Partner Content

A partner’s perspective on working with Sharakat

Saudi Arabia’s water scarcity is at the centre of a blossoming infrastructure market, with private partners at its core. Its prosperity is reflected in the success of a number of flagship projects

By SHARAKAT

Balteco structure

Bahrain Telecommunications Company (Batelco) was founded in 1981 and is the country’s leading provider of telecoms and IT services. Based in Manama, the firm is listed on the Bahrain Stock Exchange, with a market capitalisation of BD756m ($1.2bn) and an authorised share capital of BD200m.

The Bahraini government is the majority stakeholder in Batelco with 36.67 per cent, while the public owns some 21.27 per cent of shares. The remainder are held by state funds and local companies.

The company’s group chief executive officer (CEO) is Peter Kaliaropoulos. He joined the firm in 2005 and has nearly 30 years’ experience in the sector. In 2009, Batelco posted profits of BD105m – the highest in the company’s history. Revenues rose 9 per cent to BD346.9m.

Balteco operations

In addition to being the main telecoms firm in Bahrain, Batelco is also present in Egypt, Jordan, Kuwait, Mauritius, Yemen, Saudi Arabia and India through several subsidiaries and joint ventures. The firm’s regional expansion has accelerated since the arrival of Kaliaropoulos. Whereas in 2005 Batelco’s overseas operations accounted for just 9 per cent of gross revenues, in 2009 they contributed 31 per cent.

Its Jordanian subsidiary, Umniah Mobile Company, was launched in June 2005, and was the first to introduce billing by the second into the country. Umniah has 1.8 million mobile subscribers – equivalent to a 27 per cent share of the market. Batelco holds a 96 per cent stake in Umniah. Batelco Egypt Communications is wholly owned by Batelco; it was set up in 2003 and provides managed data services to multinational companies.

Batelco also owns 27 per cent of Yemen Company for Mobile Telephony, which has a 26 per cent market share and 3.2 million mobile subscribers. In Kuwait, Batelco operates a broadband service with 40,000 subscribers. Batelco’s presence in Saudi Arabia comprises a 15 per cent stake in Etihad Atheeb Telecommunication Company. Etihad Atheeb has a fixed-line licence in the kingdom under the Go brand and offers voice, internet and data services to 92,000 subscribers. In 2009, Batelco acquired a 42.7 per cent interest in Indian mobile startup S Tel, which has licences to operate in six states.

Batelco currently has 7.9 million mobile, fixed-line and broadband subscribers, split across its operations and subsidiaries. In Bahrain, it has about 836,000 mobile customers and 86,000 data and broadband subscribers.

Balteco ambitions

In 2010, a third mobile operator entered the Bahraini telecoms market. The firm’s leadership recognises this poses a huge threat and says Batelco must focus its efforts on driving innovation and improving customer services through the launch of new products and services.

Although Bahrain still accounts for some 70 per cent of the group’s revenues, increasing competition and a maturing market mean Batelco will have to look overseas to grow its business further. In particular, the firm sees India as offering huge opportunities.

In December 2009, Batelco launched S Tel in partnership with Chennai-based Siva Group and in less than four weeks secured more than 140,000 customers. By October 2010, this had risen to 1.64 million. In the coming years, Batelco aims to develop its India business and also expand further into Asia and Africa. The company is actively pursuing mergers and acquisitions and says it is targeting companies with an enterprise value of $1.5bn-2bn.

Batelco is also considering expanding its foothold in Saudi Arabia by acquiring a stake in Zain Saudi Arabia. National Bank of Kuwait is seeking a buyer for Mobile Telecommunication Company’s 25 per cent stake in Zain.