Cellcom revenues fall as increased competition forces lower tariffs

14 Nov 2012

Israel’s largest cellco by subscribers, Cellcom, has released its financial results for the three months ended 30 September 2012, reporting a 13% year-on-year decline in revenues, resulting from revised tariffs introduced amid heightened competition in the sector. For the quarter under review, Cellcom generated a consolidated turnover (including the contribution from fixed line provider Netvision) of ILS1.448 billion (USD370 million), down from ILS1.665 billion in the same period of 2011. Of that total, Cellcom’s mobile operations accounted for ILS1.187 billion, representing an almost 25% year-on-year drop against the corresponding quarter of 2011, with mobile service revenues totalling ILS902 million, down from ILS1.101 billion. Netvision, by comparison, recorded a total turnover of ILS291 million in 3Q12, with fixed line service revenues amounting to ILS276 million; no comparable figures for 3Q11 were available as Cellcom only consolidated the fixed operator in September 2011.

Operating profit for the third quarter of 2012 stood at ILS239 million, 31.5% lower than in the same period a year earlier, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 19.9% to ILS430 million. Net income for the quarter was ILS124 million, 37.7% lower than in the corresponding period of 2011.

Mobile subscriber numbers rose slightly against the end of the previous quarter at 3.338 million, with Cellcom adding around 5,000 new customers in the third quarter, but this total represented a 1.6% year-on-year decline. In terms of third-generation mobile subscribers, at end-September 2012 Cellcom said it had 1.449 million such customers, representing 43.4% of the total base, and up 37.8% against end-September 2011. Quarterly churn was 8.6% in 3Q12, compared to 5.7% a year earlier, however, with the Cellcom claiming the increase was the result of increased competition following the launch of several new operators in recent months.

Commenting on the results, Nir Sztern, Chief Executive Officer, said, ‘We are pleased with the implementation of the company’s strategy: the merger of Netvision, operational excellence, and our strengthening as a communications group. The company has taken aggressive efficiency measures, which led, so far, to an annual savings run rate of approximately ILS480 million, while focusing on operational excellence. It is our intention to continue the efficiency measures in the fourth quarter this year, as well as in 2013.’

Israel, Cellcom, NetVision