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 2016 (“the Period”). Despite competitive pressure, the Group’s ongoing cost containment efforts resulted in increased results from operating activities over the first half of 2015.

Financial and Subscriber Highlights for the Period

• Gross Revenues of BD182.9M (US$485.1M);
• EBITDA of BD71.3M (US$189.1M) representing a 39% margin;
• Consolidated Net Profit of BD22.7M (US$60.2M); 59% of revenues and 57% of EBITDA sourced from markets outside Bahrain;
• Significant cash balances of BD163.7M (US$434.2M);
• Earnings per share of 13.6 fils and an approved interim cash dividend of 10 fils per share; and
• Subscriber base of over 9 million, a decrease of 2% YoY but an increase of 1% over Q1 2016.

The Group’s Gross Revenues are down by 2% YoY to BD182.9M (US$485.1M) mainly due to competitive pressures in key markets. However, revenues have remained steady in the second quarter of 2016 compared to Q2 2015 and with a slight increase of 1% since Q1 2016.

EBITDA for the period was BD71.3M (US$189.1M), representing a margin of 39%, a 2% increase year over year and 6% increase versus Q2 2015. 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 a 4% quarter on quarter reduction from Q2 2015. The Group continues to sustain its robust EBITDA margin.

Results from operating activities for the period were BD36.8M (US$97.6M), reflecting a 2% increase year-over-year.  Results from operating activities in the second quarter of 2016 increased by 7% compared to the corresponding period of 2015.

For the first six months of the year, the Group reported Net Profit of BD22.7M (US$60.2M), an 18% decline compared to the corresponding period in 2015.  Q2 2016 net profit reported a decrease of 2% over Q2 2015. The reduced net profits for the period are impacted by one-off items and BD0.9M (US$2.4M) share of loss of the Group’s investment in Sabafon, Yemen.

The Group’s balance sheet remained strong; as of 30 June 2016 net assets were BD560.0M (US$1,485.4) with substantial cash balances of BD163.7M (US$434.2M). Earnings per share were 13.6 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 2016 following the meeting of the Board of Directors on August 4, Batelco Chairman Shaikh Hamad bin Abdulla Al Khalifa said that Batelco Group is pleased to report an increase in operating profits over the first half of 2015.

“We continue to operate smartly through synergizing Group efforts. Accordingly, our operations outside of Bahrain continue to generate over half of our revenues and EBITDA with our home operation also making a strong contribution with increased subscriber numbers for both fixed lines and Broadband in spite of the challenging market conditions in Bahrain,” he said.

“Our combined Group-wide efforts to pool resources, technologies and expertise while continuing to focus on programmes to reduce operating costs are making good progress and helping to boost our results,” Shaikh Hamad added.

Group Operational Review  

Commenting on the Group’s operational performance, Batelco Group Chief Executive Ihab Hinnawi said a number of operations performed very well which is reflected in substantially improved customer numbers for specific services in key locations.

“Across the Group a number of locations showed substantial growth in their customer base, particularly for mobile services, with Umniah numbers up by 19% YoY and South Atlantic and Diego Garcia reporting YoY increases of 64% and 26% respectively. In Bahrain mobile subscribers increased 3% compared to the first quarter of 2016 and broadband services reported a 12% YoY increase in subscriber numbers. Dhiraagu, our Maldivian operation continues to impress and posted YoY increases in mobile and broadband subscribers of 11% and 16% respectively.”

Mr. Hinnawi continued by saying that the communication ecosystem continues to shift in all locations and no sooner have telcos delivered the latest new technology before the next new wave is on the way.

“Customers, especially younger generations, have grown up in a world of always-on communications and want the newest devices and services as soon as possible. Such demands continue to challenge us to be more customer-experience-oriented. Accordingly at the moment we are very much focused on digitisation to ensure Batelco Group customers are among the first to benefit from world-class products and services which will enrich their lives beyond the pure connectivity needs,” he added.

Batelco’s overseas operations overall remain strong and at the end of the six month period, 59% of Revenues and 57% of EBITDA were attributable to operations outside of Bahrain. This is compared with 59% of Revenues and 56% of EBITDA in the first half of 2015.

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.  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 which have contributed to a 19% increase YoY and a mobile subscriber base of 3.3 million.

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 2016, Qualitynet was the first telecommunications company in Kuwait to be successfully audited and recommended for the newly revised ISO 9001:2015 standard which focuses mainly on business risk management and customer mindset. Qualitynet was also awarded as the best internet services provider in Kuwait, at the Arabian Business Achievement Awards for 2016 held in May.

