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Tue 21 Apr 2015 12:28 PM

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Saudi telco Mobily swings to Q1 net loss

An affiliate of the UAE's Etisalat, the firm suffered an earnings scandal in 2014, which led to the departure of its CEO

Saudi telco Mobily swings to Q1 net loss

Saudi Arabia's Etihad Etisalat (Mobily), which is under investigation by the bourse regulator for insider trading and share price manipulation, missed forecasts as it swung to a 199 million riyal ($53 million) net loss in the first quarter.

The loss comes after the company restated 18 months of earnings covering 2013 and 2014 and then posted a huge loss in the final quarter of last year.

The No. 2 telecom operator in the kingdom has been hit by accounting errors related to the excessive booking of revenue from wholesale broadband leases and mobile promotional campaigns.

The company on Tuesday blamed its latest loss on a 250 million riyal rise in depreciation expenses, a further provision of 133 million riyals to cover customer payments it was doubtful about receiving, as well as lower overall revenue.

Mobily, an affiliate of the United Arab Emirates' Etisalat , made a net profit of 1.61 billion riyals in the prior-year period, it said in a statement.

The first-quarter earnings fell short of estimates of two analysts, who forecast Mobily, which competes with Saudi Telecom Co and Zain Saudi, would make a quarterly profit of 470.1 million riyals and 515.0 million.

The company reiterated an earlier commitment to meeting its debt obligations, which amounted to 15.8 billion riyals at the end of March.

Mobily said in March it did not expect to meet a net-debt-to-EBITDA (earnings before interest, taxes, depreciation and amortisation) covenant as of last Dec. 31 under its long-term financing facilities with various lenders.

Discussions with lenders about a reset of the covenant were ongoing and were expected to be finalised during the second quarter of 2015, it said.

In November, Mobily cut its profits for 2013 and the first half of 2014 by a combined 1.43 billion riyals, citing accounting errors, and also reported a 71 percent drop in third-quarter profit.

Mobily's actions prompted the bourse regulator to launch a probe. It said it was investigating Mobily for insider trading and share price manipulation.

Mobily shares are down 49 percent since its earnings restatement.

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