Increased competition impacts on revenues, net profit for Partner in 3Q12

22 Nov 2012

Israel’s Partner Communications has revealed a 36% year-on-year slump in net profit for the three months ended 30 September 2012, on the back of revenues that fell by 25% against the same period a year earlier.

In the company’s third fiscal quarter it generated a total turnover of ILS1.315 billion (USD336 million), down from ILS1.751 million in the year-ago period, while service revenues fell by 16% y-o-y to ILS1.150 billion. In the wireless voice sector, service revenues reportedly fell by 17% to ILS892 million, with Partner noting that such a decline ‘largely reflected the continuing price erosion of cellular services’ which had been driven by the introduction of a number of new competitors in the first half of 2012. Further, it also pointed to continued declines in revenues from roaming services, while it said a smaller post-paid subscriber base – down 6% on an average basis over the year – had impacted on turnover. In the fixed line sector meanwhile, service revenues totalled ILS296 million, representing a 13% y-o-y decline, predominantly as a result of lower subscriber numbers, coupled with price erosions.

EBITDA in 3Q 2012 stood at ILS401 million, down 24% from ILS529 million in the corresponding quarter of 2011, with the cellular segment contributing EBITDA of ILS328 million, down from ILS447 million in 3Q11. Net profit for the period under review stood at ILS110 million, down from ILS172 million in the third quarter of 2011.

In operational terms, at the end of September 2012 Partner Communications’ mobile subscriber base stood at 3.04 million, down by around 56,000 compared to the same date in 2011, with contract customers falling by 53,000 to 2.15 million and pre-paid accesses down by 3,000 to around 900,000. Quarterly churn rate for 3Q12 was 10.4% (up from 7.2% in 3Q11 and 8.9% in 2Q12), with the higher rate attributed to customers switching to new alternative providers which had entered the market with ‘aggressive offerings’. In terms of market share, Partner estimated that at end-September 2012 it accounted for around 30% of Israel’s mobile subscribers, down from 31% three months earlier. Monthly average revenue per user (ARPU) meanwhile was ILS97, down from ILS111 in 3Q11, while monthly average minutes of use (MOU) rose from 410 minutes to 457 minutes.

In the fixed line arena, the total number of active fixed voice lines (including those attributed to Partner subsidiary 012 Smile Telecom) was approximately 282,000 at end-September 2012, down from 295,000 a year earlier. Fixed broadband accesses meanwhile totalled 594,000 at the end of the quarter, down from 594,000 at end-September 2011.

Commenting on the fiscal performance, Ziv Leitman, Partner’s CFO, noted: ‘The financial results of the third quarter compared to the previous quarter reflect the impact of increasing competition, on the one hand, and the continued impact of the efficiency measures implemented by the company during the past year and the seasonality effects, on the other hand.’

Israel, 012 Smile Telecom, Partner Communications Company