Partner posts revenue slump amid price erosion and lower handset sales

15 Aug 2012

Israel’s Partner Communications, which offers services under the Orange banner, has released its financial results for the three months ended 30 June 2012, revealing a 24% slump in revenues, with the decline driven by price erosion in the cellular sector and a ‘significant reduction’ in the number of handsets sold. For the operator’s fiscal second quarter, it reported total turnover of ILS1.428 billion (USD364 million), down from ILS1.887 million a year earlier, with service revenues falling 11% year-on-year to ILS1.213 billion. With cellular service revenue standing at ILS949 million (down 12% y-o-y), Partner noted that the decline primarily reflected price erosion for both voice and data services in the wake of new operators entering the sector. Service revenues for the fixed line segment meanwhile were 8% lower than a year earlier at ILS300 million, as customer numbers continued to fall. Turnover from equipment sales fell by more almost 60% to ILS215 million from ILSD527 million in 2Q11, with Partner citing the main factors behind the slump as including ‘strengthened competition for handset sales, increasingly stringent payment terms, a general decrease in market demand reflecting the high proportion of smartphones sold last year, and an end to the use of special discounts for customers with new handsets’.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the three-month period stood at ILS423 million, a 28% y-o-y decline, while the company recorded an operating profit of ILS245 million in 2Q12, compared to ILS377 million a year earlier. Net profit for the quarter stood at ILS120 million, down more than 40% against the same period in 2011.

At end-June 2012 Partner’s mobile subscribers base stood at 3.098 million, down from 3.147 million three months earlier, with an increase in pre-paid accesses (up 6,000 quarter-on-quarter) failing to offset the loss of approximately 55,000 post-paid customers (in the quarter). Partner’s pre-paid accesses now account for 71% of its total subscribers. Quarterly churn in Q2 2012 was 8.9% compared with 6.5% in the same period of 2011, and up from 8.0% in 1Q12, with the increase attributed to ‘the impact on post-paid subscribers of the two new cellular operators which entered the market during the second quarter with aggressive offerings’. Average revenue per user (ARPU) for Partner’s cellular subscribers in Q2 2012 was ILS101, down 10% from ILS112 in the year-ago period, despite average minutes of use (MOU) per subscriber rising to 437 minutes from 396 minutes; Partner did note thought that the increase in MOU reflected, in part, the higher proportion of customers taking tariffs which include large or unlimited quantities of minutes. The total number of active fixed lines (including 012 Smile Telecom), meanwhile, was approximately 281,000 at the end of June 2012, down from 292,000 a year earlier, while fixed broadband accesses numbered around 609,000, down from 632,000.

Israel, 012 Smile Telecom, Partner Communications Company