Bahraini operator hopes news leads to regulator price cut.
Lower profits may be of benefit to Batelco
Maybe Bahrain Telecommunications will be able to convince regulators to lower prices now that it has become the latest operator to post a sharp drop in profits. The telecoms company, also known as Batelco, posted a 20 per cent fall in quarterly profit on the same period last year, hurt by stronger competition at home and costs for new operations abroad.
Batelco is one of the smaller telecoms operators in the Gulf, with a home market of just over 1 million in which it faces rising competition from bigger rivals such as Kuwait's Zain and Saudi Telecom. The company's chief executive Gert Rieder has complained that the Bahraini regulator is delaying or blocking the promotions it is hoping to introduce to counteract new competitors in the market. Other Gulf operators such as Etisalat have also posted lower quarterly profits as they spend funds on growing abroad to offset lower profits in their newly liberalised home markets.
Batelco said net profit attributable to shareholders in the quarter ending on June 30 fell to 22.3 million dinars from almost 28m dinars in the same quarter last year. Analysts at SICO Investment Bank had expected Batelco to post net profit of 24m dinars. "Reduced market share for mobile and broadband services in Bahrain and strong price erosion adversely affected our revenues and profits," the chairman Sheikh Hamad bin Abdulla Al Khalifa said.
The operator has earmarked up to US$2 billion for an acquisition in Africa or South East Asia to further grow abroad after it bought a 49 per cent stake in the Indian mobile operator S Tel for $225m last year. It has said it expected net profit of about 100m dinars this year, below last year's profits due to the start-up costs for S Tel. Shares in Batelco have shed 3.6 per cent so far this year, trailing the gains of shares in Zain and Etisalat. They closed yesterday down 2.56 per cent to 0.57 dinars.
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