Bahrain's Batelco has cancelled plans to sell Jordanian telecom operator Umniah, the former monopoly's chief executive told Reuters, citing market conditions as it instead aims to make acquisitions itself.

In January, Batelco revealed it had received non-binding bids for Umniah, which accounted for a fifth of the parent's 2015 revenue and in which it holds a 96 percent stake.

"We're going to terminate the sale process," said group CEO Ihab Hinnawi. "It's not an optimal time to sell, it's an optimal time to buy. Prices are reducing, the appetite of so many big players is declining and many are over-leveraged.

"We have a healthy balance sheet ... we shouldn't let go of an asset that has added a lot of value."

Batelco operates in 14 markets from the Falkland Islands to the Maldives after it expanded abroad to offset stiffening domestic competition.

Hinnawi, Umniah's former chief executive before becoming permanent group CEO in January, said Batelco's priorities were to cut costs, increase efficiency, assess potential new business areas and assess existing assets.

He wants to expand into smart home services, mobile money, mobile health, mobile television and cloud services. Batelco will buy companies, forge partnerships or go in-house to offer these.

Hinnawi predicted so-called adjacent services will provide about 15 percent of revenue in 2019-2020, up from 5-8 percent currently.

Batelco had cash and bank balances of BD160 million ($424.29 million) at the end of 2015, which could be used for acquisitions, potentially another telecom operator.

"We have many options. One is to expand. We shouldn't retain much cash, be it through debt settlement or growth transactions," Hinnawi said. "There are a couple of potential target companies that we're looking at."

Domestic revenue fell 6 percent to 154 million dinars in 2015, although profit was near flat at 37.3 million dinars. This was two-thirds of the group's total.

Batelco is expanding its domestic fibre broadband network, which could be its revenue driver in Bahrain, Hinnawi said. This would help lift capital expenditure above 20 percent of revenue in 2016, although the longer-term average would be about 15 percent.

Yemeni unit Sabafon's subscriber base fell by a fifth last year as the country's civil war escalated. Hinnawi ruled out selling Batelco's 27 percent stake, citing Yemen's relatively large population which can only access 2G networks.

"There are huge opportunities and we may think to up our stake," said Hinnawi.

Loss-making Saudi fixed-line operator Etihad Atheeb has struggled to compete against better-resourced rivals and Batelco took an impairment of 3.1 million dinars relating to its 15 percent holding.

"Keeping Atheeb in its current structure is not good for us. We need to change the model, get an LTE (4G) licence and spectrum or we exit," added Hinnawi. "The Saudi market is huge and has great potential, but you need the right set-up." - Reuters