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Mobily's CEO removed after accounting probe

[DUBAI] Saudi Arabia's Mobily has removed chief executive Khalid al-Kaf, who had been suspended since November pending an investigation into accounting practices at the telecommunications operator, it said on Wednesday.

Mobily, formally called Etihad Etisalat, announced Mr Kaf's suspension on Nov 23. Earlier that month, the company slashed its profits for 2013 and the first half of 2014 by a combined 1.43 billion riyals ($381 million) because of what it said were accounting errors.

The earnings restatement prompted the bourse regulator, the Capital Market Authority, to launch an investigation into Mobily, while the company itself began its own probe as it suspended Kaf.

Mobily put his deputy Serkan Okandan in charge on an acting basis. Mr Okandan is also chief financial officer of Abu Dhabi-listed Etisalat, which owns 27.5 per cent of Mobily. He has a mandate to remain at the helm until at least the end of March.

Saudi Arabia's second biggest mobile operator said Mr Kaf, who had worked for Etisalat for 19 years before becoming Mobily's CEO in 2005, had offered to resign on Feb 21. The statement did not say whether Mobily had accepted Mr Kaf's resignation, merely that it discharged him from his position on Feb 24.

Mobily said in a separate statement that it would not pay a dividend for the fourth quarter of 2014, for which it reported a loss of 2.28 billion riyals.

This is the second successive quarter for which it will not pay a dividend, and analysts are now gloomy about the size of future payouts by the company, which was long considered a top pick among retail and institutional investors.

HSBC has in recent days slashed its price target for Mobily shares to 38 riyals from 60 riyals, with a neutral rating. The stock is now at 35.30 riyals, down 64 per cent from last May's eight-year high, wiping off about $13 billion from its market value.

The firm on Tuesday announced its chairman Abdulaziz al-Saghyir had resigned with immediate effect, citing health reasons.