Zain Saudi gets regulator nod for second capital cut

JEDDAH: Zain Saudi has received regulatory approval to cut its capital for a second time, a move common in Saudi Arabia to offset accumulated losses, the telecom operator said.
The company, 37 percent owned by Kuwait’s Zain, has yet to make a quarterly profit since launching service in 2008, having paid about SR23 billion ($6.12 billion) for the Kingdom’s third mobile license.
The Capital Market Authority has approved Zain Saudi cutting its capital to 584 million shares from 1.08 billion shares, according to a bourse filing.
The reduction is still subject to shareholder approval.
The operator originally cut its capital in 2012, reducing its number of shares to 480 million from 1.4 billion, with each share carrying a par value of SR10.
Zain Saudi then launched a SR6 billion rights issue in which parent Zain was a major buyer, upping its stake from 25 percent.
Saudi bourse rules require listed companies to cut their capital when accumulated losses reach a certain level. The move is largely cosmetic, with the share price adjusted accordingly.
Earlier this month Zain Saudi reported a fourth-quarter loss of SR306 million, which was less than prior-year’s loss of SR462.3 million and best analyst expectations.