Saudi Telco Mobily Q3 Net Profit Plunges 71%

Saudi Arabia’s Mobily reported a 71 per cent tumble in third-quarter net profit on Monday and also restated its profits for the preceding 18 months due to what it said was a timing error in recognising revenue from a promotional campaign.

Mobily, also called Etihad Etisalat and 28 per cent owned by the United Arab Emirates’ Etisalat, had delayed publishing its earnings on Thursday and suspended trade in its shares as it sought more time to review unspecified “significant matters” in its financial statements.

Mobily made a net profit of SAR472 million ($126 million) in the three months to Sept. 30, down from SAR1.63 billion in the prior-year period, it said in a bourse filing on Monday.

Analysts polled by Reuters had on average forecast Mobily, which competes with the Gulf’s biggest operator Saudi Telecom Co and Zain Saudi, would make a quarterly profit of SAR1.67 billion.

Mobily, the Kingdom’s No.2 telecom operator by subscribers, said the profit drop was because its third-quarter earnings in 2013 were boosted by non-recurring wholesale revenue that was not repeated in the same period of 2014.

Also, depreciation, sales, marketing and general expenses rose year-on-year. These included extra provisions of SAR207 million for bad debts, slow-moving inventory and goodwill impairments on its investments.

Mobily also restated its 2013 net profit as SAR5.94 billion ($1.58 billion), down from SAR6.68 billion previously, which it said was due to an error in the timing of booking revenue from a promotional campaign.

This mistake also required Mobily to restate its net profits for the first two quarters of 2014.

It raised its first-quarter profit to SAR1.61 billion from SAR1.4 billion previously, but second-quarter profit fell to SAR412 million from SAR1.31 billion.

Mobily’s second-quarter profit was further impacted by it restating “capital lease contract revenues”, it said.