Kenya’s second biggest telecommunications firm, Airtel Kenya, is broke. The firm has been relying on loans from its parent company to stay in operation. According to the firm’s latest filings, loans from its holding firm Bharti Airtel Kenya BV increased to Sh. 52.2 billion in the year ended December 2020 from Sh. 46.6 billion in the previous year.
This revelation comes hot on the heels of a financial report which showed that losses recorded by the firm doubled to Sh. 5.9 billion in 2020 from Sh. 2.78 billion in 2019. Revenue stood at Sh. 26.54 billion, up from Sh. 21.2 billion in 2019. Further, Airtel’s net liability position widen further to Sh. 43.7 billion in the period, up from Sh. 37.78 billion as of March 2020, deepening its insolvent position.
Airtel said in the filings that the loans from its parent company are a significant contributor to its ability to remain in operation, in addition to the revenue generated from operations and other borrowings from external lenders.
“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. The directors are confident that the funds… will be available to the company to support its obligations as required,” the firm said.
Additionally, other debt Airtel owes international banks Sh. 10.9 billion (HSBC Mauritius Sh. 1.64 billion, Citibank Sh. 5.4 billion, Standard Chartered Plc Sh. 1 billion, JP Morgan Sh. 2.19 billion, and a bank overdraft from Standard Chartered Bank Kenya of Sh. 702.75 million).
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The report further shows that the loans Airtel owes are dollar-denominated. They are supposed to be payable on demand, and are unsecured. They carry an interest charge of three percent per annum.
Airtel has struggled to stay profitable ever since Safaricom took the lead in the market over a dozen years ago. The firm has been sold multiple times and rebranded from Kencel, Celtel, and Zain.