Dubai: Etisalat, which owns 27.45 per cent of Etihad Etisalat (Mobily), said the Saudi telecom operator’s revisions and provisions will negatively impact its consolidated net profit by around Dh204 million this year.
The UAE operator said in a statement on the Abu Dhabi bourse on Sunday that it will also lose Dh616 million before royalty due to the Saudi company’s board of directors to reissue the 2014 annual financial statements (including restated 2013 figures) and to the findings by the Capital Market Authority over some of Mobily’s contracts with customers.
The CMA launched an investigation into the firm last November for restating a year and a half of its earnings and insider trading.
“We are currently in discussion with our external auditors on this matter,” etisalat said in a statement.
Sukhdev Singh, vice-president at market research and analysis services provider AMRB, told Gulf News that Mobily will return to black in 2016. The revision is for 2013 and 2014 and for the short term, etisalat will take a hit in profit and share prices.
Etisalat share price closed down 0.71 per cent at Dh13.90 on Abu Dhabi bourse.
Once a favourite of retail and institutional investors, Saudi Mobily’s fortunes started to unravel in last November when it began disclosing accounting errors and restated 18 months of its earnings due to excessive booking of revenue from wholesale broadband leases and mobile promotional campaigns.
First quarter financial statements
Mobily told the Saudi stock exchange on Sunday that its 2014 loss will increase by approximately 830 million Saudi riyals to 1.75 billion riyals, and the first-quarter loss will decrease by 207 million riyals, resulting in a profit of eight million riyals.
“The revised 2014 financial statements and first quarter 2015 financial statements will be reissued before announcement of second quarter financial statements. The company will call for the Annual General Meeting after obtaining the required approval,” Mobily said.
The board of directors has decided to increase provisions related to “Zain account receivables” by 800 million riyals in the second quarter of 2015, the company said without elaborating and added that it is confident that Mobily is on the right track to go back to normal operations.
Mobily, whose earnings restatement scandal led to the departure of its chief executive earlier this year, swung to a 199 million riyal net loss in the first quarter of this year.
