Batelco is one of the smaller telecoms operators in the Gulf Arab region with a home market of just over 1 million, in which it faces rising competition from bigger rivals such as Kuwait's Zain and Saudi Telecom (STC).

Other Gulf Arab operators such as STC or Emirates Telecommunications Corp. (Etisalat) have also posted lower quarterly profits as they spend funds on growing abroad to offset lower profits in their newly liberalized home markets.

Batelco said in a statement that net profit attributable to shareholders in the quarter ended June 30 fell to 22.3 million Bahraini dinars ($59.3 million) from nearly 28 million in the year-earlier quarter.

Analysts at SICO Investment Bank had expected Batelco to post net profit of 24 million dinars.

"Reduced market share for mobile and broadband services in Bahrain and strong price erosion adversely affected our revenues and profits," Chairman Sheikh Hamad Bin Abdulla Al-Khalifa said in a statement.

The operator has earmarked up to $2 billion for an acquisition in Africa or Southeast Asia to further grow abroad after it bought a 49 percent stake in Indian mobile operator S Tel Ltd for $225 million last year.