Riyadh-Mubasher: AlJazira Capital has assigned Mobily an 'Underweight' rating, with a price target of SAR 32.1, based on the telecom operator's current financial performance.

Mobily reported net losses of SAR 199 million in the first quarter of 2015, versus net earnings of SAR 1.6 million in the same period a year ago, due to high depreciation expenses.

The company’s performance in Q1 showed slight signs of improvement compared with the previous quarter, as margins increased.

EBITDA margins improved from -152% to 25%, while EBIT margins improved from -113% to -3%.

Mobily is facing several revenue-related issues, such as a potential decrease in market share and falling average revenue per user (ARPU), as well as intensive competition and a decrease in the number of hajj and umrah pilgrims to Saudi Arabia.