Cellcom hurt by competition and interconnect cuts

14 Mar 2006

Israel’s leading mobile operator Cellcom said its net profit fell 22% in 2005 as a drop in interconnection charges and increased competition damaged revenues. Net profit for the year ending 31 December 2005 was ILS482.7 million, compared with ILS616.7 million in 2004, on the back of an 8.75% decrease in revenues to ILS5.11 billion; operating profit fell 27% to ILS702.2 million. The declines occurred despite steady growth in Cellcom’s subscriber base, which reached 2.6 million at the end of 2005, compared with 2.45 million at the end of 2004. The Ministry of Communications cut interconnect charges by 29% in March 2005 in a bid to boost competition in the market. The enforced reductions had a significant impact on average revenue per user (ARPU) which fell to ILS147 in 2005, compared with ILS171 the previous year. Despite the disappointing results Cellcom announced that it will distribute an ILS1.7 billion dividend over three months.

Israel, Cellcom