Financial and Subscriber Highlights for the Period
Batelco Group reported Gross Revenues for the period of BD90.9M (US$241.1M), a 3% and 2% decrease year-over-year and over the previous quarter respectively. Revenues continue to be impacted by competitive pressure in a number of markets across the Group.
EBITDA for the period was BD35.1M (US$93.1M), representing a margin of 39%. Despite a 1% decline from the previous year, EBITDA increased by 13% from the previous quarter. Throughout the period, the Group was able to continue its successful cost containment programmes resulting in a 5% reduction in expenditure compared to the same period last year and an 11% reduction from the previous quarter. The Group continues to sustain its robust EBITDA margin.
For the period, the Group reported Net Profit of BD9.6M (US$25.5M); a 33% decline compared to Q1 2015 mainly as a result of one-off items, but a 12% increase over the previous quarter.
The Group's balance sheet remained strong with net assets of BD555.0M (US$1,472.1M) and substantial cash and bank balances of BD174.1M (US$461.8M). Earnings per share for the first quarter of 2016 are 5.8 fils.
Batelco Group Chairman, Shaikh Hamad Bin Abdulla Al Khalifa announced the Q1 2016 financial results following the meeting of the Board of Directors on May 5th at Batelco's Hamala Headquarters.
"We continue to operate in challenging markets but are encouraged by the strength of the Group as a whole and we believe that by continuing to pool Group resources, technologies and expertise we can enhance competitiveness and performance. We continue to work on restructuring programmes throughout the Group with the aim of reducing operating costs and boosting efficiency and competitiveness as evidenced by the reduction in operating expenses," Shaikh Hamad said.
"We will continue to invest heavily in new infrastructure and solutions to meet our customers' requirements and to ensure we are their first choice in all markets," added Shaikh Hamad.
Operational Review Across the Group
Commenting on the operational performance for the period, Batelco Group CEO Ihab Hinnawi said that while the overall customer base was down by 8% when compared with Q1 of 2015, a number of the Group's operations performed very well and showed marked increases in customer numbers.
"It is pleasing to note that our Maldives operator Dhiraagu posted YoY increases in mobile and Broadband customers of 10% and 17% respectively. The companies operating under the SURE brand in the Channel Islands, Isle of Man and in the South Atlantic and Diego Garcia also performed well, with their mobile and broadband customer bases increasing year over year."
"We have a number of Group-wide initiatives in place as well as programmes specific to each geographic location and we anticipate that these efforts will boost performance across the Group going forward. In general our companies operate in very competitive market places as the communications industry today is amongst the most challenging of all industries due to its dynamic nature."
To meet the unrelenting market challenges that we face we need to constantly adapt and look to new revenue drivers. Keeping all our customers connected with world class communications solutions, no matter how far away they are from our HQ, is crucial and among our key goals," Mr. Hinnawi added.
For the period, 60% of Revenues and 55% of EBITDA was attributable to operations outside of Bahrain.
Jordan - Umniah: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. In the first quarter of 2016, the company launched its 4G high-speed Internet services for individuals and its LTE fixed services for households and businesses, enhancing its coverage in the Kingdom with over 1300 4G sites. Umniah's mobile subscribers totalled 3.2 million, an impressive 17% year over year increase.
Kuwait - Quality Net: 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 recently announced the launch of its IP TV services, branded as Qualitynet TV and offering a complete home entertainment solution with worldwide content. Qualitynet was also awarded with the 'Best Digital Experience' award at the 5th Annual Customer Experience Management summit in Telecoms for the Middle East region held by IQPC in Dubai.
Maldives - Dhiraagu:Dhiraagu started the year well with revenue growth contributed by mobile data, fixed broadband and high seasonal roaming. During Q1, live chat support was extended to 24/7 in continuation of the company's commitment to introduce digital channels and improve customer experience. The company also launched smart home packages and extended its 4G services. Both mobile and broadband subscribers witnessed a 10% and 17% increase year over year respectively.
Channel Islands & Isle of Man - SURE:During the period Sure CIIM signed contracts to deliver a collapsed IP Core network ensuring future proof service and capacity across the regions. In the Isle of Man the business materially improved mobile coverage, whilst the Channel Islands successfully completed the initial population coverage commitments of the regulator's performance requirements for LTE networks. Subscriber numbers continue to grow with 3% and 4% year-over-year increases in mobile and broadband respectively.
South Atlantic & Diego Garcia - SURE:Sure S&D has had a positive start to the year in line with expected performance. Mobile service stimulation in St. Helena and Ascension Islands were successful, due to targeted campaigns resulting in increased penetration.
Yemen - Sabafon:Sabafon, in which the Group has a 26.94% shareholding, was able to maintain stable subscriber numbers during the first quarter of 2016 compared to the previous quarter. However, subscriber numbers experienced a 25% YoY decline. Despite the drop in subscriber numbers and the difficulties operating in an environment with increased political challenges, the company continued to provide telecommunication services to its customers.
Saudi Arabia - Atheeb: Atheeb, in which Batelco holds a 15% stake, reported an 11% improvement in subscriber numbers compared to the previous quarter.
Batelco Bahrain - Focus on Innovative Solutions
Mr. Hinnawi continued by stating that in Bahrain, despite aggressive competition, Batelco maintained a steady 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 remained steady over the previous quarter with a slight decline year-on-year. The Broadband subscriber growth year-over-year was pleasing with customer numbers up by 8% mainly due to the growing popularity of Batelco's TV and other value added services."
"Demand for Batelco's broadband services grew YoY as a result of Batelco's continuous investment in its fibre network to reach new developments and replace out of date infrastructure across Bahrain," said Mr. Hinnawi.
"Our customer centric strategy designed to ensure we meet the needs of our customers across all sectors is making good progress. We are now focussed on a commitment to develop relevant new digital solutions that will benefit all customers, with an emphasis on supporting the growing needs of the business sector in line with our role as Bahrain's leading business solutions provider."
"We have already laid the foundations for digital solutions and will continue to build on our strong base by developing our portfolio in-house and if required by forging partnerships with other organisations or by the acquisition of an ICT unit. Cloud capabilities, OTT TV services, fibre to the home and the delivery of superfast broadband are also areas we are tightening our focus on during 2016," Mr. Hinnawi added.
Batelco Chairman Shaikh Hamad also spoke of Batelco's reputable CSR programme, noting that Batelco is recognised as one of the leading companies in Bahrain when it comes to 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.
Concluding the meeting, the Batelco Chairman said that where there is challenge, there is opportunity and Batelco's challenge is to continue to push forward with its efforts towards a data-driven digital world including plans to leverage on the Group's know-how to create successful digital services that are relevant for all customers.
"Customer expectations are rising but we continuously raise the bar to meet and exceed their expectations. We are focused on the emerging needs of the growing digital economy; digitisation is one of the key pillars of our strategy across the group and we are investing in our transformation to become a leader in this field. We remain committed to delivering innovation, smart solutions and value and are confident in our ability to strengthen our financial and operational performance throughout the rest of 2016," Shaikh Hamad concluded.