Airtel EA units post mixed results

Indian telecommunication giant Bharti Airtel reported mixed results in East Africa for 2017, with the Ugandan subsidiary growing its profits by almost 30 per cent to $62.12m, from $44.9m in 2016.

However, the Tanzanian and Kenyan units posted a combined loss of $135.6m, pushing their accumulated losses to $1.07b.
The poor but improved performance of the regional units shows the firm is still struggling to find a foothold, even as it keeps these units afloat through borrowing.

In Uganda, Airtel saw its performance buoyed by the rising market share, even though it still trails MTN, which still controls 54.7 per cent of the market.

The telecom’s $65.12m profit was buoyed by increased revenue from different units such as mobile money and data which rose to $306.98m from $283.4m in 2016.
“As at the end of 2017, the company was in a net asset position of $65.11m. The continuous growth in profits has resulted in the independent stability of the company. This affirms the company’s ability to run its operations as a going concern,” a statement from the Ugandan unit, said.

Airtel’s mobile money division returned revenue of $50.69m up from $35.2m in the period under review.
However, the telecom posted a loss of $300,065 (Shs1.1b) due to unused equipment leased from the Ugandan Towers.
“Some conditions contained in the terms of sale were not adhered to which resulted into [prolonged] renegotiations,” the statement reads in part.

According to the firm’s annual report, Airtel Kenya made a $59.5m loss in the year ended December 2017, down from $79.4m the same period last year.

The Tanzania unit posted a reduced loss of $48.06m down from $56.4m in the same period last year.
Airtel Kenya’s revenue dipped to $167.59m from $169.2m in 2016, as shareholder loans rose to $401.2m from $376m.
Its bank borrowing almost doubled to $32m from $17m in 2016.

“As at the end of last year, Airtel Kenya had accumulated losses amounting to $652m up from $590m. The operations of the company continue to depend heavily on its direct and indirect parent companies for financing. This may result in the company’s inability to realise its assets and discharge its liabilities in the normal course of business,” the company said in its annual report for 2017.
The Kenyan unit, which is technically insolvent after last year’s current liabilities of $593.9m exceeded current assets of $64.6m, ended the year with a total debt load of $491m up from $460m 2016.
Voice revenue dropped to $75.01m from $78.18m while data revenue dropped to $35.50m from $44.56m in 2016.
Roaming revenue dropped to $7.27m from $10.2m.

Airtel’s performance pales in comparison with the market leader, Safaricom, which posted $2.33b in total revenue and $553m in profit after tax for the year ended March 28, 2018.

However, notwithstanding the performance, Airtel said it is committed to the long-term viability of its operations in Kenya, Tanzania and Africa as a whole.
“In Africa, there are a number of countries where we were not a leader or close number two and we decided to correct that. These countries include Ghana and Rwanda, where we did the merger. Discussions are ongoing regarding other countries,” said Airtel Africa chief executive Raghunath Mandava.

TANZANIA UNIT
Airtel Tanzania, which submitted its prospectus last year to the Capital Markets and Securities Authority for a possible listing on the Dar es Salaam Stock Exchange, is also technically insolvent.
The unit’s liabilities exceed its assets, casting doubt on whether it will whet the appetite of investors should its initial public offering request be approved.

Airtel Tanzania, which is the country’s second largest, saw revenue drop to $214.49m last year, from $228.02m in 2016. The firm’s liabilities of $635.38m exceeded the $233.96m in assets. The telecom is said to be seeking to raise $11.02m, through an IPO — which is way below the $291m its competitor Vodacom raised last year on the Dar es Salaam Stock Exchange.

December 31, 2017, Airtel Tanzania’s accumulated losses stood at $423.18m, up from $357.16m. The operations of the company continue to depend heavily on financing from its direct and indirect parent companies.

“Going forward, management hopes to obtain funds from third parties, meet subscriber number and revenue targets,” the firm said, adding that it has obtained a commitment from its major shareholder for a financial injection.