Batelco (Ticker: BATELCO), the regional telecommunications group with operations across 14 countries, today announced its financial results for the fourth quarter of 2018, the three month period ended 31 December 2018 (Q4), and for the full year ended 31 December 2018.

Financial Highlights

• – Q4 Net Profit attributable to equity holders of the company of BD4.1M, up 119% from BD21.7M net loss in 2017.  Net Profit for the full year 2018 attributable to equity holders of the company of BD50.1M, an increase of 1,335% over BD3.5M in 2017. The 2017 net profit was mainly impacted by impairment losses related to the Group’s investments in Yemen and Jordan.
• – Q4 Total comprehensive income attributable to equity holders of the company of BD4.6M, an increase of 120% from BD22.7M loss in 2017.   Total comprehensive income attributable to equity holders of the company for the full year 2018 of BD43.3M, an increase of 275% from BD11.5M in 2017.
• – Q4 Operating Profit of BD12.3M, down by 29% from BD17.2M in 2017.  Operating Profit for the full year 2018 of BD72.7M, an increase of 25% from BD58.4M in 2017.
• – Q4 EBITDA of BD33.6M, in line with BD33.5M reported in Q4 2017.  EBITDA for the full year 2018 of BD142.8M, an increase of 15% from BD124.7M in 2017.
• – Q4 Revenues of BD104.4M, growth of 2% from BD101.9M in 2017.  Revenues for the full year 2018 of BD405.9M, an increase of 7% from BD379.4M in 2017.
• – Q4 EPS of 2.4 fils compared to -13.1 fils in Q4 2017, an increase of 119%.  EPS for the year of 30.1 fils compared to 2.1 fils in 2017, a 1,335% increase.

Group Financial Review

Net profits attributable to equity holders of the company for the full year 2018 stand at BD50.1M (US$132.9M) up from BD3.5M (US$9.3M) for the corresponding period in 2017, an increase of 1,335%.  Similarly, net profit attributable to equity holders of the company for Q4 2018, was reported at BD4.1M (US$10.9M), a 119% increase from the BD21.7M (US$57.6M) net loss for the corresponding period of 2017.   The 2017 net profit was mainly impacted by impairment losses related to the Group’s investments in Yemen and Jordan.  The Group ended 2018 with fundamentals reporting revenue growth and higher EBITDA throughout the year.

The fourth quarter of 2018 reported total comprehensive income attributable to equity holders of the company of BD4.6M (US$12.2M), an increase of 120% from BD22.7M (US$60.2M) loss in Q4 2017.   Total comprehensive income attributable to equity holders of the company for the full year 2018 was BD43.3M (US$114.9M), an increase of 275% from BD11.5M (US$30.5M) in 2017.

The Group’s operating profit for Q4 decreased by 29% to BD12.3M (US$32.6M) from BD17.2M (US$45.6M) in Q4 2017. However, year-on-year operating profits have increased by 25% from BD58.4M (US$154.9M) in 2017 to BD72.7M (US$192.8M) for 2018.  The reduction in Q4 2018 operating profit is mainly due to increased amortization charges on intangible assets.

For the year 2018 EBITDA increased 15% over the corresponding period of 2017 from BD124.7M (US$330.8M) to BD142.8M (US$378.8M) with an EBITDA margin of 35%.  EBITDA for Q4 of 2018 of BD33.6 (US$89.1M) was in line with the BD33.5M (US$88.9M) reported in Q4 2017.  The Group’s operating expenses are down 2% YoY.

In line with the first nine months of 2018, revenues have increased by 7% from BD379.4M (US$1,006.4M) in 2017 to BD405.9M (US$1,076.7M) in 2018.  Similarly, revenues for the fourth quarter have increased by 2% over Q4 2017 from BD101.9M (US$270.3M) to BD104.4M (US$276.9M).  Revenues have been positively bolstered by strong performance at Batelco Bahrain, Umniah in Jordan and Dhiraagu, the Group’s operation in the Maldives.

The Group’s balance sheet continues to be strong with total assets of BD912.4M (US$2,420.2M) as of 31 December 2018 compared to BD932.5M (US$2,473.5M) as of 31 December 2017. Net assets as of 31 December 2018 stand at BD504.9M (US$1,339.3M) compared to BD502.5M (US$1,332.9M) as of 31 December 2017. The Group’s cash and bank balances are a substantial BD153.3M (US$406.6M).

Total Equity attributable to equity holders of the company is BD465.2M (US$1,234.0M) compared to BD461.9M (US$1,225.2M) as of 31 December 2017. Earnings per share (EPS) is 2.4 fils for Q4 2018 compared to -13.1 fils in Q4 2017 resulting in EPS of 30.1 fils for the full year compared to 2.1 fils for the corresponding period of 2017.

