Bahrain's mobile ventures boost telecoms

This week the Bahrain Telecommunications Company (Batelco) announced it bought a 20 per cent shareholding in Yemen's leading mobile communications company, SabaFon, for $144 million. Batelco's investment in SabaFon offers great potential. Currently, it is the largest GSM mobile operator in Yemen, offering national coverage with over 500 base stations across the country and, as of the end of February, 1.2 million mobile subscribers. A company spokesman said Batelco's share in the company would provide a significant entry into a rapidly growing market in Yemen, which has a population of more than 22 million and wireless penetration of approximately 12 per cent as of January 2007.

Batelco's foreign venture should come as no surprise following the company's announcement in early March that it was raising $300 million in a three-year term loan facility. The loan is to be used for general corporate purposes and to support the company's growing business in the Middle East and North Africa region. The loan was arranged by a number of banks including the Arab Banking Corporation and Standard Chartered, Bank of Tokyo-Mitsubishi, JP Morgan, National Bank of Abu Dhabi, National Bank of Bahrain and the Royal Bank of Scotland.

Batelco is listed on the Bahrain Stock Exchange with a total market capitalisation of $3 billion. Last year the telecoms company saw gross revenue grow by 11 per cent to $623 million while net income at $237 million was 4.4 per cent higher year-on-year.

Even though Batelco holds almost 70 per cent of the mobile customer base, MTC-Vodafone, its main competitor, has been making moves in recent weeks to increase its appeal. Earlier this month, MTC-Vodafone announced it would be bringing the latest Blackberry handheld devices, the BlackBerry Pearl and BlackBerry 8707v, to the Bahraini market. In partnership with Research In Motion (RIM), MTC-Vodafone has access to Vodafone's Global Frame Agreement with RIM, enabling MTC-Vodafone customers to benefit from Vodafone's global sourcing of BlackBerry smartphones and around-the-clock technical support.

In addition, MTC-Vodafone, in honour of its 1001 days of service in the kingdom, announced a series of promotional offers earlier this month to new pre- and post-paid customers.

Following legislation in 2002 that liberalised the telecoms sector, Kuwait-based Mobile Telecommunications Company (MTC), in partnership with the UK's Vodafone, acquired the kingdom's second mobile licence in April 2003. The arrival of MTC-Vodafone in Bahrain has helped shake up the market with its subscriber base notably increasing in recent years; for example, the number virtually doubled from 105,000 in December 2004 to 202,000 in December 2005.

With such dramatic changes taking place, the sector's watchdog, the Telecommunications Regulatory Authority (TRA), revealed a draft plan of its goals for the next three years. These include fostering a competitive market, educating consumers and protecting their rights, as well as reviewing the licensing, spectrum management and type approval frameworks in an effort to reduce bureaucracy.

Market observers believe the TRA is likely to consider offering a third mobile licence. However, some industry insiders are concerned about this possibility.

Rashid al-Snan, CEO of information and communications technology company Etisalcom, recently told Oxford Business Group the TRA should move away from offering another conventional Mobile Network Operator (MNO) licence. He said the take-up rate of mobile phones has reached 100 per cent so providing a third option is likely to be waste of resources and money. Instead, al-Snan suggested the TRA consider offering a Mobile Virtual Network Operator (MVNO) licence where the licensee would not own a licensed frequency spectrum, but would instead resell its wireless services under its own brand name, using the network of another mobile phone operator.

(C) Oxford Business Group - www.oxfordbusinessgroup.com

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