DUBAI Jan 28 Telecom operator Batelco
, which is battling a sustained profit slump, reported
a 61 percent drop in fourth-quarter earnings on Tuesday and the
Bahrain-based group said it had begun buying back a $650 million
bond, taking advantage of a fall in its value.
Bahrain is one of the Gulf's most competitive telecom
markets, with three mobile operators, including Kuwait's Zain
and about 10 internet providers vying for business
among its 1.3 million people.
Declining domestic income pushed Batelco to expand abroad
which led to a deal with Cable & Wireless Communications
in April to buy its Monaco and Islands Division for $570
But some aspects of the deal ran into regulatory problems
and as a result CWC returned the $100 million Batelco paid for a
stake in a holding company that ultimately owned part of Monaco
Batelco, formally called Bahrain Telecommunications Co, had
been largely debt free, but in April sold a $650 million
seven-year bond with an annual coupon of 4.25
percent to fund the CWC deal.
Batelco began buying back the bond in November, Tuesday's
annual results showed, with the operator having repurchased
$39.5 million of its debt as of Dec. 31.
"The bond buyback offers Batelco the opportunity to deploy
excess liquidity in realising interest savings and managing debt
levels," Batelco said.
Batelco, which has reported declining profits in 16 of the
past 18 quarters, did not state whether the buyback was ongoing,
although with cash and bank balances of $526.8 million the
company has scope to do more.
"Batelco has cash in its hands and not much to do with it,
but we don't have a clear view of what the company's strategy
is," Shrouk Diab, assistant vice-president for research at NBK
Capital in Dubai, said.
The group made a net profit of 6.9 million dinars ($18.30
million) in the three months to Dec. 31, down from 17.8 million
dinars in the year-earlier period, Reuters calculated from past
One analyst polled by Reuters forecast Batelco's quarterly
profit would be 14.1 million dinars.
Batelco made a full-year profit of 43.6 million dinars, down
from 60.3 million dinars in the corresponding period of 2012, it
The company blamed the profit slump on a number of one-off
expenses, including those associated with the Islands Portfolio
acquisition, but did not provide further details.
Batelco's chief executive Sheikh Mohamed bin Isa al-Khalifa
quit in May and company veteran Peter Kaliaropoulos - who
previously was CEO and held other senior positions - left in
June. A committee of three board members now runs the company.
Batelco also owns Jordanian telecoms operator Umniah, 27
percent of Yemeni mobile operator Sabafon, minority stakes in
internet providers in Kuwait and Saudi Arabia.
(Reporting by Matt Smith; Editing by Jane Merriman)