Bahraini operator Batelco is "assessing options" for S Tel, its subsidiary in India, owing to serious challenges including a “complete collapse in prices” in India's mobile market, according to Peter Kaliaropoulos, CEO.
Kaliaropoulos said that the decline in mobile prices in India had exceeded even the “worst case scenarios” predicted by Batelco.
He added that S Tel had also suffered as a result of restrictions that the Indian government imposed on the import of telecoms equipment from China last year.
Meanwhile, India’s much publicised 2G scandal has also hindered growth by making funding more difficult to access.
“There are a lot of pressures on us in India which we didn’t expect and I have to admit we are rethinking our strategy. We are assessing how do we participate in that market [India]. Is it purely by S Tel, or another vehicle? Do we consolidate S Tel into another company when the M&A rules allow us to?” Kaliaropoulos said.
But Kaliaropoulos added that India still holds significant potential for Batelco in the long term, particularly if S Tel can tap potentially lucrative markets such as mobile payments.
“We believe that medium to long term the Indian telco market is great but in the short term it has got some challenges for us.”
He added that S Tel already has about 3 million customers, although low ARPU remains a problem.
On the subject of India’s 3G scandal, Kaliaropoulos said that the government had already issued two charge sheets, but S Tel was not implicated in any illegal activities.
“S Tel has not been involved so far. There has not been any wrong-doing by S Tel so that is great news for us. Batelco bought into the company when the licence was already issued,” he said.
Batelco entered India’s telecom sector in January 2009 when it acquired a 49% stake in Chennai based S Tel for $225 million. Batelco sold part of its shareholding in S Tel in 2010 and now holds a 42.7% stake in the company.