Mobily share sale under scrutiny in Saudi Arabia

Riyadh: The Saudi Shura Council is examining a complaint against Mobily, Etihad and etisalat for violating regulations during the recent sale by the founding shareholders of a 20 per cent stake in Mobily to local and foreign investors.

According to Saud Al Shamri, a member of the Shura, the council will take up the issue with the Saudi Telecommunications and Information Technology Commission (STITC), which is the authority to issue licences for telecom services.

The Al Watan Arabic daily quoted Al Shamri as saying that the Shura will investigate whether Mobily "the second mobile service provider in the kingdom, had violated a regulation that prevents it from selling shares outside the Saudi capital market".

However, Abdul Aziz Al Sughair, chairman of Mobily's board of directors, asserted that the stake sale was strictly legal.

"Mobily has not committed any violations as it is entitled to sell part of the stake of its founders either through the capital market or to some selected investors. The sale has been done with the knowledge of the Capital Market Authority," he clarified.

Mobily recently announced completion of the sale, which was offered early in February.

"The process of selling 100 million shares by founding shareholders in line with the percentage of stake held by each in the company has met with a resounding success," the company had said.

The shares were sold to some 91 investors for 5.5 billion riyals, at a nominal value of 55 riyals per share.

Al Shamri noted that it was inappropriate to sell a share costing 10 riyals for 55, riyals. saying that the "Saudi investors are the losers." He added Mobily's move may result in other mobile phone service providers adopting similar tactics.

Mobily's founders are the UAE's etisalat, which owns a 35 per cent stake in the company. Six Saudi institutional investors, including the state-run Public Pension Agency and the General Organisation for Social Insurance own 45 per cent of the company's shares.

Mobily and its rival Saudi Telecom will face fresh competition this year when a consortium led by Kuwait's Zain starts operating a third mobile phone service network in the kingdom.