The Board of Directors has recommended a full year cash dividend of BD45.7M (US$121.2M), at a value of 27.5 fils per share to be agreed at the Group’s Annual General Meeting, of which 10 fils per share was already paid during the third quarter of 2018 with the remaining 17.5 fils to be paid following the AGM in March 2019. Batelco is committed to delivering greater returns for its shareholders with its efforts leading to improved dividends.

The full set of financial results was announced by Batelco Chairman Shaikh Abdulla bin Khalifa Al Khalifa, following the meeting of the Board of Directors on February 21^st, at Batelco’s Hamala Headquarters.

“The Board of Directors is very pleased with Batelco’s strong financial and operational performance for the year. The results reflect the effectiveness of the Group’s overall strategic initiatives and we are delighted to witness the strong year-on year growth in digital, Datacom and fixed broadband services across the Group.” the Chairman stated.

“We have established a powerful platform to build on in order to sustain long-term success for the Group and continue to deliver strong value for our shareholders.”

Financial and Operational Highlights

	2018		2017		Growth	Q4 2018		Q4 2017		Growth
	BDM	US$M	BDM	US$M	%	BDM	US$M	BDM	US$M	%
Gross Revenues	405.9	1,076.7	379.4	1,006.4	+7	104.4	276.9	101.9	270.3	+2
EBITDA	142.8	378.8	124.7	330.8	+15	33.6	89.1	33.5	88.9	–
Operating Profit	72.7	192.8	58.4	154.9	+25	12.3	32.6	17.2	45.6	-29
Net Profit/(Loss) attributable to equity holders of the company	50.1	132.9	3.5	9.3	+1,335	4.1	10.9	(21.7)	(57.6)	+119
Total Comprehensive Income/(Loss) attributable to equity holders of the company	43.3	114.9	11.5	30.5	+275	4.6	12.2	(22.7)	(60.2)	+120
Subscriber Base	8.6 million		9.4 million		-9
Contribution to Revenues by International Operations	59%		59%		–
Contribution to EBITDA by International Operations	51%		56%		-9

 

Group Operational Review

Batelco Group CEO Ihab Hinnawi said that 2018 was a turnaround year for the Batelco Group supported by the ongoing rollout of the Group’s transformation strategy and key investments in targeted services, leading to a significant increase in shareholder return.

“We diversified our revenue sources to address the relentless impact of competition in our markets, particularly focusing on the acceleration of fibre implementation and data penetration and are pleased to report that Fixed Broadband is up by 10% and Datacom services are up by 18% across our markets of operation.”

“During 2018, in line with our digitisation initiatives, we prioritised the enhancement of our digital services and continued to grow and evolve our adjacent services, with our efforts leading to 34% growth for digital services across the Group.”

“Throughout the year, we continued to manage our CAPEX aggressively, with our efforts resulting in substantial improvement in return on invested capital,” Mr. Hinnawi noted.

“Delivering unmatched customer experience is of utmost importance, and related programmes begun two years ago, have ensured we maintained market leadership and realised improvements in all customer experience metrics in key markets. We will continue in 2019 to enhance the relationship with our customers and to use business intelligence and data analytics as key drivers to create more customer-centric operations.”

“Based on our successes and achievements for the past year we will continue to build on our strategic imperatives, aligning all areas of our business across the whole Group to build on the Group’s synergy,” Mr. Hinnawi added.

 Batelco Bahrain Highlights

Batelco Bahrain Chief Executive Officer Mohamed Bubashait said that in line with Batelco’s ongoing commitment to support Bahrain’s transition to a digital and diversified economy, Batelco placed innovation, customer experience and the development of a strong digital infrastructure among its priorities during 2018.

“Our successful investment strategy with a focus on crucial in-demand services has resulted in a significant improvement in performance over 2017 for Datacom and fixed Broadband services, with revenue growth up by 27% for Datacom and by 15% for fixed Broadband, fuelled by our fibre rollout. Meeting the demand for faster internet services remains high on the agenda and the success of our fibre delivery has also attributed to a 13% increase in Broadband customers in the Kingdom of Bahrain,” said Mr. Bubashait.

“As part of the strategy to provide smart digital solutions to the public and private sectors through an integrated system, that includes infrastructure for storing and managing data, a new Data Centre will be officially opened very soon, and plans are already in place to build a second Data Centre for Batelco at its Hamala headquarters.”

Additionally, with the demand for cloud computing services growing, Batelco has continued to develop its portfolio to enable the enterprise sector to take advantage of the various benefits delivered by this vital technology.

