Batelco, the leading telecom service provider in Bahrain, expects its full-year profit to fall about 19 per cent due to the start-up costs for its Indian unit and stronger competition at home, its chief executive said.

Batelco is one of the smaller telecoms operators in the Gulf Arab region where incumbent operators are scrambling to make acquisitions abroad to offset lower margins in their home markets, which are increasingly liberalised.

It posted net profit of BD86.77 million ($230.2 million) last year, hurt by the entry of a third mobile operator to Bahrain early in 2010 and the costs of its Indian operation S Tel Ltd that it launched in late 2009.

"Our profit will be a little bit higher than what we had in the first quarter, times four," Peter Kaliaropoulos told Reuters on Thursday, implying profit of at least 70 million dinars.

The operator posted a first-quarter net profit of BD17.64 million on Wednesday.

Kaliaropoulos said that national phone traffic had dropped by more than 10 per cent during Bahrain's recent political unrest, which has slightly hurt the operator's profit.

But he said that traffic had started to recover since the end of March.

"It's been restored, it's going back to the right levels, but we need international travellers to come back to be honest with you," he said.

A number of business conferences and Bahrain's Formula One grand-prix race were cancelled after the island kingdom saw  clashes between its majority Shi'ite population and police forces in February and March.

Kaliaropoulos also said the company targets proceeds from asset sales worth 10-15 million dinars this year.

Batelco has teamed up with Kingdom Holding to buy a 25 per cent stake in Zain Saudi from its parent firm, Kuwaiti telecoms operator Zain.

The three firms have provisionally agreed on a $950 million price tag for the acquisition, and Kaliaropoulos said it would take about two to three months to finalise the deal.

He said Batelco is in talks with banks to raise about $850 million to fund the operator's share of the acquisition and inject working capital into Zain Saudi. – Reuters