The Batelco Team, across the Middle East and India, delivered solid financial and operating results in 2010 - undoubtedly the most challenging year for Batelco in the last decade!
We further diversified and grew our business to over 9.2 million customers by December 2010. We retained market leadership in Bahrain, Kuwait and Yemen. In Jordan we achieved almost equal second spot in the mobile market share. In India and Saudi Arabia, we achieved above expectations results after the first full 12 months of operations in the most competitive of market places.
The entrance of the third mobile operator in the Kingdom of Bahrain has had a marked impact on the highly penetrated telecoms industry and Batelco’s operation in Bahrain.
Establishing our Indian operation to offer voice and data services, across India’s rural regions, also affected our financial performance as such a start up venture is not expected to break even till 2014.
Our Operating Profit for 2010 of BD106.5 million ($282.5 million) declined by 4.7% compared to the previous year. Whilst Batelco Bahrain’s operating profit was lower, stronger year-on-year results from Umniah reduced the overall decline in operating profit. Batelco’s overseas operations contributed 34% of gross revenues and 25% of EBITDA. Group Free Cashflow of BD109 million ($289 million), representing a 75% EBITDA conversion rate, exceeded expectations.
Our net profit of BD86.8 million ($230.2 million), a 17.4% decline versus 2009, included our share of S Tel’s first year losses and the end of Sabafon’s investment tax exemption in Yemen, a total of BD13 million adverse impact.
Awards and Achievements
We are proud that our efforts are recognised each year by a number of prestigious organisations. For the second successive year, we were delighted to take home the Telecoms Company of the Year award for the Middle East Region at the annual Arabian Business Achievements Awards 2010. This rounded off 2010 on a high note and followed a number of other achievements for the year. Batelco was voted as Bahrain’s Leading Quoted Company for Investor Relations (IR) at the Middle East Investor Relations (ME-IR) Awards ceremony held in Beirut, Lebanon. Batelco was also the most successful organisation at the 2010 GEMAS Effie MENA Awards, taking home 5 awards.
Furthermore, Batelco’s E-Services, the Company’s online customer services portal, was awarded ISO 27001 Certification - the International Standard for Information Security Management, following a rigorous auditing process conducted by Bureau Veritas Certification. Batelco is the first telecommunications company in the Kingdom of Bahrain to have its online e-Services certified with ISO 27001.
Such recognition reflects the collective efforts of all our people, across all operations and their dedication to our customers and our company. We operate today in an ever more competitive marketplace and we believe that it is our people that give us the edge and ensure our continued success.
Investing in Bahrain to Remain our Customers’ First Choice
Batelco’s strategy in delivering a full range of communication services, world leading products and unmatched customer care are the drivers for maintaining Batelco’s leading position in the Kingdom of Bahrain. During 2010, we invested BD22 million ($58 million) in new wireless and fixed infrastructure in Bahrain.
Our focus continues to be on delivering quality and innovative services and, offering better value to customers. Such strategy led to a substantial rise in numbers for our Blackberry and O-net services in 2010. We were first in the Kingdom to offer a prepaid Blackberry package. That offering coupled with very competitive deals for Blackberry post-paid services, has seen our Blackberry customer base double. We anticipate further success with our Blackberry services as in today’s digital networked economy people find it necessary to be constantly connected to their workplace. Similarly, our O-net Mobile Broadband, which provisions for internet ‘on the go’, continued to win new customers and numbers have doubled over the course of the year.
In 2010 Batelco’s range of postpaid packages was extended to include new packages including Super 10, Super 30 and Supersmart which all feature free voice & video minutes and free SMS’s and the Supersmart even included a free iPhone 4 and 600MB Data bundle, which created rapid uptake by customers.
For our Broadband customers, we introduced Batelco Inet Security Suite, a product that can be downloaded from our e-services site on batelco.com and installed on PCs or Laptops to protect the systems from threats such as viruses, Trojans, internet phishing attacks and also spam.
By delivering end-to-end solutions we remain the first choice for business customers. Our range of solutions and services includes LAN’s, WAN’s, structured cabling and customised unified communications designed with business customers in mind. We can also deliver high availability internet access which provides guaranteed uptime that is achieved with a primary and secondary connection to the internet and VPN solutions achieved with ADSL based integrated backup.
Growing our Customer Base
Growing customer numbers across the Group continues to be a strategic priority for Batelco. We are extremely pleased that the total number of customers across all our operations grew by 67% over 2009, with numbers now in excess of 9.2 million. Batelco Group’s total mobile base now stands at over 8.8 million with just under 250,000 Broadband customers.
In Bahrain our customer base on 31 December 2010 stood at 770,000 mobile customers (6.3% lower than 2009), 88,500 Broadband customers (4.5% growth) and 185,000 fixed lines, a decline of 7.4% compared to 2009. Whilst our overall mobile base in Bahrain is lower than 2009, our number of Blackberry customers has doubled and the increase in our wireless Broadband numbers has been buoyed by the success of O-net for which the customer base has also doubled.
