Saudi telecoms company restates 2014 results
- Saudi Arabias Mobily restates 2014 results to show SR1.7bn loss ($465m)
- Revised results will reduce UAEs Etisalats 2014 profit by AED616m ($168m)
Saudi Arabias telecom operator Mobily has restated its 2014 results to increase its losses from SR914m ($244m) to SR1.7bn.
This is the third time the 2014 results have been revised down due to errors in the timing of revenue recognition.
The UAEs Etisalat, which owns 27.5 per cent of Mobily, has advised that the restatement will negatively affect its own 2014 results by AED616m ($168m).
A team from Saudi Arabias Capital Markets Authority (CMA) advised Mobily to change the accounting of its sales contracts and asset depreciation to bring them in line with international standards.
The alterations also changed Mobilys results from the first quarter of 2015, bringing them from an SR207m loss to an SR8m net profit.
Mobily has also decided to increase bad debt provisions by SR800m, for account receivables due from local Mobile Telecommunications Company (Zain KSA). Mobily claimed in late 2014 that it is owed SR2.2bn by Zain for roaming and data-sharing services. The case is still under arbitration.
This provision will impact Mobilys second-quarter 2015 results, and also reduce Etisalats consolidated net profits for 2015 by AED204m.
Mobilys CEO, Khalid Omar al-Kaf, was suspended in November 2014 and discharged following the March loss announcement. A number of board members also resigned, including the chairman Abdulaziz al-Saghyir, who remained on the board.
Bloomberg reported in March 2015 that Abdulaziz Alsaghyir Commercial Investment (AACI) sold 9.49 million shares, or two thirds of its stake in Mobily, before Al-Saghyir resigned in February. Al-Saghyir is founder and chairman of AACI.
Mobily was also unable to meet financing repayment obligations. It is in negotiation with lenders.
Mobilys difficulties highlight the need for Saudi businesses to improve their transparency and accounting practices as the Tadawulopens up foreign institutional investors, to encourage foreign investment.