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Batelco Q2 Profits Down on Increased Competition
Bahrain based Batelco has reported that its second quarter profits fell by 20% to BD22.3 million (US$59.2 million) from BD27.9 million a year ago. The group reached over 7 million customers across its operations at the end of the quarter.
"Overall our gross revenues did not grow in the first half of 2010 predominantly due to the entry of the third mobile operator in the Bahrain market. Reduced market share for mobile and broadband services in Bahrain and strong price erosion adversely affected our revenues and profits. We also expected lower profits due to funding the growth of our start-up operation in India," explained Batelco Chairman Shaikh Hamad Bin Abdulla Al Khalifa.
Batelco Group Chief Executive Officer, Peter Kaliaropoulos, stated that mobile customers grew by 47% to 6.88 million in H1 2010 compared to 4.68 million in the same period last year. For the same period, broadband services grew by 54% to 230,600 customers and fixed lines declined by 5% in Bahrain to 192,000 lines.
"We had informed the market in February 2010 that we expected a reduction of profits for 2010 due to the new mobile operator and related competitive activity in Bahrain. Whilst our operating revenues were flat we managed costs effectively and delivered an EBITDA margin of 43.5% and an EBITDA of BD74.3 million, a decline of 4% versus the same period in 2009," outlined Mr Kaliaropoulos.
"Mobile and broadband operators are adding new customers - however, revenues per customer are declining whilst costs to acquire and retain customers are growing. In a highly penetrated market for mobiles (150% of population) and broadband (110% of households and businesses) with 3 mobile operators, this is a natural competitive consequence."
"We expect some growth from mobile and fixed data in terms of new services but overall price erosion will continue to reduce revenues and profits in Bahrain. Additional operators and investments by Government Organisations in cable systems and other telecommunications infrastructure, as announced recently, will further benefit Bahrain by increasing competition but naturally will reduce growth opportunities for Batelco in Bahrain."
Batelco, in H1 2010 also entered into contracts to further expand its wireless infrastructure including a BD14.5 million (US$38.5 million) Mobile Network Expansion project with Ericsson which will see Batelco's technological capability further enhanced to tackle a number of needs such as providing or enhancing coverage and quality of service in newly developed or remote areas as well as ensuring readiness for LTE.
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