Etisalat Says Has Confidence In Saudi Affiliate Mobily

Mobily announced it had cut profits for 2013 and the first half of 2014 by a combined SAR1.43 billion because of accounting errors.

Etisalat is confident Saudi Arabia’s Mobily will return to growth soon after the affiliate restated 18 months of profits this week, the United Arab Emirates telecom operator said on Thursday.

On Monday, Mobily stunned investors by announcing it had cut its profits for 2013 and the first half of 2014 by a combined SAR1.43 billion ($381.2 million) because of accounting errors.

Shares in Mobily, which also posted a shock 71 per cent drop in third-quarter profit, have fallen 18.5 per cent since resuming trading on Tuesday, while the bourse regulator has launched an investigation into the firm.

Etisalat, which owns 27.5 per cent of Mobily, has “every confidence” in its affiliate “to overcome this temporary issue and return to growth again soon”, Etisalat said in a statement.

“We understand further that the Mobily Board/audit committee have commenced a thorough review of the matter and we are discussing with them further actions that might be taken,” the statement said.

“Etisalat supports the steps taken by the Mobily Board of Directors.”

Etisalat’s chief executive Ahmad Julfar serves on Mobily’s board, according to the UAE firm’s 2013 annual report.

Serkan Okandan, Etisalat’s chief financial officer, was appointed deputy chief executive at Mobily in mid-October this year. He remains Etisalat’s finance head.

On Wednesday, Etisalat said it would cut its profits by $44 million due to Mobily’s actions.