Etihad Etisalat, or Mobily, yesterday appointed a former accountant as its new chief executive, filling the position left vacant following a string of accounting problems at Saudi Arabia’s second-biggest telecoms operator.
In an emailed statement, Mobily said that Ahmad Farroukh, the chief executive of the South African operator MTN until this month, had a background in finance and auditing at firms including KPMG and Deloitte.
Mobily’s financial troubles started late last year after the Saudi stock market regulator raised concerns over some of its accounting methods, leading to a restatement of its accounts for 2013 and 2014. Since then the company has been under investigation by the regulator and last month its shares were suspended pending the reissuing of its 2014 and first-quarter financial statements. Both are expected after the Eid break.
Mobily yesterday also hired a new chief financial officer.
Analysts said the appointments, six months after the former chief executive Khalid Al Khaf was removed, were a “step in the right direction”.
“This is a positive development, Mobily now will have a CEO, focusing solely on the company itself,” said Omar Maher, a telecoms analyst at the Cairo-based investment bank EFG-Hermes.
“Mobily said Mr Farroukh comes with experience in financial management and audit, which is what the company needs at the moment to get out of its problems. It is going to take time before we see some improvement reflected in the numbers, but it is a step in the right direction.”
Last month, Mobily said that its losses would widen again in 2014 by 830 million Saudi riyals (Dh812.8m) to 1.7 billion riyals. But the changes would also reduce its losses for the first quarter of this year by 207m riyals, leading to a net profit of 8m riyals for the period.
Etisalat, which owns a 27.5 per cent stake in Mobily, will also be affected by the revision for last year, costing the UAE operator Dh616m before federal royalty.
Separately, Zain Saudi, a subsidiary of Kuwait’s Zain Group, said it would appeal an order from Saudi Arabia’s Department of Zakat and Income Tax to pay 619m Saudi riyals of extra payments. The payment is for the years between 2009 and 2011.
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