Telkom Kenya CEO, Mugo Kibati and Airtel Kenya CEO, Prasanta Das Sarma when they appeared before the Senate ICT Committee at County Hall, Nairobi on October 22, 2021, on the status of their merger. [Boniface Okendo, Standard] At the height of the heated debate on the proposal to declare Safaricom a dominant player in the telecommunications sector, one of the firm’s senior executives took a veiled dig at one of their competitors.
He had been asked to comment on criticisms from competitors that Safaricom’s market share made it impossible for other operators to effectively compete and grow their subscriber base.
“We have invested tens of billions of shillings to maximise our coverage in the Kenyan market, and we’ve been consistent in this investment, but some of our competitors are best known for changing colours,” he said. READ MORE
The snide comment was aimed at Airtel Kenya, which between 2004 and 2010 changed ownership thrice, during which it rebranded four times.
More than 11 years since Bharti Airtel purchased Zain and rebranded to Airtel Kenya, the dynamics of the country’s telecommunications market have changed significantly.
On the one hand, Safaricom’s detractors say the company has become too big and that no competitor can carve out a sizeable market-share along the main market segments to effectively compete.
On the other hand, analysts say the firm is simply reaping the fruits of its investment, while others term it “curious” how other service providers are able to continue operations despite almost two decades of loss-making streaks.
According to the latest financial report from Airtel Kenya, the company made Sh5.9 billion in losses for the year ended December 31, 2020, more than double the Sh2.7 billion reported in the previous year. This has pushed the firm’s accumulated losses to Sh77.4 billion as of December last year, putting it in a net liability position of Sh43.7 billion.
Further, Airtel Kenya has Sh52.3 billion in shareholders’ loans that the company says provide liquidity for operations.
A close analysis of Bharti Airtel’s latest annual report indicates a pattern where the parent company loans billions of shillings to its subsidiaries each year, shackling them in a debt cycle and interest costs that may be eroding any operating profits due. The loan to Airtel Kenya shot up 12 per cent within a year to Sh52.3 billion by December last year from Sh46.69 billion in December 2019.
The loan attracted an interest of $15.25 million (Sh1.7 billion).While ultimately the […]
