Bahrain's leading telecoms operator Batelco is poised to recover its investment in Indian affiliate S Tel after selling its 43 per cent stake in the unit, Sico Research said, raising its long-term rating on the stock to 'buy' from 'add.'

Batelco agreed to sell its stake in S Tel to its Indian partner for $175 million after the unit's licence was among 122 licences the Indian Supreme Court revoked.

Domestic operations currently contribute 62 per cent of Batelco's revenues, but increasing competition in a saturated home market keep the company's interest in the Indian telecom sector alive, analyst Nishit Lakhotia said.

Lakhotia maintained his short-term 'positive' rating, citing an attractive valuation and high dividend yield.

Batelco's expected dividend yield of 10pc is the highest in the GCC telecom sector, but competitive pressures in Bahrain will continue to hurt the company's earnings, Lakhotia wrote in a note.

Lakhotia is a five-star rated analyst for the accuracy of his earnings estimates on the companies under his coverage, according to Thomson Reuters' StarMine data.-Reuters