Airtel Kenya records New tax Savings of Sh7.5 billion

In the three months leading up to March 2023, Airtel Kenya saved Sh7.5 billion in taxes, suggesting a trend toward profitability for the following year.

According to financial disclosures made by the company’s parent company Airtel Africa, which is listed on the London Stock Exchange, for the fiscal year that ended in March, the total tax payments that were saved as a result of using deferred tax credits totalled $117 million (Sh16 billion) during that time.

In the nine months leading up to December, this was up from $62 million (Sh8.5 billion).

Over the years, the telco had incurred losses totalling billions of shillings, accumulating credits it could use later to reduce its tax obligation.

On a company’s balance sheet, a deferred tax asset is something that lowers future taxable income.

The firm now says it has started to utilize the tax credits.

“Considering Airtel Kenya’s profitability trends, that tax losses have recently been utilised and on the basis of forecast future taxable profits, the group has determined that it is now probable that taxable profits will be available against which the tax losses and temporary differences can be utilized,” read Airtel Africa’s disclosures in part.

“Consequently, the deferred tax asset recognition criteria are met, leading to the recognition of an additional deferred tax asset of $117 million during the year ended 31 March 2023 in Airtel Kenya.”

Additionally, Airtel Africa disclosed that additional subsidiaries, including those in Tanzania and the Democratic Republic of the Congo (DRC), had deferred taxes of $19 million and $25 million, respectively.

“Revenue grew by 11.5 per cent to $5.255 billion in reported currency and by 17.6 per cent in constant currency,” the multinational said of its pan-African group performance in the year ended March.

According to the company, the average revenue per user (ARPU) growth in its business and the customer base growth of 9% each contributed to the revenue growth of 17.6% in constant currency growth.

The London-based company did not break down how much of the revenue came from the Kenyan operations, but it did note that its East African operations saw a growth in mobile money revenue of 32.6%.

Kenya, Malawi, Rwanda, Tanzania, Uganda, and Zambia are all part of Airtel’s East African operations.

The telco claimed that the currency devaluations in Kenya, Uganda, and Malawi had slowed growth rates.

“While currency devaluation is not in our control, we have plans to continue to mitigate its impact by growing our revenues at a faster pace than devaluation, with double-digit revenue growth in reported currency delivered this year and as we continue to reduce our foreign currency exposure across our balance sheet,” the multinational said.