Bahrain Telecom plans $4 bln of acquisitions

MANAMA (Reuters) - Bahrain Telecommunications Co BTEL.BH (Batelco) said on Monday it planned to spend at least $4 billion on foreign acquisitions to offset an expected fall in profitability in its home market as competition intensifies.

Batelco, which lost its domestic mobile phone monopoly three years ago, will also seek to borrow up to $1.5 billion and sell shares to fund acquisitions, Chief Executive Officer Peter Kaliaropoulos told reporters in the Bahraini capital, Manama.

"Our preference is for big acquisitions ... about $2 to $4 billion to buy companies of the size of Batelco," Kaliaropoulos said, making clear later that the value was for individual buys.

Batelco, worth $3.2 billion, is planning to make one or two purchases next year, and is considering bidding for a stake in a mobile company Kuwait is setting up, Kaliaropoulos said.

Batelco has also bid "several hundred million dollars" -- but less than $800 million -- for Qatar's second mobile phone license, he told Reuters.

"The new year will see further major changes in the telecom industry in Bahrain which may adversely affect the bottom line of the Bahrain operations," Kaliaropoulos said.

"In Bahrain, the level of profitability over the next few years is expected to decline," he said.

Batelco, which competes in providing mobile phone services in Bahrain with Kuwait's Mobile Telecommunications Co (ZAIN.KW), has been under pressure from the telecom regulator to reduce its charges to other operators using its infrastructure.

The company remains the only fixed-line service provider to the population of under 600,000.

OMAN, LEBANON

The firm, which paid $415 million last year for 96 percent of Umniah, Jordan's third mobile operator, and owns 20 percent of Yemeni operator SabaFon, said it was also considering investments in Lebanon, Oman and Syria.

"Over the next three to four months, all these operations are coming to market, and we are looking at all of them," Kaliaropoulos said.

Oman said this month it plans to sell a stake in Oman Telecommunications Co OTL.OM (Omantel) to a long-term investor. Omantel stock has risen more than 40 percent since.

"There are not many licenses being offered in the Middle East," Kaliaropoulos said. "If you are going to grow, you have no option but to acquire existing operations."

Batelco last week posted its second biggest profit in the third quarter, paced by growth in its foreign operations.

Net income jumped 11.8 percent to 25.91 million Bahrain dinars. Profit from affiliates was 534,000 dinars, compared with nothing in the year-earlier period, it said.

Kaliaropoulos said the company would make about 95 million dinars this year, compared with 89 million dinars last year. He declined to give an outlook for next year.

"We cannot raise more than $1.5 billion, so we definitely have to raise new equity," Kaliaropoulos said, saying it was too early to decide whether this involved selling more shares to the public or to existing shareholders.

"Shareholders have indicated that they would be willing to be diluted if there's an equity issue," he said, adding the company may also sell bonds or Islamic bonds to help finance the expected purchases.