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Batelco Group Announces First Quarter Financial Results for 2015; Net Profit of BD14.2 Million

Batelco Group Announces First Quarter Financial Results for 2015; Net Profit of BD14.2 Million
  • chairmanSubscriber Base Grows by 9% year-on- year to 9.9 Million
  • Net profit in line with the same period last year

Batelco Group (Ticker: BATELCO), the regional Telecommunications Group with operations across 14 countries, today announced its results for the first three months of 2015 ("the Period"). Subscriber numbers across the Group continue to grow with the total customer base just short of 10 million. Net profits remain in line with the same period of 2014.  Revenues marginally decreased year-on-year due to competitive pressures in a number of the Group's operations. 

  • Financial and Subscriber Highlights for the Period
  • Gross Revenues of BD93.7M (US$248.5M);
  • EBITDA of BD35.7M (US$94.7M) representing a 38% margin;
  • Consolidated Net Profit of BD14.2M (US$37.7M);
  • Overseas operations contribute 59% of revenues and 54% of EBITDA;
  • Substantial cash and bank balances of BD148.7M (US$394.4M);
  • Earnings per share of 8.6 fils; and
  • Subscriber base of 9.9 million, an increase of 4% QoQ and 9% YoY.

Batelco Group reported Gross Revenues for the period of BD93.7M (US$248.5M), a 4% decrease year-over-year and 4% over the previous quarter. The decline in revenues is partly due to movements in foreign exchange rates.

For the period, the Group reported Net Profit of BD14.2M (US$37.7M), a minor decrease of 2% when compared to the corresponding period in 2014 but up by 68% in comparison to Q4, 2014. EBITDA for the period was BD35.7M (US$94.7M), representing a margin of 38%, a 6% decline from the corresponding period in 2014 but 7% up from the previous quarter.  Despite the reduction in EBITDA compared to the same period last year, the Group was able to continue its cost containment programmes with expenditure down 2% from the same period last year. The Group continues to sustain a robust EBITDA margin.  The Group's balance sheet remained strong; as of 31 March 2015, net assets were BD564.6M (US$1,497.6M) with substantial cash and bank balances of BD148.7M (US$394.4M).  Net debt continues to remain low at BD28.5M (US$75.6M). Earnings per share for the first quarter are 8.6 fils. Batelco Group Chairman, Shaikh Hamad Bin Abdulla Al Khalifa announced the Q1 2015 financial and operational results following the meeting of the Board of Directors on 29th April. "We are pleased with our first quarter results that delivered profits in line with 2014, despite the intensity of the competitive situation in our home market and also throughout the Group. By continuing to pool Group resources, technologies and expertise, Batelco Group aims to enhance competitiveness and performance in all markets of operation. We need to continue with our restructuring programmes to reduce our operating costs," Shaikh Hamad said. "It is also important that we continue to focus on improving the solutions we provide to our customers in all of our markets of operation, to ensure we are the customers' first choice in all markets," added Shaikh Hamad.

Operational Review & Highlights

Commenting on the operational performance for the period, Batelco Group A/CEO Ihab Hinnawi said: "It is pleasing to note that our customer numbers across the Group continue to grow with excellent gains in mobile and broadband figures in our home market and a number of our overseas markets." "For the period, we grew our subscriber base to 9.9 million across our 14 markets of operation, a rise of 9% year-on-year and 4% since the start of 2015. This is encouraging as it demonstrates that our products and services are being very well received by the Group's customers." "However, while customer numbers continue to grow, the intensity of competition in the Consumer Market is impacting ARPU as the industry has created an expectation of providing more product and service for less. Bundled deals deliver devices with services, which is great news for customers, but negatively impacts the bottom line," he said.

Overseas Operations Highlights

For the period, contributions from operations outside of Bahrain increased both as a percentage of revenues and EBITDA.

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 first quarter of 2015, Umniah's mobile subscribers remained at just over 2.7 million.  Its broadband subscribers witnessed a 13% 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.  The company maintained its market share position during the first quarter of 2015.

Channel Islands and Isle of Man:  During the period Sure CIIM completed the rollout of its new 2, 3 and 4G Huawei network in the Isle of Man.  Network build commenced in Guernsey with Sure having the first spectrum license awarded by the Channel Islands regulator.  Positive retail trading in Jersey underpinned subscriber numbers across CIIM with 2% growth YoY in mobile and 15% in broadband services.

