Paltel’s decision to postpone tax exemption dents net profit in H1 2012

14 Aug 2012

Fixed line incumbent Palestine Telecommunications Company (Paltel) has posted a 13.4% decline in net profit for the first half of 2012, Zawya reports, with the drop predominantly attributed to the devaluation of the Israeli shekel, coupled with the telco’s decision to postpone its 50% tax exemption for two years in response to a request from the state. Further, commenting on the impact of new tax legislation, Paltel chairman Sabih Masri, stated: ‘Throughout the years we have experienced strong growth in our net operating revenues and our operating revenues in core business operations in terms of mobile and data services. Although there has been a decline in our operating income this quarter, it is due to the impact of the revised Tax Law that was enforced [at the] beginning of this year, in addition to an economic slowdown in Palestine.’ In the six months to end-June 2012 Paltel recorded a net income of USD58 million, down from USD67 million in the same period a year earlier, on revenues that remained relatively unchanged, rising just 0.3% year-on-year to USD258 million (H1 2011: USD258 million). In terms of revenue breakdown, decline in turnover from its fixed line voice services continued, dropping by 9% against H1 2011, while media revenues fell by 11.8%, with these decline offset by a 0.6% and 68.8% increase in turnover from mobile and data services respectively.

At end-June 2012 the number of customers signed up to services offered by Paltel’s mobile subsidiary, Palestine Cellular Telecommunications Company (Palcel), stood at 2.61 million, up 12.9% y-o-y from 2.42 million at mid-2011. Pre-paid accesses continued to dominate, with 89.9% of the cellco’s customer base taking pay-as-you-go options, and the remaining 10.1% being post-paid. Blended average revenue per user (ARPU) for the period was USD13.2 per subscriber per month, down from USD14.7 in H1 2011. Fixed line broadband services meanwhile increased by 21.6% against the previous year to reach 167,000, with broadband ARPU standing at USD14.1, down from USD18.8. Fixed line voice connections grew 1.8% against end-June 2011, totalling 392,000 a year later, with Paltel noting that customer growth had been promoted by new acquisition campaigns.