Cellcom records 62% drop in net profit in 3Q15

18 Nov 2015

Israeli mobile communications provider Cellcom reported lower revenue, EBITDA and net profit in the quarter ended 30 September 2015, once again citing the impact of competition in the domestic wireless arena for the negative development.

In the third quarter of this year Cellcom generated a total turnover of ILS1.032 billion (USD263 million), down 9.6% from the corresponding period of 2014, while service revenues stood at ILS789 million, representing a 10.3% drop against 3Q14. Meanwhile, the company’s fixed line unit Netvision’s contribution to service revenues for the third quarter of 2015 was ILS171 million (excluding inter-company revenues), compared to ILS200 million a year earlier, falling on the back of lower revenues from ‘ISP and international calls’.

EBITDA in the quarter under review stood at ILS235 million, a figure representing a year-on-year decline of 32.1%, while excluding the one-time ILS44 million positive effect related to a reduction of a provision for cell-sites rent expenses in 3Q14 the annual reduction in EBITDA was 22.2%. Netvision’s contribution to third quarter EBITDA in 2015 was ILS53 million, down from ILS78 million in 3Q14. Net profit in the three months ending 30 September 2015 plunged by more than 62% y-o-y to ILS40 million, meanwhile, with Cellcom saying this drop was ‘mainly due to the continued erosion in cellular service revenues resulting from the intensified competition in the cellular market that was partially offset by a decrease in operational expenses’.

As at end-September 2015 Cellcom had a mobile subscriber base of 2.832 million, following a net loss of around 16,000 customers in the third quarter of the year. Monthly average revenue per user (ARPU) was ILS66.0 in 3Q15, compared to ILS70.6 a year earlier.

Commenting on the company’s performance, Cellcom chief executive Nir Sztern noted: ‘The third quarter of 2015 results reflect the continued fierce competition in the cellular market that is expected to continue, which effect is reflected in the erosion of revenues and profitability. However, we maintained a positive net income due to a decrease in operating expenses and successful efforts we have taken in other areas of operations of the Group.’

Israel, Cellcom, NetVision