Companies

Airtel Kenya tax savings increase to Sh5 billion

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Airtel Kenya Ltd headquarters located along Mombasa Road. PHOTO | DENNIS ONSONGO | NMG

Airtel Kenya has saved $42 million (Sh5 billion) in taxes after making additional recognition of deferred tax credits on its books, helping to beef up the profitability of its parent firm Airtel Africa in the half year ended September.

The telco has made losses running into billions of shillings over the years, building up credits to use in the future to lower its tax bill.

The company started using the credits in the quarter ended June and its parent firm has disclosed that the cumulative amount stood at $42 million in the six months to September.

The amount was large enough to mitigate a steeper drop in profit for the multinational.

“Profit after tax was $330 million, reduced by 1.5 percent due to higher foreign exchange and derivative losses of $160 million partially offset by an exceptional gain arising from the initial recognition of a deferred tax credit of $42 million in Kenya,” Airtel Africa said in a statement.

The London-listed firm did not disclose the performance of its Kenyan subsidiary. It however said that its East Africa business reported a 12.4 percent revenue growth in voice and SMS services in the review period.

The region, comprising Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia recorded a higher increase in mobile money revenue at 23.6 percent.

Kenya is one of the largest markets by revenue for a multinational firm in the continent after Nigeria.

Airtel Africa’s total tax bill was $186 million in the review period, down 19.9 percent from $232 million a year earlier mainly due to Kenyan tax credit.

The Kenya unit has seen a flurry of regulatory actions in the last three months, mainly on payment of licence fees, decoupling of the mobile money business and acquisition of additional 4G mobile spectrum.

In May, Airtel Kenya paid the sector regulator Communications Authority of Kenya (CA) $5 million (Sh606 million) as part payment for its operating and spectrum licence running from 2015 to 2025.

The initial payment was an outcome of an out-of-court settlement with the government following a protracted dispute over licence fee claims, where the telco agreed to pay $20 million (Sh2.4 billion) in four instalments over three years.

The telco has also been paying for additional capacity in recent months, starting with a $10 million (Sh1.2 billion) payment in March for a network licence it will be allowed to use for 10 years to cater for the increased demand for its mobile data services.

On July 25, Airtel Africa disclosed that its Kenyan unit had paid the CA $40 million (Sh4.8 billion) for a licence on additional fourth-generation (4G) Internet services in the country—60 MHz of additional spectrum in the 2600 MHz band.

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