Batelco Heads For The Cloud
Bahraini telecoms incumbent Batelco has announced the launch of its first cloud computing service. The launch fits with Batelco's strategy for diversifying its revenue and moving the company into the ICT space. Building on its strong position in the country's telecoms market, Batelco is well placed to expand its presence in the IT services market. BMI believes the company's launch is a response to the growing competition for mobile services in its existing markets and is a good strategic move to bolster its income.
Batelco's launch of infrastructure management as a service (IMaaS) is part of the company's wider cloud computing strategy and foray into the IT services market. Bahrain's IT market shows strong growth potential, an attractive prospect for Batelco. While Batelco's revenue predominantly comes from its mobile operations, this income source has declined as competition has heated up in several markets. Batelco does operate across several markets in the Middle East, but is considerably smaller in scale than many of its peers such as Etisalat or Saudi Telecoms Company (STC). BMI notes the company has been slow to innovate in some circumstances, such as being the last operator to launch 3G services in Jordan where Batelco operates as Umniah. In its home market, newcomer Viva has already launched 4G while Batelco has only trialled the technology.
|Batelco Launch Sees Diversification Into Growing Sector|
|Batelco Revenues By Business Unit (BHDmn) And Bahrain IT Forecasts By Segment (US$mn)|
Batelco's stated strategy had been to look at expanding its international presence. However, after having had its fingers burned in the Indian market - where licensing issues forced the company to exit the market - and with few opportunities for expansion, refocusing its strategy on its existing operations is a good move in BMI's opinion. In H112, mobile revenue decreased 13.4% y-o-y. This has a considerable impact on the company's overall revenue figure, which declined 4.9% over the same period as mobile makes up over 40% of the company's income.
Diversifying revenue streams is a good strategy and BMI has observed many telcos investing in their IT services units in order to build up new revenue. IT services offers a number of benefits including targeting the more lucrative enterprise market and longer-term contracts. With existing communications infrastructure, Batelco is well positioned to build on its telecoms portfolio with IT services that will encourage greater spending from existing clients and generate increased loyalty.
While BMI still asserts that Batelco has some way to go to recover from a few difficult years, adding new services to its product line is a positive move and a good new direction for its strategy. We believe operators across both developed and emerging markets will continue to seek new revenue streams through IT services, with growing interest in cloud computing making it one of the key parts of any telco's IT strategy.