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Batelco Group Announces Third Quarter 2013 Profits of BD36.7 Million (US$97.3 Million)

Batelco Group Announces Third Quarter 2013 Profits of BD36.7 Million (US$97.3 Million)

Batelco Chairman Oct 2011Batelco Group Announces Third Quarter 2013 Profits of BD36.7 Million (US$97.3 Million)   

-    Subscriber base grows to 8.8 million customers across 14 markets
-    Results buoyed by contributions from overseas operations

Manama, Bahrain: Batelco Group (Ticker: BATELCO), the international telecommunications Group with operations across 14 countries, today announced its results for the nine-month period ended 30 September 2013 ("the Period"), which were positively boosted by contributions from its overseas operations including the recently acquired CWC Island Units ("Island Portfolio"). 
Financial and Subscriber Highlights

- Gross revenues of BD271.2M (US$719.4M) for the period;
- EBITDA of BD88.1M (US$233.7M) representing a 32% margin;
- Consolidated net profit of BD36.7M (US$97.3M) for the period;
- Island Portfolio contributes solid results;
- Subscriber base grows to 8.8 million, an increase of 3% QoQ and 22% YoY;
- Ongoing diversification of Group revenues with 53% of revenues and 52% of EBITDA from markets outside Bahrain;
- Substantial cash and bank balances of BD156.1M (US$414.1M);
- Earnings per share of 23.2 fils;
- Strong uptake of 4G LTE in the Bahrain market. 

For the nine-month period, the Group reported net profit of BD36.7M (US$97.3M) versus BD42.6M (US$113.0M) for the corresponding period in 2012, a decrease of 14% year over year.  Profits for the period were impacted by a number of one off expenses including those associated with the Islands Portfolio acquisition. EBITDA for the period was BD88.1M (US$233.7M), representing a healthy margin of 32%, compared to EBITDA of BD73.4M (US$194.7M) and a 32% margin for the corresponding period in 2012.

The Group's gross revenue for the period stood at BD271.2M (US$719.4M) versus BD227.6M (US$603.7M) year over year. Operating profit for the nine-months of 2013 was BD46.5M (US$123.3M) versus BD46.6M (US$123.6M) for the corresponding period in 2012. In line with ongoing efforts to diversify revenues and maximise investments, the Group has been pleased to note an increased contribution from overseas markets thanks to the positive impact from the newly acquired Island Portfolio from CWC. At the end of the nine month period, 53% of revenues and 52% of EBITDA was attributable to the Group's operations outside of Bahrain.

The Group's balance sheet remained strong. As of 30 September 2013, there was substantial cash and bank balances of BD156.1M (US$414.1M). This includes the impact of the interim dividend (10 fils per share) announced and paid during the quarter. Earnings per share for the period stood at 23.2 fils.

Batelco Chairman, Shaikh Hamad Bin Abdulla Al Khalifa, announced the results following a meeting of the Board of Directors at Batelco Group Headquarters, stating, "The first nine months of the year continued to be marked by consistently strong cash generation and growing customer numbers across the Group thanks largely to the addition of the Island Portfolio businesses, included for the first time in Batelco Group's half year 2013 figures."

"This business crucial transaction has enabled us to strengthen our financial performance to emerge as a more profitable and cash generative communications Group. Diversification has been a key strategy for Batelco Group for some years already and we are delighted that the fruits of our M&A investments are beginning to make a significant positive impact on the bottom line. When we embarked on our overseas expansion strategy in order to offset the decline of our business in the home market, our target was to see half of our revenues coming from our overseas investments. We have not only attained that goal but exceeded it with over half our revenues and profits now generated from outside our home market," Shaikh Hamad stated.

"With the ongoing integration of our new overseas businesses, we expect to benefit from greater contribution from them as we go forward. This, in combination with the progress we are making in improving our competitiveness across all existing operations, will enable us to deliver on our commitment to our shareholders, which remains a key priority, by delivering stronger results," he added.

Operational Highlights
Across the Group, Batelco has retained its focus on enhancing competitiveness in its home market of Bahrain, as well as at the Group's existing operations and the newly added subsidiaries. This has meant remaining innovative in the approach to serving customers as well as in the manner in which all the operations are managed. Shaikh Hamad said that one measure for success has been the growth in the subscriber base which has reached 8.8 million, an increase of 22% since 2012 and a 3% increase over the last quarter.

"This reflects gains made in a number of our existing markets, namely Bahrain, Jordan, Yemen and Kuwait in addition to steady customer numbers at our new overseas markets, included for the first time in Batelco's H1 2013 results."

Across the Group, mobile subscriber numbers grew to 8.3 million, an increase of 22% year-over-year and 3% since last quarter. Solid results are also reported for Broadband, with customer numbers up by 3% since last quarter. Fixed line subscribers rose by 39% year over year and remained steady quarter on quarter. All subscriber numbers have been boosted by the addition of the Island Portfolio.

Highlights from Overseas Operations

Contributing to overall Group subscriber and financial growth was healthy performance throughout the period from key subsidiaries that continue to deliver favourable returns with overall performance enhanced by the Island Portfolio.

Jordan: Umniah continued to deliver strong results throughout the first nine months of the year despite recent tax increases by the Government in Jordan. Its mobile subscriber base grew to 2.7 million, an increase of 12% year-over-year and 6% 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 27% increase 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 nine month period, the company served about 42,000 users reflecting a gain of 7% year-over-year and steady results since the last quarter.

