Former monopoly reports tenth profit drop in 11 quarters amid domestic competition
Bahrain Telecommunications Co reported a 10th profit drop in 11 quarters on Tuesday as domestic competition and one-off charges from a cost-cutting programme hurt the bottom line.
The former monopoly, commonly known as Batelco, made a net profit of 17.75 million dinars ($47.1 million) in the three months to Dec. 31, down from 23.5 million dinars in the year-earlier period, according to Reuters calculations.
Two analysts polled by Reuters forecast Batelco would make a quarterly profit of 38.05 million dinars.
These estimates included an expected gain from the agreed sale of Batelco's 43 percent stake in Indian affiliate S Tel to its Indian partner, which the Bahraini firm had expected to be completed in the fourth quarter.
Prior to the results announcement, Nishit Lakhotia, a telecoms analyst Securities & Investment Co (SICO) in Bahrain, estimated this gain would be 19.3 million dinars based on the difference between the agreed sale price - $175 million - and the book value of S Tel on Batelco's accounts as of Sept. 30.
Batelco is now suing its India partner for non-payment. Accounting rules would allow the firm to book the sale gain in the fourth quarter as a receivable item. However, the company declined to comment on whether it had done this.
S Tel was one of eight Indian mobile operators stripped of licences in February 2012 as part of a corruption probe.
Batelco's fourth-quarter revenue was 77.16 million dinars, it said in a statement. This compares with 81.5 million dinars a year ago.
"Beyond aggressive competition in the Bahrain market and elsewhere in the region, our results for 2012 were also impacted by a number of one off charges including expenses associated with an extensive restructuring and cost rationalisation programme at our Bahrain operations," said chairman Sheikh Hamad al-Khalifa in the company's results statement.
The state-controlled firm proposed a 25 fils per share dividend, plus a 10 percent bonus share issue.
Batelco competes with units of Kuwait's Zain and Saudi Telecom Co in Bahrain, while it also owns Jordanian telecoms operator Umniah, 27 percent of Yemeni mobile operator Sabafon, minority stakes in internet providers in Kuwait and Saudi Arabia and is also active in Egypt.
The operator has expanded abroad to offset declining domestic margins, in December agreeing to buy Cable & Wireless Communications' assets in Monaco and some islands in a deal worth up to $1 billion.
Full-year net profit for 2012 was 60.3 million dinars, down from 80 million dinars in 2011.