Saudi’s Atheeb blames rival for losses, shares halted
Atheeb shares suspended after losses exceed bourse rules; Firm blames regulator, rival operator for losses
May 25, 2011 3:49 by p.deleon
Saudi Arabia’s Atheeb Telecom on Wednesday said unfair competition was to blame for mounting losses that led to its shares being suspended on the kingdom’s bourse.
The fixed line provider, which is 15 percent-owned by Bahrain Telecommunications Co , now has accumulated losses of 95 percent of its capital, according to a statement on the Saudi bourse website. Saudi market rules call for a suspension if losses exceed 75 percent.
“The company incurred in the recent period large losses of capital as a result of uncompetitive behaviour and practices from the controlling operator,” Atheeb chairman Prince Abdul-Aziz Ahmed bin Abdul-Aziz said in a statement to Reuters.
“The company was prevented from offering some services such as international calls and prepaid cards as stipulated in the license.”
He also blamed the telecoms regulator, the Communication and Information Technology Commission, saying a hearing against this body would be held on May 28.
In February, Atheeb filed a case against incumbent Saudi Telecom Co, claiming it had breached anti-monopoly laws. STC refuted the allegations.
Atheeb posted a loss of 575 million riyals ($153.3 million) for the financial year ended March 31, prompting the Capital Market Authority (CMA) to halt trading in the shares from Wednesday.
The suspension will be in place “until the company changes its situation”, the statement said.
Atheeb’s board has recommended cutting its capital to 400 million riyals from 1 billion riyals to wipe out some of its losses. This will likely be followed by a 600 million riyals rights issue, Abdul-Aziz added, with the founding shareholders pledging to cover 65 percent of the rights issue.
Atheeb’s shares ended Tuesday at 7.75 riyals. Their par value is 10 riyals and market rules prevent listed companies from issuing new shares at below this price.
The firm has six months to act, otherwise the CMA could delist Atheeb if it believes “the level of operations for the issuer or its assets do not justify continuous trading of securities on the bourse”.
Atheeb, which operates under the brand name GO, was awarded a Saudi fixed line services license in 2009. ($1=3.750 Saudi Arabian Riyal) (Reporting by Matt Smith and Erika Solomon in Dubai, Jason Benham and Marwa Rashad in Riyadh; Editing by Amran Abocar)