For and extended period, Airtel Kenya has been operating while incurring losses. The state’s second largest carrier, which also saw an increased number of subscribers to 13 million based on the latest figures from the Communications Authority of Kenya (CA), is battling one of the harshest times in its operations in the Kenyan space.
Owned by India’s Bharti Airtel, the Kenyan arm has been subject to a series of misfortunes in the local telco space. It launched 4G services in 2018, years after market leader Safaricom set up its similar stations, and a year after the smaller Telkom Kenya announced theirs.
The late deployment of LTE services was marked by legal issues between the operator and the CA over frequency fees, which Airtel had argued should not be standard (KES 2.5 billion) as each carrier commands varying profits, or lack thereof.
Airtel Kenya, which is also under the umbrella of Airtel Africa in the continent listed in the London Stock Exchange. The development was not without controversy. For instance, a document that was submitted to the stock exchange revealed that Airtel employees had fleeced the carrier of KES 670 million in mobile money fraud in Kenya and Niger. This would precede dismal performance in the market a few days after.
A few weeks ago, Telkom Kenya CEO Mugo Kibati said the merger deal with Airtel was awaiting regulatory approval. A similar assurance was echoed a few days ago in a gazette notice by the CA that revealed there wasn’t an issue that would cancel the merger.
However, it would appear that losses incurred by Airtel have affected the approval process that has taken a longer time than expected. Current numbers from Airtel indicate its worrying financial performance owing to KES 2.89 billion loss it registered in 2018. The loss means Airtel has accumulated a total of KES 68.09 billion since its operations started going under.
According to Business Daily, Airtel posted a KES 5.8 billion loss in 2018. People familiar with the matter have reported the financial uncertainty of the telco, which continues to derail Airtel’s ability to do business in the country.
To put the cumulative loss in perspective, Safaricom registered KES 63.4 billion in net income during its FY2019 earnings. The value is KES 4.69 billion less than Airtel Kenya’s overall decline in the recent past.
Further, BD found out that Airtel used most of its earning to furnish administrative, finance and distribution operations, up to the tune of KES 22 billion.
At the moment, Airtel says it will seek additional funding from its primary shareholders to run its operations this year, bearing in mind that it would not stay afloat even if it liquidated its existing assets.