Home / Batelco profit nosedives as costs rise

Batelco profit nosedives as costs rise

Bahraini telecom posts 15.1% decline in Q2 income to $62mn despite revenue surge.

Bahrain Telecommunications Co (Batelco) posted a 15.1 percent decline in second-quarter net profit as an increase in costs offset higher revenues which were helped by growth from external markets.

Batelco made a profit of 23.37 million dinars ($61.99 million), or 16.2 fils per share, in the three months to June 30, compared with 27.52 million dinars, or 19.1 fils per share, a year earlier, it said in a statement on the bourse website. The quarterly earnings just missed the profit forecast of 24.50 million dinars by SICO investment bank in a Reuters survey last month.

"They are getting growth in markets outside Bahrain, but at the same time we need to see why their expenses are increasing," said Jithesh Gopi, an analyst at the bank. While revenues in the quarter gained 17.9 percent to 82.38 million dinars, Batelco's expenses grew more quickly.

Network operating expenses for the three-month period jumped 32.85 percent to 25.48 million dinars and general and administrative expenses climbed 49.9 percent to 10.63 million dinars, it said. Employee benefits expenses also rose 18.6 percent to 12.35 million dinars.

Batelco, which operates in five countries in the region, also posted a sharp decline in "other income" to 461,000 dinars compared with 5.15 million dinars in the 2007 second quarter, Batelco said, without giving further details. Like its regional counterparts, Batelco has been expanding in the region as competition intensifies at home.

Batelco was in talks with several pan-African and Indian mobile telephone operators to buy stakes under its $4 billion acquisitions plan, Ghassan Ali Murad, head of mergers and acquisitions, told newswire Reuters in May. The former monopoly operator has come under increasing pressure from regulators and competitors in the Gulf kingdom to reduce prices. It has said it wants to derive 80 percent of its income from overseas operations in the next five years.

Outside of Bahrain, Batelco operates in Jordan, Yemen, Kuwait and Egypt. Batelco's second-quarter profit fell while that of its peers rose.

Emirates Telecommunications Co posted a record quarterly profit and Saudi Telecom's quarterly profit was its highest in at least 12 months. Shares of Batelco are down over 16 percent this year, compared with a more than 2 percent gain in Bahrain's main stock index. (Reuters)

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