Airtel losses hit Sh6bn amid audit questions

Airtel losses hit Sh6bn amid audit questions

Airtel Kenya’s losses doubled in 2020 to Sh5.9 billion even as its auditors raised the red flag on the company’s financial health after the telco’s cumulative losses rose to Sh77.41 billion.

Airtel also saw its net liability position widen further to Sh43.7 billion in the full year to March 2021, up from Sh37.78 billion as of March 2020, pointing to its insolvent position.

The firm posted its highest loss in history in the financial year ended March 31, 2021, having halved the loss to Sh2.78 billion in 2019, up from Sh5.8 billion in 2017, but losses accumulated over the years and an increasing debt load pushed it into a precarious financial position.

“These conditions, along with other matters… indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern,” warns Airtel’s auditors Deloitte.

The company’s weak financial position is in sharp contrast to market leader Safaricom, which posted a net profit of Sh68.67 billion in the financial year ended March 2021, a drop from Sh73.65 billion the previous year.

Safaricom’s profit drop came on the back of a decline in service revenue and increased costs in Covid-19 business environment, plunging the telco into the first full-year profit fall since 2012.

The firm’s directors say they have obtained a commitment from its major shareholder to obtain additional funding to meet its obligations as they fall due.

Airtel has a shareholder loan of Sh52.2 billion up from Sh46.6 billion the previous year, and its directors said with this, there is “sufficient liquidity to manage its operations.”

These loans are from its holding firm Bharti Airtel Kenya BV and are supposed to be payable ‘on demand’ and are unsecured, carrying an interest charge of three percent per annum.

“The directors are of the opinion that the company is a going concern on the basis of it generating cash flows of at least the management projections and also obtain additional funding from its shareholders required to meet its obligations,” states the board in a note accompanying the financial statements.

The negative asset position means Airtel would have been unable to meet its financial obligations maturing this year, even if it sold all assets that could be readily liquidated.“The directors acknowledge that the continued existence of the company as a going concern depends on the outcomes of various strategic measures that the directors continue to pursue to return the company to profitability and […]

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