Airtel Kenya booked Sh7.5 billion in tax savings in the three months to March 2023, as the company points towards a profitability trend in the coming year.
Financial disclosures by the company’s London-listed parent firm Airtel Africa for the year ended March show that the cumulative saving on tax payments as a result of utilising the deferred tax credits hit $117 million (Sh16 billion) in the period.
This was up from $62 million (Sh8.5 billion) in the nine months to December.
The telco had made losses running into billions of shillings over the years, building up credits to use in the future to lower its tax bill.
A deferred tax asset is an item on a company's balance sheet that reduces its taxable income in the future.
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.”
Airtel Africa also disclosed that other subsidiaries in other countries including Tanzania and the Democratic Republic of Congo (DRC) had recognized 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.
The company said the revenue growth of 17.6 per cent in constant currency growth was driven by both customer base growth of 9 per cent and average revenue per user (ARPU) growth of 7.4 per cent in its business.
The London-based firm did not give the breakdown of the revenue share generated from the Kenya business, but it noted that its East African business recorded a growth of 32.6 per cent in mobile money revenue.
“Operating profit increased by 14.5 per cent in reported currency to $1.757 billion as a result of strong revenue growth and continued improvements in operating efficiency in East Africa and Francophone Africa,” the company said.
Airtel’s East African business includes Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia.
The telco said Kenya’s, Uganda’s and Malawi’s currency devaluation resulted in 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.
