Saudi Firm Mobily Rings Up Surprise Loss

Saudi Arabian telecoms operator Etihad Etisalat (Mobily) reported an unexpected fourth-quarter loss on Wednesday, following on from its shock restatement of results in November last year.

Mobily, the country’s second-biggest telecoms operator and an affiliate of the United Arab Emirates’ Etisalat, made a net loss of SAR2.28 billion ($607.1 million) in the three months to Dec. 31, down from a profit of SAR1.69 billion in the same period of 2013.

Analysts polled by Reuters had on average forecast Mobily, which competes with the Gulf’s biggest operator, Saudi Telecom Co, and Zain Saudi, would make a profit of SAR1.33 billion.

“The reason for the net loss is mainly attributed to a decrease in revenues, an increase in operating expenses, higher depreciation and finance expenses as well as exceptional expense items recorded during the current quarter compared with the same quarter last year,” Mobily said in a statement.

In November’s restatement of previous results Mobily cut its profits for 2013 and the first half of 2014 by a combined 1.43 billion ($381 million), which it blamed on “an error in the timing of revenue recognition in respect of a promotional programme”, and also reported a 71 per cent drop in third-quarter profit.

The company’s share price has fallen by 40 per cent since the restatement, which caused the bourse regulator to launch an investigation and the company to then suspend its chief executive, Khalid al-Kaf, pending the outcome of an investigation by its own audit committee.

Mobily did not comment on the affair in its results statement on Wednesday, only reporting that fourth-quarter revenue fell 46 per cent to SAR2.79 billion after the deduction of SAR829 million riyals relating to deferred promotion costs.

It took further provisions of 741 million “for various assets and claims” and charged SAR203 million in “additional catch-up depreciation” as well as making a charge on goodwill of SAR63 million.

Full-year net profit fell to SAR220 million riyals, from the restated SAR.94 billion in 2013, on revenue down 17.7 per cent at SAR15.8 billion.

Net debt stood at SAR15.1 billion at the end of 2014, up from SAR12 billion a year earlier.