Maldives:  Dhiraagu maintained its good start to the year, successfully expanding its 4G network to 6 new islands, and becoming the first operator to introduce Smart Home solutions in the country. The company also focused on enhancing services to its enterprise customers and introduced guesthouses internet packages with cloud based centralized WiFi management system. Both mobile and broadband subscribers witnessed an 11% and 16% increase year over year respectively.

Channel Islands and Isle of Man:  During the period Sure CIIM continued to improve mobile networks with targeted investments. The Isle of Man TT event, where Sure is a key sponsor, was very successful with year on year gains in subscriber share. Sure Guernsey completed a targeted cloud investment to enable pan jurisdiction cloud services with the first customer live in Q2. Subscriber numbers continue to grow with a 4% year-over-year increase in broadband subscribers.

South Atlantic & Diego Garcia:  During Q2 Sure S&D focused on building mobile penetration in Saint Helena and Ascension Island where overall penetration has grown from 29% to 50%. A number of initiatives were launched to improve this in Q2 and will continue for the remainder of the year.

Other JVs: Sabafon, in which the Group has a 26.94% shareholding, experienced a 16% YoY decline in subscriber numbers.  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.  Atheeb, in which Batelco holds a 15% stake, reported an impressive 21% YoY improvement in subscriber numbers.

Batelco Bahrain – Focus on Digitisation  

Mr. Hinnawi continued by stating that in Bahrain Batelco maintained a steady presence in the mobile market supported by its retention of high value post-paid residential and business customers.

“Mobile subscriber numbers in Bahrain were up by 3% over the previous quarter but showed a slight decline year-on-year. However, both the fixed line and Broadband customer base has grown YoY with a 5% and 12% increase in customer numbers respectively. We are very pleased with this progress which reflects the popularity of Batelco TV and other value added services plus also the growing uptake of Batelco’s fibre offers,” said Mr. Hinnawi.

“Major news for the second quarter of the year was the launch of Bahrain WiFi with a number of Mobile Hotspots including the Bahrain International Circuit, Seef Mall Muharraq and the Juffair Restaurant area already live and over 50 locations catering to all regions of Bahrain currently ready or in process.”

“We are very proud of the launch of Bahrain WiFi which is delivered by Batelco for the benefit of the Kingdom of Bahrain. The service is available for all residents and also visitors to the Island and it will undoubtedly boost Bahrain’s endeavours to be a leading regional communications hub.”

“The investment required to cover Bahrain with WiFi demonstrates our commitment in developing relevant Smart City solutions and supports the local digitisation drive. The launch of Bahrain-WiFi combined with the rollout of Batelco’s Superfast fibre network provides the most advanced digital platform for consumers and business in Bahrain,” added Mr. Hinnawi.

Mr. Hinnawi also noted that Batelco was delighted to add a new accolade to its list of achievements by being presented with ISO 9001:2015 certification from the BSI Group (British Standards Institution), the first telecom company in the Middle East and first company in Bahrain to achieve this standard.

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.

“Continuing with our well established charitable efforts during Ramadan, 30,000 boxes packed with food items that are traditionally in high demand during the Holy Month, were delivered to families in need throughout  Bahrain.”

For the first half of 2016 Batelco committed over BD600,000 to benefit the community via its sponsorship and donation programme and plans are in place to support many worthwhile causes in the second half of the year.

Looking Ahead

In conclusion, Shaikh Hamad stressed on the importance of leveraging on the unique strengths of each of the Group’s operations and on continuing to invest wisely to deliver the relevant products and services to meet the specific needs of each operation.

“Among the key services under the spotlight at the moment are digital solutions. Batelco continues to invest in relevant platforms as part of its drive to become a recognised integrator of digital solutions in Bahrain and also in a number of our overseas operations. We have already laid the foundations for digital solutions and will continue to build on our strong base by developing our portfolio in-house throughout the Group and where needed by forging partnerships with other organisations.”

“In our Data driven world, customer expectations are sophisticated and the relentless evolution of the industry is a challenge. However, we are grateful to our management teams and all staff who continue to pull together as one family for the good of the Group,” Shaikh Hamad said.

“Our confidence in our ability to strengthen our financial and operational performance throughout the rest of 2016 has been boosted by the improvements made during the second quarter and we look forward to building on this sound platform for the rest of the year,” Shaikh Hamad added.