Batelco, which on Wednesday reported gross revenues of BD340.3 million, said its net profit in 2010 slipped 17.4% to BD86.8 over 2009.
This was announced by Batelco Chairman Shaikh Hamad Bin Abdulla Al Khalifa announced full year results for the period ending 31 Dec 2010 following a Batelco group board meeting held at Hamala Headquarters on Wednesday.
The Batelco Chairman said while group ended 2010 with an impressive customer base of 9.2 million subscribers across its seven operating markets, the Group’s annual financial results were affected by the decline of market share in Bahrain and by its share of expected losses for its start-up operation S Tel (India), which has just completed its first full year of operation.
Shaikh Hamad said that the board of directors would recommend to the general assembly of shareholders a full year cash dividend of BD64.8 million. This represents the equivalent of 45% of the paid-up capital – at a value of 45 fils per share, of which 20 fils per share was announced and paid in July 2010.
“The remaining 25 fils will be paid after the annual general assembly scheduled to take place in February.
“In spite of tremendous growth in customer numbers group-wide and strong results from our subsidiary Umniah, we continue to be impacted in Bahrain by increasing competition and regulatory decisions which limited Batelco’s growth in a heavily saturated market,” Shaikh Hamad added.
“The competitive environment in the Kingdom due to the entry of the third mobile operator in early 2010 and ongoing tough regulation has created a highly competitive market place. In contrast to other markets Batelco operates in, Bahrain was the only market where Batelco experienced a reduction of customers for mobile and fixed broadband services in 2010 over 2009. The decreasing numbers of customers and TRA’s non approval of innovative pricing in broadband services limiting Batelco’s ability to effectively compete, contributed to reduced revenues and operating profits,” the Chairman explained.
Batelco Group Chief Executive Officer Peter Kaliaropoulos said that the end-of-year results were in line with forecasted expectations and market guidance as previously communicated throughout 2010.
“In February 2010 we offered market guidance that we anticipated a decline in net profits for the full year due to our share of losses for S Tel and due to the market conditions in the highly penetrated, ex-growth market in Bahrain.”
Batelco Group consolidates in its financial accounts the results of its operations from Bahrain, Jordan and Kuwait.
“Our Operating Profit for 2010 of BD106.5 million declined by 4.7% compared to the previous year. Whilst Batelco Bahrain’s operating profit was lower, stronger year-on-year results from Umniah reduced the overall decline in operating profit. Batelco’s overseas operations contributed 34% of gross revenues and 25% of EBITDA. Group Free Cash flow of BD109 million, representing a 75% EBITDA conversion rate, exceeded guidance,” Kaliaropoulos added.
“At a group level, factors which further impacted our net profit included our share of S Tel’s first year losses and the end of Sabafon’s investment tax exemption in Yemen, a total of BD13 million adverse impact,” the group CEO explained.
“We are extremely pleased to announce that the total number of customers across all our operations grew by 67.1% over 2009, with numbers now in excess of 9.2 million.
“Batelco Bahrain’s customer base on 31 December 2010 stood at 770,000 mobile customers (6.3% lower than 2009), 88,500 Broadband customers (4.5% growth) and 185,000 fixed lines, a decline of 7.4% compared to 2009,” he said.
“Whilst our overall mobile base in Bahrain is lower than 2009, our number of Blackberry customers has doubled and the increase in our wireless Broadband numbers has been buoyed by the success of O-net for which the customer base has also doubled,” Kaliaropoulos added.
Batelco also invested BD22 million) in new wireless and fixed infrastructure in Bahrain in 2010.
Batelco Group’s total mobile base now stands at over 8.8 million with just under 250,000 Broadband customers.
Umniah, Batelco’s 96% owned subsidiary in Jordan, continues to demonstrate its strength and popularity in the Jordanian market with a mobile customer base of 2.1 million and 19,000 Broadband customers, increases of 31.5% and 5.1% YoY respectively.
Sabafon, in which the Group holds a 26.94% equity investment, has continued to impress and ended the year with over 3.6 million customers, an impressive 40.2% increase over the past year.
In spite of a difficult regulatory environment in Saudi Arabia, Etihad Atheeb, in which Batelco holds 15% equity, has managed to grow its Broadband customer base by a staggering 100% to 104,000 thanks to the commitment of a strong team and the reliability and popularity of its GO brand.
Customer numbers at S Tel India, in which Batelco holds 42.7% equity, have also significantly increased. S Tel now operates in Bihar, Orissa, Himachal Pradesh, Assam and North East and boasts a network of 3,500 base stations. During the first full year of operation the customer base has grown to over 2.3 million, representing quarter of the Group’s customer base. S Tel is now in the process of rolling out services in its final circle Jammu & Kashmir.
The Batelco Group CEO said that acquisitions remain high on the Company’s agenda for 2011.
“We had hoped to increase our footprint in 2010 but the right opportunity did not materialise. To realise further growth and diversify our revenues, we need to increase our scale and invest in companies that are already established but still offer growth in their markets or in new start ups ready to launch. Looking to acquire now licenses is not an option that we are considering.”