Airtel Financials: Airtel Kenya’s loss-making streak continued last year with a net loss of Sh. 2.89 billion. This loss brought the telecommunication’s firm cumulative losses to some shocking Sh. 68.09 billion.
“Airtel, which is in merger negotiations with the government-owned Telkom Kenya, is now insolvent to the tune of Sh. 8.14 billion after the gap between its liabilities and assets widened further from the Sh. 2.86 billion recorded in 2017. The firm halved its annual loss from Sh. 5.8 billion in 2017, but losses accumulated over the years and an increasing debt load pushed the company into a precarious financial position,” says a report that appeared in the Business Daily on Wednesday.
The report further states that Airtel’s losses grew on the back of “increased operating, finance, administrative and distribution costs, gobbling close to Sh. 22 billion of the telco’s revenue.”
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“Its distribution costs jumped to Sh. 250.6 million from Sh. 55.6 million in 2017, partly driven by arbitration talks it had entered into with some of its distributors in 2015 after they filed a lawsuit challenging its commission rates,” says the report. “Revenue from the sale of goods (accessories and handsets) recorded a sharp decline to Sh. 45 million from Sh. 677.2 million in 2017, pointing to either a struggling Airtel shops business model, or the firm’s shift away from that business line.”
Shockingly, these losses mean that Airtel would have been unable to meet its financial obligations maturing this year, even if it sold all assets that could be readily liquidated. “Airtel owes Citi and Standard Chartered banks billions of shillings. The telecommunications firm has also seen its taxes due to the Kenya Revenue Authority rise to Sh. 9.4 billion as at last year,” says the report in the Business Daily.