Bahrain’s Batelco Hit By Competition And Currency Effects

Bahrain Telecommunications Co (Batelco) posted a 2 per cent fall in first-quarter profit after revenue was dented by tougher competition and adverse foreign exchange movements.

Batelco, the former chief executive of which stepped down in February after less than a year at the helm, made net profit of BD14.2 million ($37.66 million) in three months to March 31, it said in a statement.

That compared with BD14.5 million of net profit in the same period last year, a previous statement shows, and SICO Bahrain’s forecast of BD14 million.

Batelco has reported rising profits in four of the six quarters since its acquisition of most of Cable & Wireless’s islands division in April 2013, which expanded the former monopoly’s operations to 14 markets.

But that recovery after profit fall’s in 16 of the 18 quarters to June 30, 2013, may be faltering.

The company’s quarterly revenue dropped 4 per cent year on year to BD93.7 million, a decline it blamed on competitive pressures at some of its operations and adverse foreign-exchange movements.

The revenue decline was despite Batelco expanding its customer base to 9.9 million, up 9 per cent from a year ago.

“While customer numbers continue to grow, the intensity of competition in the consumer market is impacting ARPU (average revenue per user),” Ihab Hinnawi, Batelco’s acting chief executive, said in the statement.

“The industry has created an expectation of providing more product and service for less. Bundled deals deliver devices with services, which is great news for customers, but negatively impacts the bottom line.”

In Bahrain, Batelco competes with units of Kuwait’s Zain and Saudi Telecom Co as well as about 10 internet providers.

Batelco also owns Jordanian telecoms operator Umniah, plus minority stakes in Yemeni mobile operator Sabafon and companies in Kuwait and Saudi Arabia.