Saudi Arabia-based operator Mobily has suspended CEO Khalid Omar Al Kaf and put his deputy Serkan Okandan in temporary charge while it investigates accounting errors that forced it to restate its results earlier this month.
The suspension, which took effect from Nov. 21, has been imposed to give the company time to get to the bottom of a series of errors that ultimately led to about $5 billion (€4 billion) being erased from its market value following a stock market sell-off, according to Bloomberg.
On Nov. 3, the company said mistakes made in the timing of revenue recognition from a promotional programme affected its financial statements for 2013 and the first half of 2014. Mistakes related to the leasing of its fibre-optic communication network also affected results in the six months to June 2014.
Mobily was therefore forced to restate its net income for all of these previously reported periods, wiping out SAR1.43 billion (€307 million/$381 million) of previously reported profits, according to Reuters.
The news agency noted that Kaf became CEO of Mobily in 2005 after working for 19 years at UAE-based Etisalat, which owns 27.5 per cent of Mobily. Etisalat was also forced to cut its own profits by AED162 million (€36 million/$44 million) following Mobily's results restatement, and said Mobily's restated profits will be reflected in its fourth-quarter financial results.
Some financial analysts appear to be expecting a new CEO to be appointed at Mobily following the investigation:
"As a major shareholder Etisalat wants to make sure it has some influence over cleaning things up, although ultimately I see this as a temporary management change before a new CEO is found," Asim Bukhtiar, vice president and head of research at Riyad Capital, told Bloomberg. "It is hard to say how long this will take for the company to get over but at least the share price now seems to be stabilizing around 56 riyals."
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