Etihad Etisalat (Mobily), Saudi Arabia’s second largest mobile operator by subscribers, has announced its financial results for the three months ended 30 September 2014 (Q3 2014), reporting a 71.08% slump in net profit to SAR472 million (USD125.81 million), down from SAR1.632 billion in the corresponding period of 2013. According to a press release on the Saudi Stock Exchange’s (Tadawul’s) website, the negative development was mainly attributed to the cancellation of the Indefeasible Right of Use (IRU) agreement signed with domestic fixed line operator Etihad Atheeb Telecom (GO Telecom) in March 2014, in addition to an ‘increase in depreciation, sales and marketing expenses, and growth in general and administrative expenses due to the increase in provisions amounting to SAR207 million for bad debts, slow moving inventory and impairment of goodwill resulted from the company investments.’ Further, the operator has stated that following a change in the timing of revenue recognition in respect to a promotional programme, net income for previous quarters has had to be restated; net income for the first quarter of 2014 (ended 31 March 2014) was restated from SAR1.400 billion to SAR1.612 billion, while net income for Q2 2014 dropped to SAR412 million, down from SAR1.312 billion previously. In the three months to end-September 2014 revenues decreased to SAR4.159 billion, down by 15% year-on-year, while gross profit was down by 25% to SAR2.485 billion from SAR3.292 billion in 3Q13. Earnings before interest, tax, depreciation and amortisation (EBITDA) for the third quarter of 2014 amounted to SAR1.305 billion, an 80.8% slump on an annualised basis, when compared to the SAR2.359 billion reported in Q3 2013.
As previously reported by TeleGeography’s CommsUpdate, in June the Saudi operator announced that its net profit would decline in the three months to 30 June, as a result of the cancellation of the IRU agreement with GO Telecom. Towards the end of October 2014 meanwhile, Mobily requested a temporary suspension of the trading of its shares from the Capital Markets Authority (CMA) due to a meeting of its audit committee which would ‘consider significant matters relating to its financial statements’.