Batelco Group (Ticker: BATELCO), the international telecommunications company with operations across 16 countries, today announced its financial results for the six months ended 30 June 2013 ("the Period"), which include results from the newly acquired Island Units (Dhiraagu, Channel Islands & Isle of Man, South Atlantic and Diego Garcia) from Cable & Wireless Communications (CWC) on 3rd April 2013.
Financial and Subscriber Highlights
- Gross Revenues of BD170.7M (US$452.8M) for the period;
- EBITDA of BD56.6M (US$150.1M) representing a 33% margin;
- Consolidated Net Profit of BD27.0M (US$71.6M) for the period;
- Successful integration of Islands portfolio in the second quarter;
- Subscriber base of 8.6 million, an increase of 24% YoY and 13% QoQ;
- Further diversification of Group revenues with 50% of revenues and 48% of EBITDA now sourced from markets outside Bahrain;
- Significant cash balances totaling BD153.1M (US$406.1M) and Investment Grade credit ratings from Fitch and Standard & Poor's Ratings Services;
- Earnings per share of 17.1 fils and an approved interim cash dividend of 10 fils per share.
For the first six months of the year, the Group reported Net Profit of BD27.0M (US$71.6M) versus BD34.6M (US$91.8M) for the corresponding period in 2012, a decrease of 22% year over year and a 2% increase since last quarter. Profits for the period were impacted by a number of one off expenses associated with the acquisition and related financing. EBITDA for the period was BD56.6M (US$150.1M), representing a healthy margin of 33%, compared to EBITDA of BD55.8M (US$148.0M) for the corresponding period in 2012, a 1% increase year over year and a 58% increase quarter on quarter.
The Group's Gross Revenue for the period, which stood at BD170.7M (US$452.8M) was up 10% from BD155.3M (US$411.9M), year over year and 40% quarter over quarter. Operating Profit for the period was BD33.5M (US$88.9M) versus BD38.5M (US$102.1M) for the corresponding period in 2012 reflecting a 13% decline year over year but a 73% increase over the first quarter of 2013.
In line with ongoing efforts to diversify revenues and maximise investments, the Group saw increased contributions from overseas markets both existing and through the 10 new markets added. At the end of the six month period, 50% of Revenues and 48% of EBITDA was attributable to operations outside of Bahrain. This is compared with 39% of Revenues and 35% of EBITDA in the first half of 2012 and 42% of revenues and 39% of EBITDA during the first quarter of 2013.
The Group's balance sheet also remained strong. As of 30 June 2013, there was substantial cash balances of BD153.1M (US$406.1M). Earnings per share were also healthy at 17.1 fils and the Board of Directors approved an interim cash dividend for shareholders of 10 fils per share for the six month period.
Commenting on the results, Batelco Chairman, Shaikh Hamad Bin Abdulla Al Khalifa, said:
"We're pleased to announce our results for the first half of the year, which were enhanced by the inclusion, for the first time, of our recently acquired Islands businesses. As we have said, this was an accretive transaction that has enabled us to strengthen our financial performance and emerge as a more profitable and cash generative communications Group. Diversification has long been an important part of our strategy and we've reached a milestone with half of our revenues and a considerably higher percentage of profits now being sourced from outside of our home market, where we are looking to continue to offset the impact of ongoing and aggressive competition."
He added, "With the ongoing integration of these businesses and following a number of one off expenses incurred during the quarter, we expect to see an even more positive contribution from our Island assets as we go forward. This, coupled with the progress we are making in improving our competitiveness across all existing operations, will enable us to deliver even stronger results for shareholders in the periods to come. Our commitment to shareholder value remains a priority and is reflected in yet another solid half year dividend today approved by the Board."
Operational Highlights - Subscriber Numbers Reach 8.6 Million
Operationally, the Group made considerable progress during the first half of the year and second quarter, achieving organic growth and growth through its recently completed acquisition. For the period, the Group's subscriber base grew to 8.6 million customers, a rise of 24% year on year and 13% since last quarter. This reflected gains made over the past six months in a number of key existing markets of operation including Bahrain, Jordan, Yemen and Kuwait as well as the addition of approximately 573,000 acquired Islands customers in the form of mobile, broadband and fixed line subscribers.
