Batelco 9 months net profit slips 25% to $114m

Batelco Chairman
Batelco, with a customer base of 7.4 million across six markets, reported a net profit $114million against $151million for the corresponding period in 2011, a decrease of 25%.

The telecom group reported an EBITDA for the period $194million, representing a 32% margin, compared to EBITDA of $247million for the previous year.
The Group’s gross Revenue for the period stood at $605million versus $650million year over year. Operating profit for the nine-months of 2012 reached $125million versus $172million for the corresponding period in 2011. In line with ongoing efforts to diversify revenues and maximise investments, the Group continued to see an increasing contribution from overseas markets. At the end of the period, 40% of revenues and 38% of EBITDA was attributable to the Group’s operations outside of Bahrain.

The Group’s balance sheet remained strong. As of 30 September 2012, there was low debt at $72million and substantial cash and bank balances of $231million. This includes the impact of the interim dividend (15 fils per share) announced and paid during the quarter as well as significant investments made in overseas operations at the start of the year. Earnings per share for the period stood at 29.6 fils.

Batelco attributed the decline to highly competitive conditions in Bahrain and the restructuring programme and a number of one-off adjustments in addition a 12% drop in gross revenues versus the previous year in our home market due to increased competition and lower tariffs.

“Redundancy payments for a higher number of employees and an adjustment of mobile data revenues contributed to the low Q3 profit result. Normalised for the above items, the adjusted EBITDA was $223million with an EBITDA margin of 36%, commensurate with prior periods,” Batelco in a statement added.

Batelco Chairman, Shaikh Hamad Bin Abdulla Al Khalifa, announced the results following a meeting of the Board of Directors at Batelco Group Headquarters and said the first nine months of the year continued to be marked by consistently strong cash generation and growing customer numbers across the Group.

“A number of one-off adjustments resulted in more pronounced decreases than would otherwise have been the case. Still, margins are healthy and these one-off charges help position the Group in executing its strategy of revenue enhancement, cost optimisation and achieving scale. The Group continues to generate strong cash flows and underlying profits, well in line with the industry, and shareholder returns, which remain among the strongest in the region despite substantial competitive pressures in Bahrain and across the MENA markets.”

“Throughout the period, we remain focused on further building the business and our customer base. We’ve made great progress in this regard and are pleased to announce three consecutive quarters of overall subscriber growth, following the announcement of the sale of our stake in India. We’ve seen a 5% increase since last quarter and an impressive 12% gain in the Group’s subscriber base, when normalised for STel, since Q4 2011. This brings us to 7.4 million users today and growing,” Shaikh Hamad, added.

“We continue to look at ways to further build our position in the MENA region and other regional markets. We have a strong balance sheet and cash position which we are working actively to put to use. Scale is essential for stabilizing and growing revenues as well as in achieving greater efficiencies. While seeking both organic growth and acquisitions, we are also implementing initiatives aimed at maximising synergies across our existing businesses. This includes rationalizing costs while simultaneously optimising operations and service in the interest of customers and shareholders alike. Some of these initiatives have impacted results for this period, but will help to streamline operations and costs as we go forward. We have launched a restructuring programme that will generate BD20million of cost savings annually from 2014 onwards, essentially in Bahrain where ever increasing competition in what has become a mature mobile market, has strengthened both the need and our focus on innovation and efficiency.”

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