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Batelco's profits down 17% in Q1

Competitive pressure continues to drive profits down

Batelco's profits down 17% in Q1
Shaikh Hamad bin Abdulla Al Khalifa, chairman, Batelco, said the results reflected fierce competition.

Batelco Group, Bahrain's incumbent telecom operator, posted a net profit of BD13.4m ($35.5m) for the first quarter of the year, a decline of 17% compared to the same period last year.

The operator's gross revenues stood at BD71.0m ($188.3m) in Q1, down 9% from BD78m in Q1 2012.

EBITDA for the period was BD21.9m, representing a 31% margin, versus EBITDA of BD28.3m, for the corresponding period in 2012. Batelco blamed the decrease in profit mainly on "competitive pressures continuing in Bahrain".

The group's subscriber base increased to 7.9m across its six existing markets, a rise of 15% year on year. This figure excluded the firm's recent acquisitions.

In line with ongoing efforts to diversify revenues, the group saw a greater contribution from overseas markets. At the end of Q1, 42% of revenues and 39% of EBITDA were generated from operations outside of Bahrain. The company expects this trend to continue following its acquisition of a number of Cable & Wireless Communications' (CWC) companies, which opened up 10 new markets for the telco, in April 2013.

Batelco said that its balance sheet remained strong with net cash balances totaling BD75.9m as of March 31, despite the dividend payment during the period. Earnings per share for the period were 8.5 fils.

Shaikh Hamad bin Abdulla Al Khalifa, chairman, Batelco, said: "Results for the period reflect the intensity of the competitive situation in our home market and the need to accelerate the restructuring programme to reduce our operating costs.

"Our overseas operations delivered steady performance and sound results. In line with guidance, and despite robust competition in all MENA markets, we delivered reasonable profits although revenues recorded a decline. Also impacting performance were costs relating to our ongoing efforts to enhance competitiveness across the Group. We are focused on preserving margins and strengthening cash flows and the bottom line."

He added that the acquisition of 10 operations from CWC would help to transform Batelco into a "regional operator of international reference" and support its strategy of adding new revenue streams to its business.

"As announced, the transaction is accretive and the benefits and contributions from the addition of these cash-generative businesses will be reflected in the Group's financial performance starting in the second quarter with the expected result of enhancing profitability and shareholder value, a main priority."

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