Cellcom records revenue declines in 1Q16 citing continued impact of cellular competition

24 May 2016

Israel’s Celcom has published its financial results for the first quarter of 2016, reporting increased EBITDA and net profit, despite lower revenues in the period under review.

In the three months ended 31 March 2016 Cellcom generated a total turnover of ILS1.022 billion (USD271 million), representing a 3.8% year-on-year decline from ILS1.062 billion in 1Q15. Service revenues were down 3.3% at ILS774 million in 1Q16, and while service revenues in the cellular segment accounted for the bulk of that – ILS559 million – this figure too was down from ILS582 million in 1Q15. The declines in the mobile sector, Cellcom said, were mainly the result of the ongoing price erosion of such services, combined with the churn of customers ‘resulting from the intensified competition in the cellular market’, while these were partially offset by increased national roaming revenues. By comparison, turnover in the fixed line segment (which includes revenue from the company’s landline telephony services, internet infrastructure and connectivity services, television services, end user fixed-line equipment and supplemental services) was down 1.9% y-o-y at ILS264 million, mainly due to lower long distance call revenues.

Operating income in the opening three months of 2016 increased by 83.6% compared to the same period a year earlier, to ILS101 million, though Cellcom noted that this increase was mainly due to an approximately ILS30 million one-time expense recorded in 1Q15 linked to the entering of a collective employment agreement. Nonetheless, the company did note that it had seen an improvement in gross profitability and a decrease in operating expenses mainly as a result of efficiency measures it had implemented. Meanwhile, EBITDA in 1Q16 stood at ILS238 million, representing a year-on-year increase of 21.4%, with this rise again being linked to the one-off expense in the year earlier period, with net profit for the first quarter of this year totalling ILS59 million, a significant increase on the ILS26 million recorded in 1Q15.

In operational terms, at the end of March 2016 Cellcom had 2.813 million mobile subscribers, down 2.5% from the 2,885 million it had reported a year earlier, with the bulk of those lost said to have been signed up to a pre-paid service. Meanwhile, the number of ‘internet wholesale subscribers’ totalled 121,000 at the end of the first quarter of 2016, up from 94,000 three months earlier and 31,000 at the end of June 2015 (the latter date being the first period for which Cellcom reported such accesses).

Israel, Cellcom