Etihad Etisalat loss widens to Dh3.3bn, expects to break covenant on loans

The Saudi Arabian telecoms company, which is under investigation by the market regulator for suspected rule violations, has re-stated its fourth quarter loss.

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Saudi Arabia’s Etihad Etisalat, the telecoms company under investigation by the market regulator for suspected rule violations, restated its fourth-quarter loss and said it expected to break a covenant on its loans.

The Riyadh-based company’s fourth-quarter net loss widened to 3.4 billion riyals (Dh3.33bn), compared with a previously announced figure of 2.28 billion riyals, it said in a statement to the stock exchange today. Mobily, as the company is known, also expects to breach the net debt-to-earnings before interest, taxes, depreciation and amortization covenant on its long-term financing.

Mobily “does not expect difficulties with respect to future financing repayments and costs,” it said in the statement. “Management is confident that discussions with the lenders to reset the net debt-to-Ebitda financial covenant will be successful during the second quarter of year 2015.”

HSBC Holdings is advising Mobily on talks with its lenders after violating the debt-to-Ebitda agreement on about 10 billion riyals of loans, three people familiar with matter told Bloomberg last week. The Capital Market Authority announced on February 26 its investigating the company for suspected market violation, a day after Mobily’s shares were suspended from trading as the CMA sought an explanation for a discrepancy in its 2014 interim results.

The phone operator reported a 2014 loss of 913 million riyals in a statement on February 25, after posting a preliminary profit of 220 million riyals on January 21.

The CMA started procedures in November to determine if Mobily violated rules after the company sought a trading halt to provide more time for its audit committee to work on the results. Mobily has since lost about $9 billion of its market value.

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