Increased competition and new regulation impacts Cellcom’s Q2 2011 results

8 Aug 2011

Israel’s largest mobile network operator in terms of subscribers, Cellcom, has revealed a slump in both net income and turnover from mobile voice services in the wake of increased mobile termination rates introduced in January 2011. Commenting on the cellco’s performance in the three months to end-June 2011, Amos Shapira, Cellcom’s chief executive officer, said: ‘In the second quarter of 2011, we saw a strong impact of the regulatory changes that came into effect at the beginning of the year and impacted our results in the magnitude previously expected and reported. At the same time, we took additional measures in the fields of customer service and pricing plans, to better address the current market conditions.’

In the three-months to 30 June 2011 Cellcom posted total revenues of ILS1.589 million (USD465 million), down 6% year-on-year, while turnover from mobile voice services tumbled 24.5% against Q2 2010, down to ILS1.331 million, as a result of the regulatory changes and increased competition in the sector. Earnings before interest, tax, depreciation and amortisation (EBITDA) meanwhile stood at ILS565 million, down 17.2% against the same period a year earlier, while net income fell by 25.2% to ILS244 million.

In operational terms, at the end of June 2011 Cellcom’s mobile voice subscriber base stood at around 3.366 million, up from 3.341 million a year earlier, of which around 1.22 million, representing 36% of the total customer base, had signed up to the operator’s 3G services.

Israel, Cellcom