Beacon of change

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XAVIER: Warns that fixed line services could suffer from underinvestment.

He says the result is that Batelco is no longer "lethargic and indifferent to the customer's needs," but he concedes that the "by-product" of the competition has been a decrease in market share for the company.

"If you look at market share, currently we are at about 30% for IDD, and probably a couple of years ago, on the retail level, we were at 95-100%, adding that Batelco has a 60% share of the mobile market. Despite this, the company's revenues have continued to grow in line with the growth of the market.

But the number of mobile customers on Batelco's books could be eroded by measures outside of the operator's control. Last month, the Bahrain telecoms regulator, the TRA, unveiled plans to register the remaining 600,000 Zain and Batelco prepay users whose details have not been recorded.

"It's so potential users of a network don't abuse a network," Kaliaropoulos explains. "It's been known for many years, for some reason the last two or three years the industry here became a little bit relaxed so we've been asked by the regulator and everybody in the industry to adhere to those rules."

In justification of the exercise, the TRA told the story of one unregistered Bahraini mobile customer who called a shopping mall to say that a bomb was about to explode, just to put a stop to his disobedient wives shopping trip.

The way that networks arrive at their subscription rates is a matter of debate for telecoms companies globally, so it will be interesting to see what affect, if any, the registration process has on subscription figures.

"We can't predict the impact, although I think the work we've done shows a few users will probably have left the country or gone to work somewhere else, so we expect to have less customers," admits Kaliaropoulos.

He estimates there to be a total of 1.3 million mobile customers in Bahrain, with 85% of them prepaid users, but he will not say by how much this figure might shrink after the remaining unregistered customers are booted off the networks in December.

This latest proposal from the TRA has provoked less indignation from Kaliaropoulos than some of its previous initiatives.

Batelco's fights with the Bahraini regulator have been well documented, having been fought in the full glare of the media spotlight.

Unbundling Bahrain

Last month, the TRA began searching for a consultant to lead the process of unbundling Batelco's fixed line (LLU) network so that other operators can access the lines, a process that was not welcomed by the Batelco chief.

"This is something that Batelco has to live with, whatever implications it has on our business. We just have to manage it," Kaliaropoulos says.

He explains that other companies will be able to buy the naked copper and add a service layer independent of Batelco.

"If their cost structure is much lower to ours, they'll be able to offer customers a much better proposition in terms of pricing, and if they put content and if their network has got different functionality then obviously they will offer different services as well, so this is the most advanced and aggressive level of competition in the fixed network."

Kaliaropoulos says that in light of the LLU, it would not be smart business to continue expanding the fixed line network for "very, very small margins".

"If the incentive is not there to lay infrastructure on the ground, and we will get a very low return, well why continue to invest?"

Another bugbear for Kaliaropoulos is the legislative necessity for Batelco to seek regulatory approval for any new deals or promotions it wants to offer.

"My hands are tied behind my back," Kaliaropoulos protests. "When a third mobile operator comes along, that will free us up from submitting requests for approvals - but that's almost a year from now."

"In the meantime, our competitor with almost the same market share as I, and if you believe the reports, the same revenues in the mobile industry as mine, is allowed to do everything from bundling, special pricing promotions to special products without even notifying the TRA.

"I have to go through a very elaborate, bureaucratic, time consuming process - my bundling proposals for mobile and fixed has been knocked back four times by the regulator," he adds.

Kaliaropoulos insists that he is being forcibly held back by the regulator, but supporters of the measures say they are necessary to prevent Batelco from using its size to blow the competition out of the water.

But despite the public spats, Kaliaropoulos is also keen to play down the friction between TRA and Batelco.

"If you look globally, there's more than sparring going on between every incumbent and every regulator. The incumbent operators cannot just sit back and let the regulator implement, at whatever timetable, at whatever policy, without taking into account the consequences on existing operations."

Kaliaropoulos is positive about the opportunities for the Bahraini market. Despite his regulatory gripes, an increasingly crowded marketplace and rising levels of penetration, he thinks a growing expat community and wider range of services mean that there is still room for growth.

"There is content that will be delivered, more and more content, and gaming on fixed and wireless broadband networks, the whole area of e-government with online portals that will also stimulate more and more broadband services, convergence of technologies, that will bring growth," he says.

"Batelco is growing; we will deliver double digit growth this year like we've done for the last three years. But our job is to look over the horizon. We know our market share is declining, because of all these regulatory impacts, also, we introduced process changes. To be able to survive with less market share is a fundamental strategy of the company.

"It's a very, very exciting market. You have to be a very good operator to deliver your margins and sustain your business here."

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