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.
This is 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.
This is 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.
This is 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.
Safaricom’s profit drop came on the back of a decline in service revenue and increased costs in the Covid-19 business environment.
This plunged the telco into the first full-year profit fall since 2012 according to Business Daily.
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.
Airtel’s borrowings in the 2020 financial year jumped to Sh9.23 billion, up from Sh6.83 billion in 2019.
Its net assets in foreign currencies rose to Sh8.89 billion in 2020, up from Sh6.19 billion the previous year,
Foreign currency liabilities stood at Sh56.17 billion up from Sh49.85 billion in 2019.
In 2020, Airtel Kenya picked up Sh2.18 billion in new loans from JP Morgan Bank.
It also had loans with HSBC-Mauritius (Sh1.64 billion), Citi Bank (Sh5.4 billion) and Sh1.7 billion in loan and overdrafts from Standard Chartered Bank.
Airtel further cleared its Sh1 billion loan from Stanbic Bank. Its net borrowings as at March 2021 stood at Sh61.28 billion, up from Sh53.19 billion the previous year.
“The current borrowings from HSBC-Mauritius and Standard Chartered Bank are repayable within twelve months to December 2021,” it said.