Zain Saudi Arabia has announced that its board has recommended the convening of an Extraordinary General Meeting (EGM) to seek the approval for a reduction in the company’s capital from SAR 10,801,000,000 (US$2.879 billion) to SAR 5,837,291,750, resulting in a reduction of 45.96 per cent. The total number of shares after the reduction is set to number 583,729,175 as compared to 1,080,100,000 shares currently. The capital reduction will involve cancelling one Zain Saudi Arabia share for every 2.18 shares prior to the reduction.

The principal reason for the proposed capital reduction is to write-off all of the company’s accumulated losses up to September 30, 2014.

The market value of Zain Saudi Arabia will not change as a result of the capital reduction, although the number of shares held by each shareholder will reduce. Therefore, the opening price of the shares on Tadawul (the Saudi Stock Market) will be calculated by multiplying the previous closing price by 1.85. This change will occur on the first trading day after the capital reduction is approved by shareholders at the EGM.

The proposed capital reduction is subject to obtaining all necessary regulatory and shareholder approvals. In the event that shareholders of the company approve the capital reduction at the EGM, the capital reduction will apply to all shareholders registered in the company register on Tadawul as at the close of trading on the day of the EGM.

Since its previous capital restructuring in 2012, Zain Saudi Arabia has experienced some unanticipated challenges to its operating environment. They have included aspects that are linked to the telecommunications sector in the kingdom, such as extremely competitive pricing on calls in the market and committing to new regulatory restrictions on prepaid lines. However the company successfully improved its financial indicators in the first nine months of 2014, reducing its net losses by 26 per cent compared to the same period in 2012 and by 19 per cent compared to the same period in 2013.

Airtel Uganda’s managing director, Tom Gutjahr, does not think that the country can sustain all of its seven operators, which fight over a market with a population of 35 million.

“It’s an absolute illusion to believe that four, five, six mobile operators can ever be profitable in one country,” Gutjahr told Reuters, adding that, “it’s unlikely that the smaller companies will get profitable any time soon.”

Although the sector expanded by 11 per cent in the 2012/13 fiscal year, officials believe intense competition has forced operators to lower prices to attract customers, causing margins to become thin – thereby seeding the ground for more mergers.

Gutjahr has said that Airtel, which has experienced “some growth” this year and has spent around US$100 million to expand its infrastructure, will consider any other interesting offers that come its way.

According to GSMA Intelligence, there are 21.86 million mobile connections in the country, where MTN dominates the market with 10.8 million, nearly half of the total, while Airtel is in second place with 8.47 million. It achieved this position after buying Warid Uganda last year.

Uganda Telecom comes in at number three with 2.7 million connections.

Another company to be sold off was Orange Uganda, which was bought by Africell earlier this year, although compared to giants like MTN; Africell is a small-scale player, with around 800,000 connections.

However, Gutjahr does believe that there is potential for growth opportunities because almost half of Uganda’s population is under 15.

Airtel has inked a deal to sell more than 4,800 masts in Nigeria to American Tower, for an unspecified sum.

Under the terms of the agreement, Airtel will be the anchor tenant for the towers over a ten-year period. The acquisition is expected to close in the first half of 2015, subject to conditions and approvals.

In a statement, the companies said that the deal will enable the operator to “focus on its core business and customers”, while reducing its debt and cutting capital expenditure on passive infrastructure in the African market.

In September, Airtel announced a deal to sell 3,500 towers in six African markets to Eaton Towers, again with the operator signing a ten-year lease for the infrastructure.

Mobily, Saudi Arabia’s second-largest telco has suspended its chief executive Khalid al-Kaf and put his deputy Serkan Okandan in temporary charge pending an investigation into accounting errors.

Earlier this month the company announced a restatement of its results which it blamed on accounting errors, wiping out SAR 1.43 billion (US$381 million) of previously reported profits and sending its share price tumbling.

Al-Kaf will be suspended until Mobily’s audit committee completes its investigation into these errors, the company said in a statement.

Al-Kaf was appointed CEO of Mobily in 2005 after 19 years at Etisalat, which owns 27.5 percent of Mobily.

On November 5 Etisalat cut its own profits by AED162 million (US$44 million) following Mobily’s results restatement.

Okandan, Etisalat’s CFO, was appointed as deputy CEO of Mobily in October, while Etisalat’s chief executive Ahmad Julfar is also a director of Mobily and chairman of its Risk Management Committee.

Mobily’s share price has fallen 36 percent since late October, when rumours began to circulate that something was amiss with the company’s results, wiping out SAR6.56 billion from the value of Etisalat’s stake, according to Reuters calculations.

Mobily’s annual profits more than quadrupled from 2006 to 2009 to reach SAR3 billion that year.

The telco reported a record annual profit in 2013 of SAR6.68 billion, up 11 per cent from the previous year, although that result has now been cut in the restatement.

Vodafone CEO Vittorio Colao said certain non-core assets would be up for sale at the right price, but is more ambiguous about the value or otherwise of operators buying content to fill out their 4G or quad-play offerings.

The operator would be open to offloading operations in Australia, the Czech Republic, and Hungary if the right deal comes along, although the operator is not under any pressure to sell, said Colao.

Colao was speaking at the Morgan Stanley Technology Media and Telecoms Conference in Barcelona.

The Vodafone CEO also returned to a favourite theme during his presentation — the question of whether operators should acquire exclusive use of media content for their 4G networks, or as part of their quad-play strategies.

Colao is unconvinced that owning exclusive content makes sense from a financial perspective but relying on a distribution-type arrangement with the actual owner carries a risk.