By Ed Attwood
Head of telco’s local operations says no room for third mobile player.
The head of Batelco’s Bahraini operations has warned that the high number of telecoms licence holders in the Gulf state’s market means that many of them will struggle to achieve profit.
“There have been more than 100 licences given out for fixed, mobile and internet services in Bahrain, which is far too many. A lot of the players are struggling to get economies of scale – or any kind of scale in the first place,” Batelco Bahrain chief executive Gert Rieder told Arabian Business.
“If you look at the fixed market, we’re talking about 200,000 households and 200,000 broadband connections. You cannot have a sustainable business if you only have around 4,000 customers.”
Bahrain has a population of around 1.4 million, and mobile penetration – the number of active SIM cards within the population – of 180 percent, one of the highest in the world.
Earlier this year, Saudi Telecommunications Company (STC) launched a third mobile operator, VIVA, in Bahrain. VIVA joined incumbent Batelco and Kuwaiti giant Zain in the congested market.
But Rieder said that there was no room for the new entrant.
“The business case of the third operator – looking at their investments – I think they will have a very tough time ever breaking even. Definitely the two-player scenario would have been my preferred option, but the regulator wanted to offer a third licence, and we didn’t need it, to be honest,” he said.
“[The regulator’s decision] is more a case of wanting to increase competition and to ensure that customers would have a choice. But there’s a tough balance, because you can offer licences to many operators, but at the end of the day some of them will struggle despite having a healthy business case.”
When asked whether Batelco had had to switch its business plan to cope with VIVA’s entry, Rieder said the firm had prepared well for the launch.
“VIVA launched in Kuwait a couple of years ago – they basically copied what they did in Kuwait so the launch offer as such was not a surprise,” the executive said.
“We didn’t have to change anything – this is not a price war. We accept that new entrants will have to get some market share and will need to position themselves towards customers. We just want to make sure that our customers feel well taken care of and that’s the prime focus for us.”
I'd just like to say that, as a Batelco Customer for my whole life, I'm very happy with their service. It got a little annoying during upgrades a few years ago, but they've added more value to what I pay each month, offer good stability, and innovative promotions, ongoing reduction of prices. Having said that, the other operators aren't really offering anything spectacular.. and where it seems spectacular, it comes at a price, which Batelco offers for less anyway.. And my goodness the number of people exploiting Viva's promotion, only to disconnect as soon as the free months end, well, lets just say everyone got free mobile internet for the last 3 months.. back to paying the old bills soon.. Even 2 operators is too much for Bahrain. They should just keep batelco, but make it into a Gov't entity, not commercial. Our local comms should be free, as should basic internet access.
After VIVA's arival, local call's are reduced by Batelco GSM users by 50%. Are they giving it at loss? Were they making huge profit before VIVA's arival? More competition between operators give's customer good value and service.
Come on Batelco we have heard this story over and over from you, its time you stop complaining and get your act together. What we have seen with the third mobile entry, more choices, better prices, you yourself have launched many packages, like super 10 and 30, would you have launched these if it was not for Viva's aggressive pricing. Both Zain and Batelco have been in idle mode for some time and its only now that Batelco at least has woken up. Zain still in sleep mode.