Once one of the market’s hottest stocks, Mobily ran into trouble late last year when it began disclosing accounting errors related to the excessive booking of revenue from wholesale broadband leases and mobile promotional campaigns
Reuters
Dubai
Saudi Arabian telecommunications firm Mobily insisted yesterday it could meet all its debts despite announcing last week that it had suffered a $243mn loss in 2014 and expected to breach covenants on long-term loans.
“The company does not anticipate difficulties with respect to future financing repayments and costs,” Mobily, also known as Etihad Etisalat, said in a stock exchange statement.
The market regulator, the Capital Market Authority, subsequently said it would permit trading in Mobily shares to resume today. The shares have been suspended for a week in response to the company’s financial troubles.
Once one of the market’s hottest stocks, Mobily ran into trouble late last year when it began disclosing accounting errors related to the excessive booking of revenue from wholesale broadband leases and mobile promotional campaigns.
Last week it restated its 2014 earnings, saying it had suffered a $243mn loss instead of the $58.6mn profit which it had reported in its unaudited numbers in January.
The CMA has launched an investigation into Mobily on suspicion the company violated one of its market listing rules and two articles of the Capital Market Law, including provisions against insider trading. Mobily said yesterday it did not expect to meet a net-debt-to-EBITDA (earnings before interest, taxes, depreciation and amortisation) covenant as of last December 31 under its long-term financing facilities with various lenders.
That covenant required a minimum EBITDA of 5.57bn riyals over the previous four quarters; the company’s EBITDA for 2014 was short of that amount by 2.67bn riyals, of which 2.51bn riyals was due to provisions and adjustments related to the company’s financial results, it said.
However, Mobily added: “Management is confident that discussions with the lenders to reset the net-debt-to-EBITDA financial covenant will be successful during the second quarter of year 2015.
“Mobily is committed to continue to meet its obligations as they become due in the normal course of operation.”
A total of 2.4bn riyals of financing facilities will come due in 2015 and 2.1bn riyals in 2016, with the rest of the company’s debt spread across the period until 2024, Mobily said.
It said its assets totalled 47.5bn riyals as of December 31, up 2.3% from a year earlier, while total liabilities were 28bn riyals, up 21%.
Shares in Mobily, which is 27.5% owned by Abu Dhabi-listed Etisalat, have plunged to 35.30 riyals from an intra-day peak of 98.50 riyals hit last May.
