Mobily to reissue 2014, Q1 2015 results after probe

The Capital Market Authority (CMA) launched an investigation into the firm last November after Mobily, 28% owned by the UAE’s Etisalat, restated a year and a half of its earnings.Reuters/DubaiSaudi Arabia’s Etihad Etisalat (Mobily) will book further losses for 2014 after a regulator-led investigation into accounting errors at the company, it said in a statement yesterday. The company, the country’s second-biggest telecommunications firm, would also increase provisions by 800mn riyals ($213.3mn) in the second quarter of 2015 in a separate impairment relating to Kuwaiti operator Zain. Mobily has been in the spotlight since late last year when it began disclosing accounting mistakes which it said were due to excessive booking of revenue from wholesale broadband leases and mobile promotional campaigns. The Capital Market Authority (CMA) launched an investigation into the firm last November after Mobily, 28% owned by the UAE’s Etisalat, restated a year and a half of its earnings. Mobily’s statement yesterday came after the CMA identified concerns over the operator’s contracts with certain customers, including those for fibre networks, with the filing adding the team recommended the company reconsider its accounting approach for such contracts. Under the CMA’s recommendation, Mobily re-evaluated its accounts under the International Financial Reporting Standards (IFRS) method of auditing for the year 2014 and the first quarter of 2015, which caused the earnings to be adjusted. Currently, the auditing of most Saudi companies complies with rules set down by the Saudi Organisation for Certified Public Accountants. However, listed firms are expected to follow IFRS from January 1, 2017. The auditing practice change, according to yesterday’s filing, meant Mobily would increase its 2014 loss by about 830mn riyals to 1.745bn riyals, but would see its first-quarter 2015 earnings inflated by about 207mn riyals, swinging it to a profit of 8mn riyals. Mobily said it would release revised financial statements for both periods ahead of publishing its second-quarter results, due to take place in July. Separately, Mobily said it would book an 800mn riyal provision in the second quarter relating to “Zain account receivables”, the company added without elaborating. Mobily has been in arbitration with Zain Saudi, the kingdom’s third-largest operator, since last year over 2.2bn riyals Mobily says it is owed under a 2008 contract by which the former would provide services including domestic roaming and site sharing to the latter, which began commercial operations that year. Both episodes caused parent Etisalat to say in a separate bourse filing the restatements would likely negatively impact its 2014 profit by 616mn dirhams ($167.7mn), while the Zain provision would knock its 2015 earnings by 204mn dirhams. Etisalat had reported a 2014 net profit of 8.9bn dirhams. Etisalat’s share price was down 0.7% at 0922 GMT. Mobily’s shares were suspended by the regulator on June 9 until the impact of the CMA report on its earnings was disclosed.