AMMAN // Batelco Group, Bahrain's telecommunications operator, says its new Indian arm will show a profit within four years.
Batelco owns a 42.7 per cent stake in S Tel, a new telecoms company in India, and last month won three 3G mobile phone licences worth 3.37 billion rupees (Dh263.3 million).
The rest of S Tel is owned by Skycity Foundations, an Indian private equity company, and Telecom Investments Mauritius.
The S Tel investment represents Batelco's most ambitious expansion effort. It is a relative newcomer to India, where it battles with 12 rivals for a share in the world's second-fastest growing telecoms market.
"Before we started opening the doors for business, we were already out of pocket by about US$3.5bn (Dh12.85bn)," said Peter Kaliaropoulos, the chief executive of Batelco Group.
"In a country where [monthly bills] are $2, to get that money back it's a long-term play, about four years." Mr Kaliaropoulos said Batelco had invested about $175m in equity in S Tel and had financed the rest of its operations with debt.
"It's a risk but it's a good risk," he said. "We're seeing benefits already ? India is helping us optimise our performance in the supply chain for the rest of our operating companies."
He said he expected the company to be active in acquiring other Indian operators over the next three to four years.
S Tel's 3G licences are in Himachal Pradesh, Bihar and Orissa- mainly rural areas in India - and in the Assam, north-east and Kashmir regions. The purchase reflects Batelco's strategy in operating in "niche markets", Mr Kaliaropoulos said.
In the quarter to the end of March, Batelco reported a net profit of 24.3m Bahraini dinars (Dh236.6m), a 7 per cent decrease compared with the same period last year and mainly attributed to write-downs accrued by its Indian operations.
"If you look at the operating performance of all our existing businesses, they are still growing at single, high digits," Mr Kaliaropoulos said.
He said the company expected its profits to be down next year by about 5 per cent due to its investment in India.
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