Israeli mobile duo report third-quarter results

10 Nov 2010

Israel’s first- and second-placed mobile network operators, Cellcom and Partner Communications respectively, have released financial results for the three-month period ended 30 September 2010.

The market’s largest cellco by subscribers, Cellcom posted a 14.9% year-on-year increase in net profit, which rose to ILS332 million (USD91 million), while revenues increased 1.1% against the same period a year earlier to ILS1.509 billion; the operator attributed the higher turnover in part to higher sales of smartphones in the quarter. Earnings before interest, tax, depreciation and amortisation (EBITDA) for the three-month period was ILS716 million, up from ILS655 million in 3Q09, representing a 9.3% annual rise. While subscriber numbers, both 2G and 3G, continued to climb in the quarter, Cellcom did note that average revenue per user (ARPU) had fallen to ILS145.9, down from ILS150.4, a drop which it said stemmed from fewer working days in the three-month period when compared to the year-ago quarter. Commenting on the results, Cellcom CEO Amos Shapira noted: ‘This has been a strong quarter … during which we presented growth across all of our financial parameters including, among others, revenues, EBITDA, operating income and net income, despite the ongoing airtime price erosion. These positive results are attributable to our efforts in generating new revenue sources while continuing with efficiency measures.’

Partner meanwhile, saw revenues increase by 4.8% year-on-year to ILS1.65 billion, while EBITDA was up 12.5% compared to the same period in 2009 at ILS641 million and net profit stood at ILS309 million, up 17.5% in the year. In line with reporting its recent financial data Partner also outlined possible strategies to counter the impact of an upcoming reduction in interconnection fees; measures the cellco said it could consider included ‘cost-cutting, operational efficiency and repackaging [its] product offerings’. In addition, Partner’s recent move to acquire Israeli fixed line operator 012 Smile.Communications is expected to boost results, with the cellco saying the acquisition would increase EBITDA by around ILS350 million per year in the medium term. Yacov Gelbard, Partner CEO said of the cellco’s 3Q10 performance: ‘Partner continues to achieve excellent financial results. However, we are not taking our achievements for granted and that is why we took two significant steps this quarter to ensure that our profitability continues to grow in the coming years: first, by signing an agreement with Ericsson for the upgrade of our network, and second, by entering into an agreement for the purchase of 012 Smile, a leading Israeli operator of international telecommunication services, internet services and local fixed line telecommunication services.’

At end-September 2010 Cellcom remained Israel’s largest cellco by subscribers, reporting a 3.6% increase in customer numbers y-o-y to reach 3.376 million, while its 3G customer numbers rose to 1.114 million. Partner by comparison saw a 4.2% annual increase in its customer base to 3.133 million, although it reported higher sign-ups for third-generation services, 1.491 million.

Israel, Cellcom, Partner Communications Company