Etihad Etisalat (Mobily), Saudi Arabia’s second largest mobile operator by subscribers, has announced that its net profit for the three months to 30 June 2014 will decrease by SAR338.7 million (USD90.31 million), as a result of the cancellation of an Indefeasible Rights of Use (IRU) agreement signed with domestic fixed line operator Etihad Atheeb Telecom (GO Telecom) in end-March 2014. As previously reported by TeleGeography’s CommsUpdate, Mobily’s subsidiary Bayanat Al-Oula agreed to grant GO Telecom the rights to use its 50,000 fibre-optic access points, in order to provide broadband access and fixed telephony services to residential users and private businesses. However, in a surprise announcement last week, GO Telecom said that the deal has been terminated due to ‘some technical difficulties and logistics’, while also revealing that negotiations between the two sides in regards to Bayanat Al-Oula’s acquisition of GO Telecom have been cancelled as well.
Bayanat Al-Oula inked the agreement with the main shareholders of the fixed line operator – Atheeb Trading Company, Batelco of Bahrain and Al-Nahla Trading Company – on 20 August 2013. By the end of April this year, Bayanat Al-Oula had successfully completed its ‘commercial, financial, technical and legal due diligence’ for the deal, and the two parties were in the process of structuring the proposed acquisition; GO Telecom was seeking shareholder approval to write off up to 100% of its accumulated losses by way of cancelling shares in order to decrease its capital, while Bayanat would thereafter accumulate shares representing 20% of GO Telecom’s total share capital by acquiring the founding shareholders subscription rights. Atheeb Trading Company holds a 25% stake in the telco, while Batelco of Bahrain and Al-Nahla Trading Company own 15% and 13.7%, respectively; the rest of the share capital is publicly owned.