Batelco to sell 30 percent stake in India JV S Tel for possible future consolidation


At a time when Saudi Telecom Company (STC),
Etisalat, du and other telcos in the Middle East have began slashing call
tariffs to countries in South Asia like India, Pakistan and Bangladesh, in an
effort to arrest falling ARPUs and declining profit margins, Bahrain’s national
carrier, Batelco announced its plans to sell 30 percent of its stake in Indian
joint venture S Tel.


Batelco, which has a 42.7 percent stake in S Tel,
has hired an investment bank to sell up to 30 percent of its stake in the
venture, to release funds for its other operations. The company may also look
at market consolidation once the new guidelines on M&A’s are released by
the Indian government.


Considering the financial performance of new telecom
service providers’, the revenue of S Tel may be encouraging to investors.
During the quarter ended June 2011, S Tel posted revenues of INR 385 million.
Etisalat reported INR 412 million, Videocon Telecommunications INR 1,955
million and Uninor INR 5,389 million.


During the March quarter, S Tel had a mobile subscriber
base of 2.8 million in 5 circles, Uninor 22 million in 13 circles, Videocon
Telecommunications 7 million in 16 circles and Etisalat 0.96 million in 15 circles.


Batelco, along with a private-equity partner, acquired a
49 percent stake in S Tel valued at $225 million in early 2009. This was one
year after S Tel got 2G licenses to operate in India. Siva Group is the Indian joint venture


Considering the current regulatory issues in India, stake
sale in a new service provider will not attract many investors. However,
availability of spectrum with S Tel will be a good attraction. S Tel
provides telecom services in circles such as Orissa, Bihar, Himachal Pradesh,
North East, Assam and Jammu and Kashmir.


Although the timeframe of the stake sale by Batelco has
not yet been specified, the telco has said that it will make a detailed
submission outlining its reasons for the stake sale to the TRA. This comes a
day after the international regulatory body issued a notice to Batelco
regarding anti-competitive practices in some international markets. Batelco has
been given until October 13 to respond to the notice.


As per a quote in a leading publication made by Rashid
Abdulla, CEO, Batelco Bahrain, Batelco has been informed of this decision and
is in the process of making a detailed submission to the TRA outlining reasons
why we believe we acted fairly and consistent with the regulatory and
competitive laws of the kingdom. We look forward to the opportunity to outline
our case to the TRA and we are confident we will receive a fair hearing.”


Last month Batelco
announced that it had appointed Sheik Mohammed bin Isa Al Khalifa, a member of
the ruling Royal family and chairman of the Board of directors of the company
as the new CEO, effective October 1, to replace current CEO Peter
Kaliaropoulos. The decision was taken due to the recent political unrest that
has rocked Bahrain, following a challenge to the decades old minority rule.


Batelco currently has over 10 million subscribers – both
wireline and wireless. Batelco and Saudi billionaire Prince Alwaleed’s Kingdom
Holding are currently pursuing a $950 million stake in Zain Saudi.


By Beryl M
[email protected]