Batelco profits under pressure from domestic competition and international expansion

Batelco Group delivered for the nine months ending September 30, an operating profit of BD80.8 million, a three per cent decline versus the same period in 2009. However, changes to taxation rules in Jordan and Yemen, foreign exchange currency movements and share of profits and losses from associate companies impacted the telco’s net profit by BD12.1 million resulting in a Q3 net profit of BD 19.3 million and for the first nine months group net Profit of BD66 million a 17 per cent decline versus the same period last year.

Lower numbers of customers and lower prices in Bahrain have reduced revenues and operating profits, commented Shaikh Hamad

“We informed the market in February this year that our overall net profit will be lower due to our share of losses in our Indian start-up operation and competitive pressures in Bahrain. Based on the current outlook we are maintaining our guidance that net profit for 2010 is likely to be 15 per cent lower than 2009. Operating profit however, is expected to be 2-3 per cent below 2009,” Peter Kaliaropoulos, CEO of Batelco Group said.

The net profit amount reported for the nine months to end-September represented a 17 per cent decline compared to the same period in 2009.

“The competitive environment in Bahrain due to the entry of the third mobile operator and ongoing regulatory reform has created a highly competitive market place. In contrast to other markets Batelco operates in, Bahrain was the only market in Q3 where Batelco experienced an actual reduction of customers for mobile and broadband services. Lower numbers of customers and lower prices in Bahrain have reduced revenues and operating profits,” commented Shaikh Hamad Bin Abdulla Al Khalifa, chairman of Batelco.

Batelco Group’s customer stood at just over 7.9 million across all our operations for all products and services at the end of September. A year ago the operator’s mobile subscriber base was 4.9 million but has now reached approximately 7.5 million representing an increase of 53 per cent.

Umniah, Batelco Group’s 96 per cent owned subsidiary in Jordan, continues to demonstrate its strength and popularity in the Jordanian market with a mobile customer base of 1.8 million customers.

Sabafon, the operation in Yemen in which Batelco holds a 26.94 per cent equity investment, counted 3.2 million subscribers at the end of the period.

Etihad Atheeb, in which Batelco holds 15 per cent equity, continues to grow in the Saudi market through offering quality broadband and voice services under the brand GO. Etihad now delivers to 92,000 customers an increase of five per cent quarter-on-quarter.

Subscriber numbers in S Tel India, in which Batelco holds 42.7 per cent equity, have also grown in Q3 to 1.64 million across its operations in Bihar, Orissa and Himachal Pradesh and the recently launched Assam and North East.