[2007-07-25]  Deregulation 'hitting projects'
MARKET deregulation is forcing Batelco to review its levels of investment in Bahrain, the company reiterated yesterday. "If the Telecommunications Regulatory Authority (TRA) is going to limit commercial returns for new infrastructure investments, Batelco will be more selective on projects," said Batelco chief executive Peter Kaliaropoulos.

TRA should also address issues like loss-making local access services and rebalancing tariffs, he told a Press conference at the Batelco headquarters in Hamala.

"Competition is something that we have embraced for some years now - and against formidable companies such as MTC-Vodafone," he noted.

"We also compete in markets outside Bahrain against very established operators.

"The fundamental debate with the TRA is not one of competition, but one of proportionate regulation for the size of the (Bahraini) market."

This is an era of rapidly changing market conditions, shaped by new, often-disruptive technologies and business models, said Mr Kaliaropoulos.

"The region's telecom providers must welcome such change across their organisation if they are to sustain their customer loyalty and profitability," he added.

The newly-deregulated telecom sector (in Bahrain, Jordan, UAE and Qatar) is and will continue to undergo fundamental changes, said Mr Kaliaropoulos.

"We must understand the potentially disruptive impact to existing operators, the new competitive landscape, the opportunity for growth through new scale and scope strategies and take a long hard look at revenue streams and cost management," he noted.

"We need to re-invent our operating models to deliver to the demands of the 'new era' customer, while ensuring that we maintain market leadership in the face of economic shifts and changes.

"In the telecommunications sector across the Middle East, the current key factors that influence change and opportunity drivers include deregulation, technology convergence, entrepreneurial competition and customer lifestyle expectations."

Batelco recently announced a half-year net profit of BD52.3m, a 10.2pc increase over the first six months of last year.

Gross revenues grew to BD136.4m, whilst net revenues grew by 25pc over the same period of 2006.

Earnings per share of 44 fils were also announced with a cash dividend of 20 fils per share.

The net profit results include a one-off benefit of BD4.7m as a result of write back for provisions relating to network assets and an investment return.

"This strong set of half year results was delivered as a result of Batelco's regional growth strategy while keeping in touch with Bahrain's customer requirements for better products, genuine service and more affordable prices," said Mr Kaliaropoulos.

Batelco embarked on a niche growth strategy across the region acquiring operators and new licenses to deliver mobility and broadband services.

"Our focus is on paying the right value for such acquisitions and resisting the temptation of offering inflated prices based on public auction approach," he said.

Last year, Batelco acquired 96pc of Umniah, the third Jordanian GSM mobile operator.

Batelco has also become one of the first few foreign investors in the Yemeni market, with its 20pc shareholding of SabaFon, the largest GSM mobile operator in Yemen.

It also has ventures in Egypt and Kuwait and in March this year Batelco, as part of a consortium, won one of three new, fixed services licences in Saudi Arabia.

"Batelco's overseas operations are making the most significant contribution to the company's growth," said Mr Kaliaropoulos.

"Growth in Bahrain's retail operations was 2pc compared to the same period last year, as a result of price erosion and market share loss.

"Meanwhile, operations in Kuwait, Jordan, Egypt and Yemen contributed 28pc of our revenues - almost all of our growth."

Batelco has more than 30,000 broadband customers in Jordan and Kuwait, in addition to 815,000 mobile customers from Umniah, Jordan and 1.6m customers from Sabafon, Yemen.

The company's latest venture will see a Batelco/Atheeb consortium launch fixed and wireless broadband services in the Saudi market, targeting millions of households next year and beyond.

Mr Kaliaropoulos said that in a market with 115pc mobile penetration and over 48pc broadband penetration on a household basis, it was vital to assess and balance the long-term viability of the industry and delivering better value to customers.

More than 100 licences have been issued to various service providers in Bahrain.

"Batelco not only has a legal obligation but has a strong preference to offer full access to its network infrastructure," said Mr Kaliaropoulos.


Copyright © 2007
Source: Copyright © 2007 Gulf Daily News