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Batelco Group Announces Half Year 2015 Profit of BD27.5 Million (US$72.9 Million)

Batelco Group Announces Half Year 2015 Profit of BD27.5 Million (US$72.9 Million)

chairmanihab-         Net Profit up by 11%

-         Customer Base Grows by 4% YoY  

-         Interim Dividend of 10 fils per share approved by Board of Directors 

Manama, Bahrain: Batelco Group (Ticker: BATELCO), the international telecommunications company with operations across 14 countries, today announced its financial results for the six months ended 30 June 2015 ("the Period"). The Net Profit has been positively impacted by cost savings in 2015, improved deployment of assets and adjustments taken in 2014.

 Financial and Subscriber Highlights

  • Gross Revenues of BD185.7M (US$492.6M) for the period;
  • EBITDA of BD69.8M (US$185.1M) representing a 38% margin;
  • Consolidated Net Profit of BD27.5M (US$72.9M) for the period;
  • Subscriber base of 9.4 million, an increase of 4% YoY;
  • 59% of revenues and 56% of EBITDA sourced from markets outside Bahrain;
  • Significant cash balances of BD135.9M (US$360.5M);
  • Earnings per share of 16.6 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 BD27.5M (US$72.9M) versus BD24.9M (US$66.0M) for the corresponding period in 2014, an increase of 11% year over year, though a 7% decrease since last quarter. The improved profits for the period are mainly due to cost savings in 2015, increased yield on invested cash, lower interest expense and non-recurrence of adjustments taken in 2014. EBITDA for the period was BD69.8M (US$185.1M), representing a healthy margin of 38%, compared to EBITDA of BD71.9M (US$190.7M) for the corresponding period in 2014, a 3% decrease year over year and  4%  quarter on quarter.

The Group's Gross Revenues for the period showed a decrease, down by 5% YoY and 2% QoQ to BD185.7M (US$492.6M) from BD194.6M (US$516.2M) mainly due to competitive pressures in key markets and currency translation. Operating Profit for the period was BD36.1M (US$95.8M) versus BD39.1M (US$103.7M) for the corresponding period in 2014 reflecting an 8% decrease year over year and a 6% decrease over the first quarter of 2015.

While Batelco Group's overall subscriber numbers are up by 4% year on year, there has been a marked decline in the customer base in Sabafon, Yemen, since last quarter due to the difficult operating environment in the country, which has negatively impacted profits. Nonetheless, Batelco's overseas operations overall remain strong and at the end of the six month period, 59% of Revenues and 56% of EBITDA were attributable to operations outside of Bahrain. This is compared with 57% of Revenues and 52% of EBITDA in the first half of 2014.

The Group's balance sheet remained strong; as of 30 June 2015 net assets were BD577.7M (US$1,532.4) with substantial cash balances of BD135.9M (US$360.5M). Earnings per share were 16.6 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 for the first six months of 2015 following the meeting of the Board of Directors, Batelco Chairman, Shaikh Hamad bin Abdulla Al Khalifa, said that Batelco Group is pleased to report a double digit increase in net profit during the period, despite the challenging environments in its key markets. 

"The Group's efforts to improve competitiveness across all operations by leveraging on the Group's combined technical capabilities, has contributed to the increase in overall subscriber numbers year over year."  

"We continue to operate smartly through synergizing Group efforts. Accordingly, our operations outside of Bahrain continue to generate over half of our revenues and profits which meets our expectations and efforts to offset the impact of ongoing and aggressive competition at home," Shaikh Hamad said.

Operational Review  

 Batelco Group A/Chief Executive Ihab Hinnawi commenting on the operational highlights said; "It is encouraging to report that customer numbers across the Group continue to grow. The Group's subscriber base now stands at 9.4 million customers, a rise of 4% year on year. This reflects pleasing gains made over the past year in the key markets of Bahrain and Jordan as well as across the majority of the Group's subsidiaries. Reduced customer numbers in Yemen are the result of the political challenges present in that market."

"Innovation in our approach to serving customers is key to our strategy and we will continue to focus on improving the products and services we provide in all markets of operation. By pooling of Group resources, technologies and expertise where possible, we aim to further enhance competitiveness and performance across our network of operations," added Mr. Hinnawi.

Overseas Markets Review

Mr. Hinnawi continued by saying that the Group's performance during the first half of 2015 is in line with expectations and the result of ongoing efforts by the Group's management and staff. During the period, a number of overseas markets delivered positive results due to the rollout of new and enhanced solutions to exceed their customers' expectations.

Jordan:Umniah continues to demonstrate a significant presence in the Jordanian telecom market due to its strategy of offering high quality services, with the best value, while keeping abreast with sector developments and customers' various needs and expectations.  During the second quarter of 2015, Umniah's mobile subscribers remained at just over 2.7 million.  Its broadband subscribers witnessed a 5% growth YoY due to Umniah's upgraded infrastructure and expansion of its coverage across Jordan.

