Airtel Uganda is only profitable unit in East Africa

Airtel Uganda was the only unit in the East Africa cluster to return a profit for the year ended 2018.
Other units in Tanzania, Kenya and Rwanda posted losses with the Indian telecommunication giant registering a consolidated loss of $46.5m in the three countries.

The details of the performances are contained in a Bharti Airtel Africa financial report for the year ended 2018.
In Uganda, Airtel saw its profits grow by almost 30 per cent from $65.6m in 2017 to $90.5m in 2018.

However, the performance of other regional units is likely to be a drag-on on the only profitable unit in the region as the Indian-based telecom giant continues to struggle to find a foothold in a highly competitive region.
Many of the telecom’s units continue to be kept afloat through borrowing.

Airtel Tanzania saw its losses narrow to $15.94m in the period compared to $47.1m posted in 2017 pushing accumulated losses to $436.6m.
The company also saw its revenues dip to $202.6m from $212.9m in the period under review, according to the Bharti Africa annual report.

The Tanzania unit current assets now stand at $211.8m while liabilities add up to $625.7m, leaving the telecom in a deep negative territory.

The Kenyan unit posted a $27.43m loss last year, down from $59.5m in 2017, while the Rwanda saw its loss widen 10 times to $3.16m in the period, barely a year after it acquired Tigo.

In Uganda, Airtel has been investing heavily to out-compete MTN, which currently holds a slight sway in the country’s telecom market.

According to data from Uganda Telecommunications Commission, MTN has a market share of about 47 per cent compared to Airtel’s 44 per cent.
The market is largely controlled by the two telecoms with the likes of Africell playing a distant second fiddle.

Competition
The Tanzania loss leaves Airtel exposed, as its liabilities exceed assets in the face of stiff competition from market leader Vodacom.

The unit saw its Airtime revenue drop significantly from $82.26m in 2017 to $64.74m in 2018 while value added services grew to $90.43m up from $72.8 million.
Cost of sales dropped to $48.9m as of December 2018 up from $58.23m the previous year.

The Tanzania unit’s poor show comes barely three months after authorities in the country quietly waived listing requirements for the second-largest telecom as part of settlement arrangements.

“In June 2019, pursuant to settlement arrangements agreed with the Government of Tanzania, Airtel Tanzania will receive a waiver from the listing requirements,” Airtel Africa said in the prospectus.

In 2016, Tanzanian authorities demanded that telecommunication firms offer at least 25 per cent of their total share capital on the Dar es Salaam Stock Exchange by or no later than 31 December 2016.
The same requirement – listing on the exchange - although it is still under review, has been tabled by the Ugandan government under the National Broadband Policy.

In Tanzania, according to the prospectus presented for listing the Airtel Africa unit on the London Stock Exchange, Airtel Africa argued it wasn’t able to meet this requirement as a result of various factors, among them insufficient liquidity in the Tanzanian economy.

This, the unit said, would result into a potential lack of investors with sufficient capital to subscribe for the shares.

Listing on exchange

Just like in Tanzania, there have been discussions for Airtel to list on the exchange, although the proposal, which is contained in the National Broadband Policy is still under review.

In Tanzania, according to a prospectus presented for listing the Airtel Africa unit on the London Stock Exchange, Airtel Africa argued it wasn’t able to meet the listing requirement as a result of various factors, among them insufficient liquidity in the Tanzanian economy.

This, the unit said, would result into a potential lack of investors with sufficient capital to subscribe for the shares.

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