DUBAI: Saudi Arabia’s No.2 telecommunications operator Mobily restated a year and a half of earnings due to accounting errors yesterday and posted a shock plunge in profit, months before the kingdom is due to open its stock market to direct foreign investment.
A Reuters survey of a dozen international fund managers early this year found Saudi Arabia ranked highest among the five main Middle Eastern exchanges for full and accurate disclosure of corporate information, and second highest for enforcement of rules against illicit trade. But Mobily’s surprise move — it cut its 2013 profit by SR740m ($197.28 million) and profit for the first-half of 2014 by 688 million riyals due to what it said were accounting errors — may give potential foreign investors pause for thought as well as riling existing shareholders.
“This may be a temporary glitch as Mobily has actively engaged analysts and the investor community in the past,” said Asim Bukhtiar, head of research at Riyad Capital.
“It might take a couple of quarters to shake off this misstep and the company may need to do some damage control.
Foreign investor sentiment may be affected depending on the root cause for restatement and emergence of more details on the quarterly results.”
Mobily, also called Etihad Etisalat, and 28 percent owned by the United Arab Emirates’ Etisalat, had reported surging profit after it ended Saudi Telecom Co’s (STC) monopoly in 2005.
A record annual profit last year — now amended to be below that of 2012 — helped Mobily’s shares reach an eight-year high of SR98.25 in May, but investors became jittery last week after the company failed to report its third-quarter earnings.Reuters