Broken down by segment, mobile subscriber numbers grew 24% year-over-year and 12% quarter on quarter. Similarly, positive results were achieved in Broadband, where customer numbers for the quarter increased by 23% year-over-year and by 19% since last quarter. Fixed line subscribers also rose by 39% year-over-year and by 44% since the first quarter as a result of the addition of Island fixed line users.
Performance from Overseas Markets
During the period, overseas markets continued to deliver enhanced results as highlighted by their growing contribution to the bottom line, which was further bolstered by the addition of the Islands businesses.
Jordan:Umniah continued to deliver strong results throughout the first half of the year. Its mobile subscriber base grew to 2.5 million, an increase of 8% year-over-year and 5% since last quarter. This was supported by the ongoing roll out of 3.75G services across the Kingdom which began in June 2012. Fixed broadband growth was even more robust with Umniah reporting an impressive 36% increase year-over-year and 5% quarter on quarter.
Kuwait:Batelco's subsidiary Qualitynet, which delivers total ICT solutions, remains the market leader in Kuwait's Data Communications and Internet Services industry. At the end of the six month period, the company served about 42,000 users reflecting a gain of 5% year-over-year and steady results since the first quarter.
Channel Islands & Isle of Man. A complete rebrand to SURE was completed on 3 July 2013. Mobile subscriber growth was 6% and broadband segment achieved double digit subscriber growth supported by IPTV services and mobile bundling. This has been supported over the last half year by the creation of dedicated Customer Experience, Enterprise Sales & Professional Services divisions bringing re-invigorated insight and focus to the business.
South Atlantic & Diego Garcia: The first half of 2013 witnessed growth mainly driven by enterprise business such as the construction of secure GPS hosting facilities for the European Space Agency (ESA) on Falklands and Ascension Island. Broadband demand continues to be strong across the businesses and improved offers have been launched as part of the rebranding of Cable & Wireless in the South Atlantic to "Sure". In addition, St Helena launched a new digital TV service and a UK government funded airport project offers new opportunities for the business. Mobile performance was stable in Falklands with demand expected to increase in the next 6 months with the ramp up of oil related activity.
Other JVs:Sabafon (Yemen), in which the Group has a minority shareholding, ended the six month period with 4.3 million users reflecting growth of 22% year on year and 4% quarter on quarter. Atheeb (Saudi Arabia), in which Batelco holds a 15% stake, reported a decline of 4% year over year while broadband subscriber numbers were largely stable since the last quarter.
Dhivehi Raajjeyge Gulhun Plc (DHIRAAGU):The overall mobile customer base grew by 4.1% despite a high penetration of 147% in a saturated market. Upon successful completion of migration to the new billing system, many segment specific offers were launched in the period, which included pre-paid youth tariff, free twitter promotions, new mobile data bundles and new loyalty schemes (for both post-paid and pre-paid). The deployment of HSPA+ to greater Male' and 7 regional islands was also completed in this quarter.
Batelco Bahrain - Focus on Efficiency & Innovation
For the period in Bahrain, mobile subscribers increased by 21% year-over-year and by 17% since last quarter. This marked a third consecutive quarter of mobile growth in Bahrain with these positive results reflecting a focus on strengthening competitiveness through innovation. Having become the first operator in Bahrain to offer 4G LTE in February 2013, Batelco rolled out a number of new related packages and services, which enabled it to attract and maintain customers during the period. In addition, customer numbers were also strengthened by a number of new promotions, upgrades and enhancements to its services.
Fixed broadband subscribers remained stable in line with a growing shift toward mobile broadband usage. Similarly, and as in previous periods, demand for fixed line services in Bahrain also continued to decline in favour of mobile.
Commitment to Community & Employees
For the first half of 2013, Batelco also put significant resources into its Corporate Social Responsibility activities. More than BD900,000 was paid or committed to various sports, social, health and education and charitable organisations in Bahrain. In addition, the company was recognised by a first place distinction in the Excellence Awards at the 5th Annual GCC HR Excellence Awards 2013, underscoring Batelco's ongoing investments in training and development, employee recognition and corporate philanthropy.
Building on Momentum & Growth
Concluding, Shaikh Hamad said: "This has been an exciting quarter and a strong first half of the year. We will work hard in the months ahead to further build on the progress that has been achieved. We continue to focus on strengthening our performance in our home market and in our overseas markets of operations - both long standing investments and in our newly acquired businesses. With an expanded customer base, network and revenue streams, we are confident that we are better positioned than ever to serve our customers and our shareholders alike."Back