Saudi Arabia's Zain is testing the patience of its investors.
The telecommunications operator is launching a 6 billion riyal rights issue tomorrow, offering additional shares to existing investors for 10 riyals each versus its current trading price of about 15 riyals.
Zain has been in the red since its inception in 2008, having paid a high price for its mobile licence to operate in the kingdom. It is yet to post a single quarterly profit.
Zain's stock price tumbled 9.6 per cent yesterday to 14.55 riyals, bringing its losses since inception to almost 50 per cent, a sign that investors have little hope that the operator with debt obligations of 22.9 billion riyals as of March 31 will be able to turn around.
"Zain has not been profitable, and the capital is required to penetrate a high-exposure market, while facing tough competition from rivals Mobily and Saudi Telecom," said Marwan Shurrab, the vice president and chief trader at the asset manager Gulfmena Investments in Dubai.
In September the regional operators Bahrain Telecommunications and Kingdom Holding cancelled a US$950 million bid for a 25 per cent stake in Zain Saudi, which is currently held by the larger Zain Group.
Zain Group's business in Iraq is also in trouble.
The company has been fined $12,864 daily since September 11 for failing to list on the Iraq Stock Exchange, as was required by the government when it acquired the licence to operate in the country. The two other operators, Asiacell and Korek, have also been fined.
"The hearing committee was of the view that all operators had enough time, more than four years, to prepare for the IPO, so there's no excuse," Ahmed Alomary, a commissioner at the communications regulator in Iraq, told Reuters. Zain was fined more than the other operators because it had more subscribers, said Mr Alomary.