UPDATE 1-Bahrain telecom group Batelco profit falls 17 pct

Mon May 13, 2013 8:47am EDT

* Q1 profit 13.4 mln dinars vs 16.1 mln dinars a yr ago

* Q1 revenue 71 mln dinars vs 78 mln dinars a yr ago (Write through, adds details)

By Matt Smith

DUBAI, May 13 (Reuters) - Bahrain Telecommunications Co (Batelco) reported a 17 percent drop in first-quarter profit on Monday, due to tough competition in its domestic market.

Batelco, Bahrain's biggest telecom group, has now reported a fall in profits in 11 quarters out of 12 and has seen its market share eroded by rivals, such as Saudi Telecom affiliate Viva, which launched in 2010 and slashed prices to woo customers.

As well as three conventional mobile operators, Bahrain also has about 10 internet service providers and these may be allowed to launch mobile services should they win a auction to sell spectrum for next-generation networks.

"The decrease in profitability was mainly attributable to competitive pressures continuing in Bahrain," Batelco said in a statement.

Former monopoly Batelco said its domestic subscriber base shrank by 2 percent in the first quarter compared to the year-earlier period.

The group's deteriorating performance at home, where it competes with Kuwait's Zain and Saudi Telecom Co , has spurred it to expand abroad. The company completed the purchase of Cable & Wireless Communications' Monaco and Islands Division in April.

This deal puts Batelco in 10 new markets and will be included in the company's results from the second quarter, it said.

Batelco made a net profit of 13.4 million dinars ($35.5 million) in the three months to March 31, down from 16.1 million dinars in the year-earlier period.

Securities & Investment Co (SICO) forecast Batelco would make a quarterly profit of 12.4 million dinars.

First-quarter group revenue was 71 million dinars, Batelco said. This compares with 78 million dinars a year ago. Bahrain accounted for 58 percent of quarterly revenue.

Chairman Sheikh Hamad bin Abdulla al-Khalifa said Batelco was focused on preserving margins and strengthening cash flows and the bottom line.

Batelco also owns Jordanian telecoms operator Umniah, 27 percent of Yemeni mobile operator Sabafon, minority stakes in internet providers in Kuwait and Saudi Arabia and is also active in Egypt.

($1 = 0.3770 Bahraini dinars) (Reporting by Matt Smith; editing by Jane Merriman)

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