 Kuwait:Batelco Group holds a 90% shareholding in Qualitynet, which remains the clear market leader in the fixed Data Communications and Internet Services industry in Kuwait.   In Q2 2015, the company maintained market share by introducing new and innovative offerings for the customer segment which bundle DSL with 4G internet service. Qualitynet was awarded with the most innovative use of technology to improve customer experience award, at the 4th Annual CEM ME summit, for its competitiveness in providing innovative services that enhance the overall experience for customers in both corporate and residential markets. 

 Channel Islands and Isle of Man: During the period Sure CIIM completed a successful rollout of its new 4G network across the Isle of Man, Guernsey and Jersey bringing much improved performance over the previous network. Positive retail trading across the region resulted in subscriber numbers at the end of Q2 up 3% YoY in mobile, 14% in broadband and 2% in fixed line services. 

 South Atlantic & Diego Garcia:  Sure S&D had a very successful first half finishing ahead of plan.  This performance was driven mostly by better than expected oil exploration activity in the South Atlantic, driving consumer and enterprise revenue, and by increased visitor activity in Diego Garcia.  The company is focused on the launch of mobile network services in both Ascension Island and Saint Helena during the third quarter of 2015, which will deliver revenue growth during the last quarter of the year.

 Maldives:Dhiraagu maintained its solid results despite a seasonal drop in tourism during the second quarter. The company introduced special broadband plans and fixed line packages for schools, IDD call rate promotions and special Ramadan promotions for mobile and fixed broadband customers and improved its Dhiraagu TV service by enriching the content offered to its customers.  Mobile subscriber numbers remained in line with the previous year whilst broadband subscribers increased 7% year over year.

 Other JVs:Sabafon (Yemen), in which the Group has a 26.942% shareholding, experienced an 11% reduction in subscriber numbers during the quarter but was able to increase its subscriber base by 11% YoY to 4.6m despite operating in an environment with increased political challenges.   Atheeb (Saudi Arabia), in which Batelco holds a 15% stake, reported a decline of 27% year-over-year in subscriber numbers and 6% since the last quarter due to intense competition in broadband services.

Innovation Driving Success in Bahrain

 For the period in Bahrain, mobile subscribers increased by 2% year-over-year and by 2% since Q1. The steady increase in mobile customers can be attributed to Batelco Bahrain's delivery of value for money innovative voice and data products and services.

"The demand for the latest mobile services is relentless but we meet that challenge by continuously evolving our offers. Our choice of bundled packages featuring the latest smart devices with 4G LTE services and at value for money prices strengthens our competitiveness and wins us new customers," Mr. Hinnawi noted.

 "We are particularly delighted with the growth in our Broadband customer base which has grown by 16% YoY and by 4% since Q1. Batelco's Broadband packages, delivering speeds of up to 300 Mbps, include options to suit all usage requirements and ensure the continuing popularity of our offers."

 Mr. Hinnawi added, "Crucially, Batelco continues to be the ideal enabler for businesses of all sizes by providing sophisticated technology to fit the needs of this vital segment throughout Bahrain. We are fully committed to helping businesses grow through technology, thereby increasing their efficiency and competitiveness.  Batelco takes pride in being the leading provider of mobile services, fixed voice, broadband, and ICT services, with all of these complemented by many adjacent solutions that are geared towards supporting businesses."

 Batelco's customer experience and operational excellence was recognised by various regional organisations recently. At the 4th CEM in Telecoms: Middle East Summit awards ceremony, which was held in Dubai in May, Batelco was presented with the Best Customer Experience Management Brand award.

 Additionally, Batelco's operational efforts were recognised at the BCI Middle East Conference and Exhibition held in Doha in May, when the Company was presented with the Best BCI Middle East Award for Best Continuity and Resilience Team 2015.

 Caring for our Communities

 Shaikh Hamad bin Isa Al Khalifa, the  Batelco Chairman, continued by stating that Batelco gives high priority to its Corporate Social Responsibility (CSR) programme which aims to support initiatives across the fields of Health, Education, Sports and Culture.

"For the first half of 2015 Batelco put significant resources into its CSR activities with around BD1.0M committed to various initiatives. Batelco's annual Ramadan contribution was carried out successfully with 30,000 food boxes distributed to the Kingdom's charitable societies to support needy families during the Holy month."

 Looking Forward

 "We remain focused on our customers at home and overseas to ensure our provisioning exceeds their expectations. We are committed to delivering a portfolio of products and services that is in line with world leading standards," Shaikh Hamad said.

 "In keeping with our strategic goals we will continue to invest in building, developing and enhancing infrastructure and services. We believe that the progress we are making in improving our competitiveness across all our operations will enable us to deliver improved results for shareholders in the second half of the year," Shaikh Hamad concluded.