Sunday, Aug 02, 2015

Dubai: Saudi Arabia’s Etihad Etisalat (Mobily), which is embroiled in an accounting scandal, reported a net loss of 901 million Saudi riyals (Dh882 million) compared to a net profit of 92.5 million riyals during the same period last year.

The telecom operator, which slashed its profits for the last 27 months, attributed the net loss to an additional debt provision of 800 million riyals relating to claims against Zain Saudi, as well as the increase in Zakat, a form of obligatory almsgiving and religious tax in Islam, expenses by 81 million riyals.

Mobily’s fortunes started to unravel last November when it began disclosing accounting errors and restated its earnings due to excessive booking of revenue from wholesale broadband leases and mobile promotional campaigns.

The firm said in a statement on the Saudi bourse that its revenues for the quarter were flat at 3.57 billion riyals when compared to the same quarter in 2014.

Revenues for the first six months of 2015 amounted to 7.21 billion riyals in comparison to 7.42 billion riyals for the same period in 2014 representing a decrease of 2.8 per cent.

Net loss for the first six months of 2015 amounted to 945 million riyals in comparison to net income of 403 million riyals for the same period in 2014.

Etisalat, which owns 27.45 per cent of Mobily, said last month that the Saudi telecom operator’s revisions and provisions will negatively impact its consolidated net profit by around Dh204 million this year.

Sukhdev Singh, vice-president at market research and analysis services provider AMRB, told Gulf News that the sharp drop in profits is due to provision for their case with Zain Telecom. However, if the operator is under considerable financial pressure, this would certainly and negatively affect Etisalat’s bottom-line.

“But Mobily will definitely return to black in 2016. The profit revisions are only for short term,” he said.

Company’s value

Mobily shares, suspended since June as part of the probe by the Capital Market Authority, are expected to start trading on the Saudi bourse on Monday, the stock market regulator said in a statement.

The share is down by 58 per cent and which wiped out around $9.4 billion of the company’s value on the Saudi bourse.

The company’s net debt as of June 30 stood at 14.96 billion riyals, in comparison to 15.03 billion riyals as of December 31, 2014. During the first half of 2015, the company serviced all its contractual debt obligations to its lenders, amounting to 1.40 billion riyals principal repayments and 107 million riyals interest payments, in accordance with the existing financing agreements.

Mobily, which slashed its profit for the 27 months to March 31, on June 30 slashed its total profits over the period by nearly 1.76 billion riyals.

The operator has made adjustments to its 2013 profit by slashing its profits to 4.69 billion riyals from 5.94 billion riyals as published previously. It has also increased its 2014 loss from 913 million riyals to 1.58 billion riyals and has cut its first-quarter loss to 45 million riyals this year from a previously reported 199 million riyals.

By Naushad K ?Cherrayil Staff Reporter

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