Saudi regulator halts Etihad Atheeb trading

Etihad Atheeb was yesterday banned from trade after its loss widened and its shares slumped.

Saudi Arabia's market regulator yesterday suspended trading of shares in Etihad Atheeb Telecom because of the company's overall losses. The kingdom's Capital Market Authority (CMA)took the action after Etihad Atheeb said its full-year loss widened to 575.1 million riyals from 379m riyals a year earlier, according to a statement on the Saudi bourse website.

This represents an accumulated loss of 95 per cent of its capital. Saudi market rules call for a suspension if losses exceed 75 per cent. Trading in the company's stock was suspended for six months as of yesterday, said the CMA, long considered one of the region's most active regulators. Etihad Atheeb is a predominantly fixed-line phone operator and has had to compete with a wider suite of services on offer from competitors including Saudi Telecom, which is the largest listed telecommunications operator in the Middle East, and the UAE's Etisalat.

But analysts said the losses were not surprising, considering Etihad Atheeb's narrow business model.

"It was relying on these [fixed-line] operations and those are stale markets," said Asma Dakkak, an analyst at NCB Capital in Riyadh.

The shares dropped 1.9 per cent to 7.75 riyals before the bourse's announcements, giving the company a market value of 775m riyals. The stock has shed almost 50 per cent of its value since the start of the year. Etihad Atheeb, which is 15 per cent owned by Bahrain Telecommunications Company, was awarded a fixed-services licence in 2009.

Speaking to Reuters yesterday, Prince Abdulaziz Ahmad Abdulaziz Al Saud, the chairman of Etihad Atheeb, contended that the company had incurred its large losses as a result of "uncompetitive behaviour and practices from the controlling operator", a reference to Saudi Telecom. He said his company had been prevented from offering services such as international calls and prepaid cards.

In February, Etihad Atheeb filed a lawsuit against Saudi Telecom involving similar allegations. Saudi Telecom denied the claims. A hearing is scheduled for Saturday.