“Batelco’s plans for advanced infrastructure and innovative services are supported through its partnerships with world class organisations, with all entities working hand in hand to achieve mutual strategic goals, while focusing on operational efficiency improvements, and striving to maintain the Kingdom of Bahrain’s position as a leader in the region’s industry and data economy,” added Mr. Bubashait.

Our success would not have been possible without the dedicated support of all Batelco’s teams. I extend my appreciation to the executive team and all Batelco employees in Bahrain for their professional commitment and dedication. I also offer appreciation to our Board of Directors; their confidence and support is invaluable and ensured we could push forward strongly with our strategic plans.

International Highlights

For the full year 2018, 59% of Revenues and 51% of EBITDA were attributable to operations outside of Bahrain, compared with 59% of Revenues and 56% of EBITDA in 2017.  Across the Group, a number of operations delivered strong revenue growth and improved operational performance.

• Jordan (Umniah): Driven by its digital transformation strategy, Umniah continues to set new milestones in the Jordanian telecommunications market with the inauguration of the first information security academy in the Kingdom.  The company also partnered with a cloud based security company to help its enterprise customers combat the every growing threat of cyber attacks.  Expanding further on its digital footprint, Umniah partnered with Booking.com for a loyalty points program and with ArabiaWeather to become the sole and exclusive telecommunications partner for the weather platform.  In 2018, Umniah achieved year-over-year revenue growth of 15% and fixed broadband subscribers increased by 39% year-over-year and 7% over Q3 2018.
• Maldives (Dhiraagu): Dhiraagu is proud to be celebrating 30 years in connecting the Maldives through telecommunication.  The company’s FTTH network now covers 55 slands and reaches 74% of the population, making it by far the largest fibre network in the country.  The FTTH network also supports DhiraaguTV, which is now available in 50 islands.  During the year, Dhiraagu completed 4G coverage to 100% of the population and became the first company in the Maldives to demonstrate 5G technology affirming its commitment to providing the best network in the country.  Year-over-year fixed broadband subscribers have increased by 35% and by 3% since the third quarter of 2018.
• Channel Islands, Isle of Man, South Atlantic & Diego Garcia (Sure Group): Sure closed the year with an acceleration in market share gains and revenue growth particularly driven by enterprise services, residential broadband and the Isle of Man expansion.  Sure is now the most highly rated telecoms operator in the Channel Islands for security, having extended the international information security standard accreditation ISO27001.  In the Isle of Man, Sure’s highly competitive propositions and market leading network led to an acceleration in growth.  Mobile and fixed broadband customers across the Sure Group increased by 3% year-over-year.
• Kuwait (Quality Net): Qualitynet continues to diversify its product offering and deliver new solutions to the market.  During the year the company successfully implemented various contact center projects and security projects.  In November 2018, Batelco announced that it had signed an initial agreement to sell its 90% shareholding in Qualitynet. The negotiations are in the final stages and a share purchase agreement is expected to be signed in due course.

Looking Forward to the Year Ahead

Batelco Chairman Shaikh Abdulla bin Khalifa Al Khalifa stated that he was very pleased to have witnessed a strong growth in revenues and the successful implementation of the Group’s strategies since joining Batelco half way through 2018.

“I extend appreciation to my predecessor Shaikh Mohamed bin Khalifa Al Khalifa, who served as Chairman until June, for his contribution in supporting the implementation of the Group’s plans. I am very grateful to my colleagues on the Board, executive management and all employees across the Group’s operations for the roles they have played in turning Batelco around and increasing shareholders return significantly,” he said.

In addition to its role as a major investor in world-class solutions and superior customer experience across its operations, Batelco continues to play a very important role in the communities in which it operates.

“Corporate Social Responsibility has always been an integral part of Batelco’s remit and we have renewed our commitment to reaching out to the communities around us, with a sharp focus on supporting initiatives in the Kingdom of Bahrain. Batelco’s CSR activities are in line with the company’s eagerness to strengthen its community partnership as part of its national duty,” Shaikh Abdulla added.

In concluding the meeting, the Chairman said, “Boosted by this strong set of financial and operational results we have a sound platform to work from as we begin a new year for Batelco and its subsidiaries.”

“We believe we have the correct strategies in place, with particular attention given to building the digital infrastructures needed for our future success while maintaining a relentless focus on the experience of our customers. We understand that it’s also vital to invest in our people to ensure we have the relevant skills in place to address the changing landscape of the industry; accordingly, training programmes have been launched to upskill our employees’ competencies in key areas including the digital arena.”

“Furthermore, we have confidence that the successful execution of our evolved strategy will serve the long term interests of all our stakeholders and drive sustainable growth in value for our shareholders,” Shaikh Abdulla concluded.

 

This press release, along with the full set of financial statements, is available on the Bahrain Bourse website and on Batelco Group website, www.batelcogroup.com