Zain Saudi has received regulatory approval to cut its capital for a second time, a move common in Saudi Arabia to offset accumulated losses, the telecom operator said on Tuesday.
The company, 37 per cent owned by Kuwait’s Zain, has yet to make a quarterly profit since launching service in 2008, having paid about 23 billion riyals ($6.12 billion) for the kingdom’s third mobile licence.
The Capital Market Authority has approved Zain Saudi cutting its capital to 584 million shares from 1.08 billion shares, according to a bourse filing. The reduction is still subject to shareholder approval.
The operator originally cut its capital in 2012, reducing its number of shares to 480 million from 1.4 billion, with each share carrying a par value of 10 riyals.
Zain Saudi then launched a 6 billion riyals rights issue in which parent Zain was a major buyer, upping its stake from 25 percent.
Saudi bourse rules require listed companies to cut their capital when accumulated losses reach a certain level. The move is largely cosmetic, with the share price adjusted accordingly.
Earlier this month Zain Saudi reported a fourth-quarter loss of 306 million riyals, which was less than prior-year’s loss of 462.3 million riyals and best analyst expectations.