We have been pleased with the achievements of our subsidiaries and affiliates across the Batelco Group. Our overseas operations continue to add value and in 2010 contributed 34% of gross revenues.
Umniah continues to demonstrate its strength and popularity in the Jordanian market with a mobile customer base of 2.1 million and 19,000 Broadband customers, increases of 31.5% and 5.1% year on year respectively. Umniah is considered today to be the fastest growing telecom service provider in the Kingdom of Jordan. Broadband services, Umax and UDSL, combined with data business solutions and state-of-the-art mobile telecom services, underpin Umniah’s growth for the future.
Qualitynet remains the clear market leader in the Data Communications and Internet Services industry in Kuwait where there are four licensed ISP’s delivering services. The company grew its Broadband customer base by 11% in 2010.
Sabafon has continued to impress and ended the year with over 3.6 million customers, a notable 40.2% increase over the past year.
In spite of a difficult regulatory environment in Saudi Arabia, Etihad Atheeb has managed to grow its Broadband customer base by a staggering 100% to 104,000 thanks to the commitment of a strong team and the reliability and popularity of its GO brand.
Customer numbers at S Tel India have significantly increased. S Tel now operates in Bihar (includes Jharkhand), Odisha, Himachal Pradesh, Assam and North East and boasts a network of 3,500 base stations. During the first full year of operation the customer base has grown to over 2.3 million, representing quarter of the Group’s customer base. S Tel is now in the process of rolling out services in its final circle Jammu & Kashmir.
Our People – The Key to our Success
All our Operating Companies recognise that to succeed in transforming and improving our business we need to retain, develop and motivate the talent that drives results - our people. We continue to introduce developmental programmes aimed at maintaining a team of high-performing, engaged and motivated people who can make a difference for customers, shareholders, the Company and themselves.
During 2010 Batelco’s Training Centre in Bahrain, invested over BD1 million in training and development to deliver 60,000 hours of training, benefitting 950 staff which represents 78% of the workforce. With e-learning and classroom based learning delivered by our qualified Training Centre staff or by external professionals Batelco aims to provide relevant learning opportunities that gives our staff the advantage when dealing with the challenges they face in their everyday jobs.
Our Executive Leadership Programme in conjunction with Lancaster University, in 2010 allowed us to further focus on mentoring and coaching future leaders across all our operating companies to handle the complexity and diversity in our daily operations.
Our employees have continued, with considerable passion, their efforts to deliver the best products and services for our customers. I offer them my sincere thanks for their tremendous efforts during a demanding year and encourage them to keep their passion for success alive as we prepare to face even tougher competition in the year ahead across all markets.
I am also delighted that Rashid Abdulla has been appointed to the role of Chief Executive for Batelco’s Bahrain operation. Having driven our Kuwait operation, Qualitynet for 11 years, he is most capable of dealing with the challenges Batelco faces in our home market.
The quality of our senior leaders is vital to Batelco’s continuous successful transformation and I believe that we have some top quality men and women whose dedication is unmatched. My heartfelt gratitude to all Batelco Group senior leaders at Batelco Bahrain and at our subsidiary companies and also to the senior executives of our affiliate companies for their collective efforts in delivering the Group’s financial and operating results in 2010.
Our Chairman, Shaikh Hamad Bin Abdulla Al Khalifa and each member of the Board of Directors offer intuitive guidance and staunch support which is greatly appreciated by me and my colleagues on the Senior Leadership Team. We thank them for their invaluable direction.
Lastly, but most importantly, I save the biggest vote of thanks for Batelco’s customers for their loyalty in using our products and services. We listen to their feedback and develop new products and services and continue to innovate and improve.
Focus on Future Success
We are clearly focused on retaining our leadership position in Bahrain, Kuwait and Yemen and on growing our customer base across all our operations.
Leveraging our resources further to ‘deliver more with less’ through process re-engineering and innovation is paramount to our success.
We will continue to make our back office systems and processes ‘smarter’ across the Group. We will also continue to implement cost reduction programmes and restructure our operations driven by market conditions.
Additionally, by reviewing procurement arrangements with our largest suppliers on a group-wide basis, we are striving to improve supply terms and service delivery.
Such actions will allow us to operate more efficiently and consequently reduce our input costs.
Acquisitions also remain high on the Batelco Group’s agenda for 2011. To realise further growth and diversify our revenues, we need to increase our scale and invest in companies that are already established but still offer growth in their markets or in new start ups ready to launch. The Middle East, North Africa and India/Asia Pacific regions remain our focus for further expansion.
We remain confident about the future of our Operations. We also anticipate that the future will be tougher as high levels of penetration, is now the reality in many of the markets we operate in. However, ongoing innovation, and ’focus on the basics – innovation, value, customer care, our community and our people‘, will continue to deliver solid results for our shareholders.
Sh. Mohd bin Isa Al Khalifa
Group Chief Executive
Bahrain Telecommunications Company (B.S.C.)