Mobily suspends CEO pending accounting probe
| 24 November 2014
Saudi Arabian telecommunications operator Mobily has suspended its chief executive Kahlid al-Kaf pending an investigation into accounting errors that wiped SAR1.43 billion (US$381 million) of previously reported profit.
Earlier this month, the company, which is Saudi Arabia's second largest telco and 27.5% owned by the UAE's Etisalat, announced a restatement of its results – news that sent the company's share price tumbling. The share value of Mobily – formerly known as Etihad Etisalat Co – has fallen around 30% since the end of October.
On 5 November, Etisalat also reduced its profits by AED162 million ($44.65 million) following Mobily's results restatement. The Abu Dhabi-based telecommunications giant has called for an independent investigation.
Kaf, who has held the position of CEO since Mobily's inception in 2005, will be suspended until the company's audit committee completes its investigation, the company said. His deputy, Serkan Okandan – also Etisalat's chief financial officer – has been placed in temporary charge.
Mobily said an error in the timing of revenue recognition from a promotional programme had affected financial statements for 2013 and the first half of 2014. Mistakes related to the leasing of its fibre optic network also impacted results in the six months to June.
Its third-quarter profit dropped more than 70%.
Mobily provides a raft of wireless services, including free and pay-per-view mobile TV. In addition, it hopes to offer fixed line services through the acquisition of a stake in fixed line operator Etihad Atheeb.