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Wed 21 Oct 2015 05:39 PM

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Saudi telco Mobily swings to Q3 loss as expenses rise

Telco, which restated 27 months of earnings earlier this year, made loss of $42m in three months to Sept 30

Saudi telco Mobily swings to Q3 loss as expenses rise

Saudi Arabia's Etihad Etisalat (Mobily), which restated 27 months of earnings earlier this year, said rising expenses were to blame as it swung to a third-quarter net loss on Wednesday despite slashing its capital expenditure.

Mobily, an affiliate of the United Arab Emirates' Etisalat, made a net loss of 158 million riyals ($42.1 million) in the three months to Sept. 30, it said in a bourse statement.

That compared with a profit of 129 million riyals in the prior-year period.

NCB Capital had forecast Mobily would make a quarterly profit of 245 million riyals.

Mobily, Saudi's No.2 mobile operator, attributed its quarterly loss to a 235 million riyal increase in general and administrative expenses, plus an extra 56 million riyals in finance charges.

The company's quarterly revenue was 3.69 billion riyals, down 4.5 percent from a year earlier as interconnection income fell.

In February, the regulator slashed call interconnection charges. High fees benefit larger network operators, which have a bigger market share and fewer calls going "off-net" to other providers.

Mobily's third-quarter capital expenditure was 789 million riyals, down from 1.85 billion riyals.

The company's more parsimonious spending follows a series of shock earnings restatements.

In late July, Mobily altered its results for the 27 months to March 31, slashing total profits over the period by about 1.76 billion riyals in its latest attempt to resolve an accounting scandal. It then reported a second-quarter loss of 900.9 million riyals.

The company had attributed its woes to the premature booking of revenue from wholesale broadband leases and mobile promotional campaigns and it has also made further changes to the way it accounts for some contracts and the depreciation of property and equipment.

Mobily in February said the earnings changes had put it in breach of the terms of loans from various lenders. It remains in negotiations to re-set these covenants, Wednesday's statement said.

As such, these debts have been classified as current liabilities, which totaled 17.5 billion riyals as of Sept. 30.

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