Kenya’s second-largest telco Airtel Kenya is broke and surviving on a series of shareholder loans from its parent company Bharti Airtel Kenya BV.
According to the firm’s latest financial filings, loans from its holding firm, most of which it is unable to service, increased to Sh. 52.2 billion in the year ended December 2020 from Sh. 46.6 billion in the previous year.
According to a report by The East African, it is the capitalisation of interest due to be paid worth Ksh1.34 billion that gives a peek into the cash flow distress facing Airtel Kenya, revealing the telco’s inability to pay up the loans, forcing the parent firm to add the dues to the principal loan.
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.
Airtel according to the report had also capitalised interest worth Ksh1.29 billion in the previous year, as well as converting Ksh2.88 billion worth of loans to equity to fund a cash injection into its mobile money unit.
Additionally, Airtel Kenya has other debts owed to international banks totalling Ksh10.9 billion. They include 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.
“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.
Last year, Airtel refuted claims that it plans to exit the Kenyan market after reports emerged that the telco was likely to call it quits.
In a statement, Airtel Kenya CEO Prasanta Das maintains that the company remains committed to delivering quality and value for money products and services to all its customers in Kenya.
“Contrary to false online reports, Airtel is not leaving the Kenyan market. We remain committed to delivering quality and value for money products and services to all our customers whilst ensuring effective, uninterrupted communication is achieved across the entire country,‘’ he said.
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