Saudi Arabia’s second-biggest telecoms operator Etihad Etisalat, or Mobily, says it is in talks with lenders to reset some financial covenants.
The company said in February that it hoped to complete these talks by the end of the second quarter, which ended yesterday.
“These discussions are still ongoing, and results will be announced immediately after completion,” Mobily said yesterday in a filing to the Saudi stock market.
In March, when Mobily reissued its financial statement for 2014 and restated its profit to a net loss, some covenants were breached with lenders. The company stated at the time that the breaches resulted in some 16 billion Saudi riyals(Dh15.67bn) of loans being classified as current liabilities.
In an attempt to fix its financial woes, it was reported in May that Mobily was looking to sell its telecom towers to raise between $1.5bn and $2bn in cash.
But analysts say that talking to lenders is better than a sale of infrastructure assets.
“I would rather see them negotiating with banks,” said Dipanjan Ray, the senior research analyst at Saudi Fransi Capital. “They will not get a good valuation for their towers. Buyers will want to go with a lower price.”
Separately Mobily said on Sunday that it would reissue the financial statements for 2014 and 2013 once an external audit is completed.
Mobily has been under investigation by Saudi Arabia’s Capital Market Authority (CMA) since late last year.
The company’s shares have been suspended from trading since June 8, after the CMA team raised concerns over the accounting approach used in some of Mobily’s contracts.
A spokesman for the Saudi market regulator told The National on Monday that Mobily’s shares would remain suspended pending further investigation into its accounting irregularities by the CMA.
Etisalat, which owns a 27.5 per cent stake in Mobily, said it would take a hit of Dh616 million before federal royalty as a result of Mobily’s accounting changes for last year and its net profit this year would also be affected by about Dh204m because of the increased provisions.
selgazzar@thenational.ae
