Batelco profits under downward pressure

Batelco reported gross revenues in 2010 stood at BD340.3 million (US$902.7 million), with net profit amounting to BD86.8 million, a 17.4 per cent decline year-on-year.

While the Batelco Group ended 2010 with a customer base of 9.2 million subscribers across its seven operating markets, its annual financial results were affected by the decline of market share in Bahrain and by its share of expected losses for its start-up operation S Tel (India), which has just completed its first full year of operation.

The board of directors is to recommend a full-year cash dividend of BD64.8 million, which represents the equivalent of 45 per cent of the paid-up capital – at a value of 45 fils per share.

Kaliaropoulos says that acquisitions remain high on the company’s agenda for 2011

“In spite of tremendous growth in customer numbers group-wide and strong results from our subsidiary Umniah, we continue to be impacted in Bahrain by increasing competition and regulatory decisions that limited Batelco’s growth in a heavily saturated market,” commented Batelco chairman Sheikh Hamad Bin Abdulla Al Khalifa.

Bahrain was the only market where Batelco experienced a reduction of customers for mobile and fixed broadband services in 2010 over 2009. The telco said the decreasing numbers of customers and TRA’s non approval of certain pricing in broadband services limits Batelco’s ability to effectively compete, which contributed to reduced revenues and operating profits.

“Our operating profit for 2010 of BD106.5 million declined by 4.7 per cent compared to the previous year. Whilst Batelco Bahrain’s operating profit was lower, stronger year-on-year results from Umniah reduced the overall decline in operating profit,” explained Batelco Group CEO Peter Kaliaropoulos.

“At a group level, factors that further impacted our net profit included our share of S Tel’s first year losses and the end of Sabafon’s investment tax exemption in Yemen, a total of BD13 million adverse impact,” Kaliaropoulos added.

The total number of customers across all of Batelco’s operations grew by 67.1 per cent over 2009, with numbers in excess of 9.2 million end-2010.

At the end of 2010 Batelco Bahrain’s customer base stood at 770,000 mobile customers (6.3 per cent lower than 2009), 88,500 broadband customers (4.5 per cent growth) and 185,000 fixed lines, a decline of 7.4 per cent compared to 2009.

Batelco Group’s total mobile base stood at over 8.8 million with just under 250,000 broadband customers.

Umniah, Batelco’s 96 per cent owned subsidiary in Jordan, continued to demonstrate its strength and popularity in the Jordanian market with a mobile customer base of 2.1 million and 19,000 broadband customers, increases of 31.5 per cent and 5.1 per cent year-on-year respectively.

Sabafon, in which Batelco holds a 26.94 per cent equity investment ended the year with over 3.6 million customers, up 40.2 per cent year-on-year.

In Saudi Arabia, where Batelco holds a 15 per cent equity stake in Etihad Atheeb, the number of broadband customers grew 100 per cent to 104,000 in 2010.

Customer numbers at S Tel India, in which Batelco holds 42.7 per cent equity, have also significantly increased. S Tel now operates in Bihar, Odisha, Himachal Pradesh, Assam and North East and boasts a network of 3,500 base stations. During the first full year of operation the customer base has grown to over 2.3 million, representing quarter of the Batelco’s customer base. S Tel is now in the process of rolling out services in its final circle Jammu & Kashmir.

Kaliaropoulos said that acquisitions remain high on the company’s agenda for 2011.

“We had hoped to increase our footprint in 2010 but the right opportunity did not materialise. To realise further growth and diversify our revenues, we need to increase our scale and invest in companies that are already established but still offer growth in their markets or in new start ups ready to launch. Acquiring new licences is not an option that we are considering,” Kaliaropoulos said.