Dubai: Bahrain Telecommunications Co (Batelco) saw its profits slump continue as it reported a 13 per cent second-quarter fall as fierce competition in a stagnating home market weighed on the bottom line.
The former monopoly, which had reported declining profits in seven of the previous eight quarters, made a net profit of 18.5 million Bahraini dinars (Dh180.25 million) in the three months to June 30, down from 21.3 million dinars in the corresponding period last year, Reuters calculations show.
“In our home market, Bahrain, we continue to face significant competition from other operators coupled with a lack of any significant growth,” Shaikh Hamad Bin Abdullah Al Khalifa, the Batelco chairman, said in an emailed statement.
“As a priority, we are implementing various initiatives to improve efficiencies (and) lower our operating cost structure.”
Bahrain’s telecoms sector is arguably the most liberalised in the Gulf. The kingdom has three mobile operators - Batelco, plus units of Kuwait’s Zain and Saudi Telecom Co - as well as about 10 Internet providers serving a population of around 1.3 million. In May the regulator ordered Batelco to reduce various interconnection fees that it charges rival domestic operators.
These limitations led Batelco to expand abroad and it also owns Jordanian telecoms operator Umniah, 27 per cent of Yemeni mobile firm Sabafon, minority stakes in internet providers in Kuwait and Saudi Arabia and is also active in Egypt.
Yet Bahrain remains central to Batelco despite this diversification, providing 61 per cent of the group’s half-year revenue of 155.3 million dinars. Home revenue was 94.7 million dinars, down 7.5 per cent from a year ago, Reuters calculations show.
“We are actively pursuing opportunities to build our network through strategic acquisitions,” Shaikh Mohammad Bin Eisa Al Khalifa, the Batelco chief executive, said in the statement.
The company points to its low debt - 27.5 million dinars at of June 30 - and cash and bank balances of 87.4 million dinars, which is little changed from a year ago, to show that it is well positioned to expand abroad.
However, it has made little headway in recent years, scrapping a $950 million joint bid for a 25 per cent stake in Saudi Arabia’s No.3 mobile operator Zain Saudi in September 2011, while the operator’s subscriber base fell 34 per cent year-on-year to 7 million, largely because of the exclusion of its failed Indian affiliate S Tel from the company’s books.
Batelco has agreed to sell S Tel, which was ordered to be stripped of its licence after a corruption investigation. The sale to Sky City Foundation is expected to be completed by the end of October.
