If verified, it would be the worst massacre and largest single defeat that the AU force in Mogadishu has suffered in some four years of bloody battles defending the weak Western-backed government against the hardline Shabaab.
“We have killed more than 70 of the enemy soldiers today… We have inflicted heavy losses on them and you can see their dead bodies,” Shabaab spokesman Sheikh Ali Mohamud Rage said, displaying the bodies in the dust to reporters.
Angry crowds dragged some of the bodies across the ground, witnesses said.
Photographs show long lines of at least 20 bodies dressed in military uniform laid out in the sand, surrounded by a large crowd with their faces covered.
Witnesses confirmed that the dead bodies were displayed in the extremist Shabaab-controlled Alamada area, some 18 kilometres (11 miles) outside the war-torn capital late on Thursday, and that the bodies were not Somalis.
“I have seen the largest number of soldiers killed in a battle, I have counted 63 Burundian soldiers, all of them dead, the Shabaab brought them on trucks to Alamada,” Hasan Yunus, a witness said.
“Some of the dead bodies were dragged along by angry residents – I could not count them exactly, but there were more than 60,” said Ahmed Jama, another witness.
African Union Mission for Somalia (AMISOM) troops and government forces have been pushing into remaining rebel areas in Mogadishu, after the bulk of the Shabaab abandoned fixed positions in August.
Burundian troops with the 9,000 strong AMISOM force control the sector closest to the fighting and are believed to have led the assault.
Ugandan soldiers make up the bulk of the AU force and control other sections of the anarchic capital.
Despite their pullout from much from the capital, the Shabaab have not wavered from their aim to topple the AU-protected government. They still control large swathes of southern and central Somalia, and remain a serious security threat.
Shabaab fighters in southern Somalia are also facing assaults from Kenyan troops and tanks backed by air strikes since Nairobi declared war on the insurgents and confirmed it had moved its forces into Somalia on Sunday.
Kenya’s military said on Thursday it had seized the coastal area of Ras Kamboni without a fight, a former Shabaab stronghold just across the Somali border, said military spokesman Major Emmanuel Chirchir.
Inland, Chirchir said Kenyan troops were bogged down by “heavy rains” some 100 kilometres (60 miles) inside Somalia, as they prepared to push forward to seize the town of Afmadow, where Somali government forces were fighting.
Nairobi’s unprecedented military incursion into Somalia, which it said had already killed dozens of Shabaab fighters, has triggered warnings of bloody retaliation by the Shabaab.
The Shabaab deny involvement in a spate of attacks and abductions from Kenya – including that of a disabled French woman who died in captivity – that Nairobi says prompted its offensive.
In Somalia, there has been a series of suicide bombings in the capital since the Shabaab rebels said they were abandoning face-to-face battles and switching to guerrilla tactics in the city instead.
Earlier this month, a suicide bomber exploded a truck laden with explosives, killing at least 82 people and wounding many more.
But the deaths in Mogadishu Thursday provide a grim warning suggesting that the Shabaab remain a powerful military threat.
Shamso Abdulkadir was amongst the giant crowd who came to see the dead bodies, and said that some wore body armour and helmets.
“I have counted 70, most of them were shot in the head and shoulders,” Abdulkadir told AFP.
“Residents gathered to watch the dead bodies after they were publicly displayed, and then afterwards, they were dragged about by people,” she said.
Somali government and AMISOM officials could not be immediately reached for comment.
Heavy fighting was reported in the northwest Deynile district throughout Thursday, but Somali government officials had earlier said they were moving alongside AU troops “towards the final strongholds of the terrorist militants”.
Battles began before dawn in Mogadishu as AU-backed Somali forces advanced on holdout Islamist Shabaab positions, officials and witnesses said.
The fighting was centred in Deynile suburb, a remaining pocket still held by the Al-Qaeda linked militants, which borders the rebel-held Afgoye, the world’s largest camp for displaced people.