South Atlantic & Diego Garcia:  Sure S&D had a very successful first quarter 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.  During Q1 2015, Sure finalised negotiations to rollout mobile networks in the South Atlantic, the target for the completion of this project being the third quarter of 2015

Maldives:Dhiraagu saw a solid start to 2015 with revenue increases driven by roaming and continued demand for enterprise and data products.  During the quarter, 4G LTE services were expanded to additional islands in the south of the Maldives.  Dhiraagu TV service was launched with popular local channels for both ADSL and mobile users and Fibre Broadband services were launched introducing speeds up to 100 Mbps.  Mobile subscriber numbers remained in line with last quarter whilst broadband subscribers increased 9% QoQ and 7% YoY.

Other JVs:Sabafon (Yemen), in which the Group has a 26.942% shareholding, was able to increase its subscriber base by 17% YoY to 5.1m despite operating in an environment with increased political challenges.  Atheeb (Saudi Arabia), in which Batelco holds a 15% stake, reported a decline of 29% year-over-year in subscriber numbers and 2% since the last quarter due to intense competition in broadband services.

Batelco Bahrain - Focus on Innovative Solutions

Mr. Hinnawi continued by stating that in Bahrain, despite aggressive competition, Batelco maintained a strong presence in the mobile market supported by its retention of high value post-paid residential and business customers. "For the period, mobile subscribers in Bahrain increased by 15%, over the previous quarter and also by 15% year-on-year. The Broadband subscriber growth remained impressive with year-over-year growth of 22% and a 6% increase quarter-on-quarter.  As in previous periods, and reflecting a global shift to mobile services, demand for fixed line services declined with only a marginal 1% growth since Q1, 2014."

"Our customer centric strategy, to ensure the needs of our customers across all sectors are met is successful, as reflected in the increased mobile and broadband customer numbers and the retention of our position as Bahrain's leading business solutions provider." "Batelco's major investment in enhanced networks and new solutions continues. Our Fibre Network expansion programme is making excellent progress and services are now available in a wide number of areas with new locations coming on line continuously. The service features the highest dedicated, stable superfast download in Bahrain and we have recently launched our latest superfast Broadband package with speeds up to 300Mb." "We will continue to focus on executing our strategy of investing in both strengthening our existing networks, rolling out our Fibre network and growing our subscriber base through the delivery of world class solutions," Mr. Hinnawi added. Batelco also addresses the intense local competition by striving to be first in delivering innovative products and services and in line with this commitment was the first and also exclusive provider of YotaPhone2 in the Kingdom.

Achievements and Commitments

Batelco is fully aware that sound Corporate Governance principles are critical to maintaining the good reputation the Company has developed and accordingly strives to comply with a rigorous set of principles. The company's efforts were recognised byGlobal Banking and Finance Reviewwho recently presented Batelco with theBest Company for Corporate Governance Bahrain 2014. The award was presented for Batelco's outstanding achievements in adhering to high standards in Corporate Governance and also its commitment to Corporate Social Responsibility (CSR) during 2014. Batelco is recognised as one of the leading companies in Bahrain when it comes to CSR, with the Company supporting local communities through its commitment to Health, Education, Sports and Social/Cultural initiatives. For the period, Batelco has committed over BD600,000 to benefit the community via its sponsorship and donation programme.

Looking Forward

Before concluding, Batelco Chairman Shaikh Hamad continued by extending a warm welcome to Batelco Group's newly appointed A/CEO Ihab Hinnawi who is supporting the group while also heading the Group's sister operation, Umniah. Shaikh Hamad also extended his appreciation to Alan Whelan for his efforts during his year as the Group's CEO. "The challenges in our industry are unrelenting but we have the right strategy and leadership in place across the Group and are optimistic for the future. Our grand plans for 2015 include the roll out of an LTE enabled network to meet customer demands for mobile services in the South Atlantic, specifically for St. Helena and Ascension Island.  This investment is part of Batelco Group's ongoing strategy to build and enhance mobile networks across all of its operations." "We remain committed to delivering innovation, smart solutions and value and are confident in our ability to strengthen our financial and operational performance throughout 2015," Shaikh Hamad concluded.

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