Channel Islands and Isle of Man:  A solid quarter on quarter performance with revenue growing 4% and margin 6% over the quarter on a like for like basis.  This has been underpinned by strong growth in revenues from Enterprise Sales and Professional Services bringing reinvigorated insight and focus to the business markets.  Steady growth was also experienced in consumer mobile and broadband businesses supported by IPTV services, in itself showing a 30% rise in customer connections quarter on quarter, product bundling and the benefit attained from the dedicated Customer Experience division.  Extensive planning and preparations are underway to launch a 4G/LTE network in 2014 to deliver improved cost efficiencies, operating performance and the  introduction of a new range of services across the region.

South Atlantic & Diego Garcia:  The period ended 30 September 2013 witnessed 16% growth of enterprise revenue, compared to the same period in 2012, for the South Atlantic business mainly driven by the construction of secure hosting facilities on Falklands and Ascension Islands. Broadband demand continues to be strong across all the businesses and offers have been improved as part of the re-branding of Cable & Wireless to "Sure".  Mobile performance was stable in Falklands with demand expected to increase in the next 12 months with the ramp up of oil related activity.

Dhivehi Raajjeyge Gulhun Plc (DHIRAAGU): The company performed strongly during the quarter with both revenue and net profits increasing by 6% and 32% respectively compared to the previous quarter. Overall mobile national revenue grew by 3%, fueled by strong data growth.  Mobile data revenue increased by 15% and data customers grew by 21% in the reporting period. Fixed broadband business also grew in revenue by 3% with launches of new high speed consumer ADSL and business ADSL packages.

Other JVs: Sabafon (Yemen), in which the Group has a minority shareholding, ended the nine month period with 4.3 million users reflecting growth of 15% year on year and remaining steady quarter on quarter. Atheeb (Saudi Arabia), in which Batelco holds a 15% stake, reported a decline of 10% year over year in subscriber numbers and 6% since the last quarter.

Batelco Bahrain - Focus on Delivering Leading Products & Services with Great Value
For the period in Bahrain, mobile subscribers increased by 29% year-over-year and by 4% since last quarter, to reach 875,000 subscribers. The increase marks the 4th consecutive quarter of mobile growth in Bahrain, with these positive results reflecting a focus on delivering top quality products and services, best value, great offers and prize winning promotions.

In line with a commitment to continually enhance its networks Batelco upgraded its 4G LTE speed from 100 Mbps to 150 Mbps, with this initiative being very well received by customers. Batelco also extended its 4G LTE mobile internet to prepaid customers, becoming the first Bahrain based telco to offer the service for prepaid customers.

Thousands of customers also joined in the Company's recent SMS Challenge which offered a total of US$162,000 in cash prizes with daily winners throughout the summer long promotion and the top winner receiving a fantastic US$50,000 in cash. Such ongoing initiatives enable Batelco in Bahrain to retain customers and attract new customers, and support the Company's strategies in responding to the ongoing challenge presented by competitors. 

Fixed broadband subscribers remained steady in line with a growing shift toward mobile broadband usage.  Similar to previous periods, demand for fixed line services in Bahrain continued to decline in favour of mobile. This decline is in line with industry trends, particularly in the MENA region where users continue to migrate from fixed broadband and telephony to wireless and mobile technologies.

Appointment of new CFO's for Group and Bahrain

Meanwhile, Batelco is pleased to announce the appointment of new Group and Bahrain Chief Financial Officers. Faisal Qamhiyah who has held the position as Chief Financial Officer for Batelco Bahrain operations since January 2013 has been appointed to the role of Group CFO. Prior to joining the Batelco Bahrain team Mr Qamhiyah held the position of CFO of Batelco's Jordan subsidiary, Umniah. Faisal had previously served with distinction as advisor to the Board of Directors, CEO, CFO, COO and as Marketable Secuties Fund Manager in various companies. On the home front, Sameer Altaf, has been appointed to the position of CFO Bahrain operations.Mr. Altaf, joined Batelco in 2008 to lead the financial control function for Batelco Group and Bahrain and has held a number of key roles within the financial division including most recently, the post of Group Financial Controller.

The executive search for a new Group CEO is ongoing with the process well underway and proceeding according to plan. The Supervisory Committee of the Board of Directors, consisting of Deputy Chairman Mr Murad Ali Murad, Executive Committee Chairman Mr Abdul Razak Al Qassim and Director Mr Waleed Ahmed AlKhaja, continues to assume the role of the Group Chief Executive Officer on a temporary basis until such time as the new CEO is appointed.

Commitment to Local Communities and Initiatives
Batelco continues to be among the leading philanthropic organisations in the Kingdom of Bahrain.  More than BD1 million was paid or committed to various sports, social, health, education and charitable organisations in Bahrain during the first nine months of 2013. Key among the Company's contributions have been the delivery of 30,000 Ramadan Baskets to Bahrain's charitable societies during Ramadan to support those less fortunate.

Building on a Solid Platform
In conclusion Shaikh Hamad said that 2013 has been a significant year so far for the Batelco Group as the Company has become a major communications force internationally due to its addition of the Island Portfolio.

"Our growth this year positions us as one of the most important organisations in the Kingdom of Bahrain and the country's largest shareholding company. We are buoyed by this success which has swelled our customer base and diversified our revenues stream. Furthermore, we are in a strong position to build on this platform in order to strengthen our performance at home and abroad and better serve both our customers and shareholders."