Airtel’s Kenya business has saved $21 million (2.5 billion shillings) in tax after it initially recognized a deferred tax credit on its books, helping its parent company Airtel Africa to increase its profits by 25% in the quarter ended June 2022.
The decision to use the tax credit – which has been accumulated due to past years’ losses – is an indication that the profitability of the Kenyan business has now improved.
Airtel Africa, while not giving the performance breakdown of its Kenyan unit, highlighted a 14.1% increase in voice and mobile money revenue in its East Africa business.
This, combined with an 18% improvement in sales in Nigeria, underpinned an overall 13% growth in group revenue to $1.26 billion (150 billion shillings).
The multinational’s total tax burden was lower by $19 million (2.26 billion shillings) to $98 million (11.6 billion shillings), mainly due to the Kenyan tax credit. Net profit thus increased by a quarter to reach 178 million dollars (21.1 billion shillings) for the telecommunications operators.
“Basic earnings per share (EPS) improved to 4.4 cents (Sh5.22), while EPS before exceptional items improved to 3.8 cents (Sh4.5) The increase in Basic EPS was primarily due to higher operating profits and the initial recognition of deferred tax credit in Kenya, which more than offset foreign exchange and derivative losses,” Airtel Africa said in its update. results update.
The Kenyan unit has also seen a flurry of regulatory actions over the past three months, primarily over the payment of license fees, the decoupling of mobile money business and the acquisition of additional 4G mobile spectrum.
In May, Airtel Kenya paid the sector regulator Communications Authority of Kenya (CA) $5 million (594 million shillings) in partial payment for its operating and spectrum license from 2015 to 2025.
The initial payment was the result of an out-of-court settlement with the government following a protracted dispute over license royalty claims, where the telephone company agreed to pay $20 million ($2.38 billion shillings) in four installments over three years.
The phone company has also been paying for additional capacity in recent months, starting with a $10 million (1.18 billion shillings) payment in March for a network license it will be allowed to use for 10 years. to meet the increased demand for its mobile data. services.
On July 25, Airtel Africa revealed that its Kenyan unit had paid 40 million Canadian dollars (4.75 billion shillings) for a license on additional fourth generation (4G) Internet services in the country – 60 MHz of additional spectrum in the 2600 MHz band. .
The license is valid from July 2022 for a period of 15 years, the telecommunications company said, deepening the pivot to data services as a market growth driver.
Airtel Kenya launched 4G internet services in the country in 2018 and is leveraging the additional spectrum to support capacity expansion for mobile data and fixed wireless broadband to the home, as well as future 5G deployment .