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Batelco sees flat 2011 profit on India costs -CEO

Gulf Arab operations face rising competition at home.

October 21, 2010 2:43 by

Bahrain Telecommunications(Batelco) expects 2011 net profit to be flat as start-up operations in India still burden the bottom line, its chief executive said on Thursday.

Batelco expected 2010 net profit to be 15 percent below the 105 million dinars ($279 million) it reached in 2009, mainly due to the start-up costs of Indian operator S Tel, in which Batelco bought a 49 percent stake last year. “The biggest impact on our net profit is the share of losses from our start-up in India,” Peter Kaliaropoulos told Reuters, adding the losses would amount to about 12-13 million dinars this year and could reach up to 15 million next year.

He said he expected next year’s net profit “at the same level” as this year, depending on how much the company can cut its costs.

Batelco plans to reduce its costs by 8-10 percent annually to compensate for lower revenues in Bahrain, where it is losing market share to competitors Saudi Telecom Co and Kuwait’s Zain .

Just like other Gulf Arab operators, Batelco is under pressure to make acquisitions abroad to offset increased competition at home.

But Kaliaropoulos cautioned it would take Batelco time to make an acquisition.

“It’s not something that will happen this month, next month, (even though) the plan was for 2010 to have one big acquisition,” Kaliaropoulos told a news conference.

“We’re interested in the bigger targets, and there are fewer of them, so it takes time,” he said.

He reiterated that Batelco was interested in buying a 25 percent stake in the Saudi operations of Zain that Emirates Telecommunications would have to sell if its plans to buy a 46 percent stake in Zain go through.

(Reporting by Frederik Richter; Editing by Will Waterman)

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