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Batelco eyes share in KSA mobile market

The Bahrain company's $3bn acquisition plans could include a Saudi mobile licence stake.

Bahrain Telecommunications Co. (Batelco), the Gulf state's second-largest company by market value, is considering three acquisitions in its growth plans, including a share in Saudi Arabia's third mobile licence.

Batelco Chief Executive Peter Kaliaropoulos told Reuters on Monday the firm had earmarked up to $3 billion for acquisitions in the next 18 months, and that it was in talks for a 10% stake in a consortium bidding for the third Saudi licence.

"All the growth of the company will come from international acquisitions ... We're currently looking at three acquisition targets. The Saudi deal is the smallest one," he said. He has previously said growth opportunities in Bahrain were "limited".He declined to identify other consortium members, but said they were regional firms. Kingdom Holding Co., owned by Saudi billionaire Prince Alwaleed bin Talal, has formed a consortium with Turkish mobile operator Turkcell for the bid.

At least eight bidders are prepared to pay up to $4 billion for the Saudi licence, pan-Arab daily Asharq al-Awsat said late last month, quoting unidentified sources. Bidding closes on February 24th.

Kaliaropoulos declined to give details of the other two acquisition targets, but said they were based in the Middle East and North Africa.

He said Batelco did not have the "deep pockets" needed for quick purchases, and that acquisition negotiations were taking three to six months to avoid a bidding war with other firms.

Batelco borrowed $300 million last week for acquisitions, Kaliaropoulos said, adding that the firm could be leveraged to raise $1.5 billion. The company could raise another $1.5 billion through equity, he said.

In June last year, Batelco acquired a 96% stake in Jordan's third mobile operator Umniah in a deal worth $415 million.

Kaliaropoulos dismissed an analyst's report that a depreciation of goodwill from the deal was behind a 9.4% fall in Batelco's fourth-quarter profits to 20.2 million dinars ($53.58 million), compared with a year earlier."Absolutely not ... The valuation of Umniah has gone up. There's no write off from Umniah," he said.

Kaliaropoulos instead ascribed the lower profit to a write-off of 1 million dinars in bad debt, and a 2 million dinar one-off expense for the firm's 25th anniversary celebrations, including a one-month salary bonus for staff.

The firm made a 2006 net profit of 90.84 million dinars, up 4.5% from 2005.

The firm's share price has fallen 13.8% since the start of the year, but Kaliaropoulos said the stock's lack of liquidity meant relatively few trades strongly affected price.

Mumtalakat, a government holding company, owns 75% of Batelco's shares, Kaliaropoulos said.

In December, Britain's Cable & Wireless sold its 20% stake in Batelco for 258 million British pounds ($506 million) to Mumtalakat, a figure that meant shares were sold at a discount, Kaliaropoulos said, depressing the stock's price.