Forecast comes a year after the kingdom's number two telecom operator made the first in a series of shock earnings restatements
Saudi Arabia's Etihad Etisalat aims to become profitable again within 12 months, its chief executive said this week, a year after the kingdom's number two telecom operator made the first in a series of shock earnings restatements.
Errors by the company - known as Mobily - represented one of the Gulf's biggest accounting debacles. An ongoing investigation by the Capital Market Authority (CMA) is seen as a test of the regulator's ability to enforce corporate disclosure standards and punish transgressors.
Mobily - 27.4 percent-owned by United Arab Emirates' Etisalat, the Gulf's largest telecom firm by market value - restated 27 months of earnings to March 31, 2015.
This slashed Mobily's total profits by 3.63 billion riyals ($967.97 million) reducing its profits for this period by more than half to 3.07 billion riyals.
Mobily made an annual net loss of 1.58 billion riyals in 2014.
"Hopefully going back to profitability won't be too far. Hopefully it is a short-term (situation) and short term may be estimated at more or less twelve months ... though it may take longer," Chief Executive Ahmad Farroukh told the Reuters Middle East Investment Summit, his first interview with international media.
His long-serving predecessor Khalid al-Kaf left in February with Farroukh appointed in July, the same month as Mobily's last earnings adjustment.
The operator, which said the accounting errors were due to its premature booking of revenue from a promotional campaign, subsequently reported losses in the second and third quarters, while its shares have fallen 65 percent since the first restatement on Nov. 3, 2014.
That precipitous drop led some investors to demand compensation from Mobily, but the CMA found in the company's favour last month.
"Mobily improved its corporate governance model in a way that ensures such violation will not happen again," said Farroukh.
"Our strategy is to bring back confidence and deliver value to our shareholders. What can bring back confidence is the consistency of performance. This is a journey that we need to embark (on) and it needs some patience."
Farroukh said Mobily would try to increase its revenue through more so-called value-added telecoms services such as mobile money transactions should the industry regulator allow, plus further developing data and home broadband services.
"If you look at the bottom line across all operators you will find it went down, and this is an indication that there is pressure on prices, there is pressure on revenues," said Farroukh.
Mobily is considering selling its mobile transmitter towers, most likely to a specialist tower company which would then lease these back to the seller.
"We are doing this to bring value to shareholders and to better utilise an asset not because of any financial or cash constraint or funding concerns," he said.
Tower companies typically buy towers from one operator and then attract others as tenants. This has proved particularly beneficial in Africa where operators face highs costs in powering generator-run towers, sites are difficult to access due to poor transport links and phone use and coverage are relatively low and therefore there is significant market growth potential.
Saudi's mobile penetration is 180 percent, the seventh-highest globally, and it may be difficult to convince Mobily's rivals Saudi Telecom Co and Zain Saudi to become tenants.
"If the tower sale goes (ahead), first of all it is a financial deal, then a technical efficiency, then the most important thing is (to) find a second tenant on the tower," said Farroukh.
He said company had no immediate plans to raise debt, given its "reasonable cash position" and predicted Mobily's capital expenditure next year would be in low- to mid-single digits of billions of riyals.For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.