x Abu Dhabi, UAESaturday 22 July 2017

Batelco feels pinch at home and abroad

Batelco says it expects revenues and profits to decline again this year.

Analysts are giving Batelco investors a wake-up call after the telecommunications operator said it expected revenue and profits to decline this year.

The Bahraini operator is feeling the pinch from its investments in India and Yemen, despite increasing its subscriber base to 9.2 million customers last year.

Batelco reported last month that its profit from last year reached 86.8 million dinars, a 17.4 per cent decline from 2009. Its revenues were 340.3m dinars, down about 2 per cent from 2009.

"In addition to the reduced market share, Batelco's annual financial results were affected by its share of expected losses for its start-up operation S Tel [in India], which completed its first full year of operation in 2010," said Sheikh Hamad bin Abdulla Al Khalifa, the chairman of Batelco.

Company officials said this week that Batelco was likely to report further declines in revenues and operating profit this year as it struggles to maintain local market share and keep a cap on costs at its Indian unit, a Global Investment House report said.

Diala Hoteit, an analyst with NBK Capital, said Batelco's domestic business, which generates most of its profits, has been affected by a rise in competition.

"Management [attributes] the decline in its market share to a highly competitive market, as well as a tough regulatory backdrop," Ms Hoteit said.

"While we acknowledge the aggressive competition in the market since the entry of Viva, we still view the stronger subscriber decline in Bahrain as a negative."

Sheikh Hamad said Batelco planned to continue its strategy of international investment to offset domestic losses.

"Our strategy to grow and diversify the group through our expansion programme continues to be successful and resulted in a 67 per cent increase in Batelco's customer base," he said.

 

dgeorgecosh@thenational.ae