenya, therefore, rose to 43.7 billion shillings in the full year to March 2021, up from 37.78 billion shillings as of March 2020.

The recent loss is the largest in its history having halved the loss to 2.78 billion shillings in 2019, up from 5.8 billion in 2017 shillings.

Its auditors Deloitte expressed concern that the negative equity position combined with deepening losses raise doubts over the firm’s ability to continue as a going concern.

By operating on negative assets, the company wouldn’t be able to meet its financial obligations even if it sold all its assets.

Worse still, Airtel Kenya owes other international banks amounts totaling 10.9 billion shillings, which rose from 7.88 billion shillings in 2019. It is still servicing this facility.

The telco owes HSBC Mauritius, 1.64 billion shillings; Citibank, 5.4 billion; Standard Chartered Plc, 1 billion shillings; JP Morgan, 2.19 billion shillings; and a bank overdraft from Standard Chartered Bank Kenya of 702.75 million shillings.

The interest paid on these debts stood at 2.05 billion shillings in the period, part of total financing costs of 3.12 billion shillings in the year.


RELATED ARTICLES


 

https://sokodirectory.com/2022/01/airtel-sinks-further-as-losses-hit-ksh-6-billion/



About Korir Isaac

A creative, tenacious, and passionate journalist with impeccable ethics and a nose for anticipated and spontaneous news. He may not say it, but he sure can make one hell of a story.

View other posts by Korir Isaac


More Articles From This Author








Trending Stories










Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE



ARCHIVES

2022
  • January 2022 (206)
  • 2021
  • January 2021 (182)
  • February 2021 (227)
  • March 2021 (325)
  • April 2021 (259)
  • May 2021 (285)
  • June 2021 (273)
  • July 2021 (277)
  • August 2021 (233)
  • September 2021 (271)
  • October 2021 (305)
  • November 2021 (365)
  • December 2021 (250)
  • 2020
  • January 2020 (272)
  • February 2020 (310)
  • March 2020 (390)
  • April 2020 (321)
  • May 2020 (335)
  • June 2020 (327)
  • July 2020 (333)
  • August 2020 (276)
  • September 2020 (214)
  • October 2020 (233)
  • November 2020 (242)
  • December 2020 (187)
  • 2019
  • January 2019 (251)
  • February 2019 (215)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (271)
  • June 2019 (250)
  • July 2019 (338)
  • August 2019 (293)
  • September 2019 (306)
  • October 2019 (313)
  • November 2019 (362)
  • December 2019 (319)
  • 2018
  • January 2018 (291)
  • February 2018 (213)
  • March 2018 (276)
  • April 2018 (223)
  • May 2018 (235)
  • June 2018 (176)
  • July 2018 (256)
  • August 2018 (247)
  • September 2018 (255)
  • October 2018 (283)
  • November 2018 (283)
  • December 2018 (184)
  • 2017
  • January 2017 (183)
  • February 2017 (194)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (245)
  • June 2016 (182)
  • July 2016 (271)
  • August 2016 (247)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (165)
  • April 2015 (107)
  • May 2015 (116)
  • June 2015 (119)
  • July 2015 (147)
  • August 2015 (157)
  • September 2015 (186)
  • October 2015 (169)
  • November 2015 (173)
  • December 2015 (207)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950