Cellcom revenues, net income continue to decline amid high levels of competition

13 Nov 2013

Israel’s Cellcom has published its financial results for the three months ended 30 September 2013, reporting a continued decline in revenues as a result of price erosion in the wireless sector stemming from high levels of competition.

In the quarter under review Cellcom generated a total turnover of ILS1.224 billion (USD346.1 million), down from ILS1.448 billion, with revenues excluding those from fixed line unit NetVision standing at ILS994 million. Services revenues in 3Q13 totalled ILS1.013 million (ILS789 million of which was attributed to Cellcom’s mobile operations), down from ILS1.148 million in the same period a year earlier. Operating income for the third quarter of 2013 totalled ILS173 million, representing a 27.6% year-on-year decline from ILS239 million in 3Q12, while EBITDA was ILS347 million, down by 19.3% from the ILS430 million recorded a year earlier. Net income in 3Q13, meanwhile, stood at ILS52 million, less than half of the ILS124 million recorded in the same period of 2012, with Cellcom attributing the decline to ‘the erosion in the price of cellular services during the past year and the significant decrease in equipment revenues, as well as the increase in financing expenses’.

In operational terms, at the end of September 2013 Cellcom’s mobile subscriber base totalled 3.156 million, up from 3.151 million at the end of the previous quarter, but down from 3.338 million a year earlier. Churn in the third quarter of 2013 was 8.9%, up marginally from 8.6% in 3Q12, with the rate said to have been effected by the intensified competition in the sector. Average monthly cellular minutes of use (MOU) per subscriber was 461 minutes in the period under review, up from 399 minutes in the third quarter of 2012, with the increase said to have primarily been the result of customers switching to tariffs which included unlimited calls. Average revenue per user (ARPU), meanwhile, was ILS79.6 in 3Q12, down from ILS86.7 a year earlier.

Commenting on the quarterly performance, Cellcom CEO Nir Sztern said: ‘Even in this quarter of intensified competition, the company continues to present improvement in its operational results compared with the previous quarter. EBITDA, operating profit and free cash flow increased compared with the previous quarter and service revenues were maintained at a similar level as in the previous quarter. This is the second consecutive quarter of increase in EBITDA after four quarters of decrease. The improved results are the result of our continued efficiency measures and a seasonal increase in revenues from roaming services, which were partially offset by the ongoing price erosion.’

Israel, Cellcom