Cellcom improves bottom line despite pricing pressure on revenues

11 Aug 2016

Israel’s Cellcom has reported an increase in net profit for the three months ended 30 June 2016, despite recording lower revenues in the period. The second quarter of the year saw Cellcom generate a total turnover of ILS1.029 billion (USD267 million), down 1.1% year-on-year, with both service and equipment revenues declining, to ILS782 million (down 0.5%) and ILS247 million (down 2.8%), respectively. The operator attributed the drop mainly to ‘the ongoing erosion in the price of these services and churn of customers as a result of the competition in the cellular market’, while it noted the decline had been partially offset by an increase in national roaming revenues.

EBITDA in the period under review totalled ILS238 million, representing a 10.2% increase against Q2 2015, with the increase stemming mainly from an improvement in gross profitability and a decrease in operating expenses, largely as a result of lower employee voluntary retirement plan expenses in the quarter. Operating income in Q2 2016 stood at ILS104 million, a 30% y-o-y improvement resulting mainly from the decrease in the employee voluntary retirement plan expense, as well as an improvement in gross profitability and a decrease in operating expenses mostly as a result of efficiency measures. Net income in the quarter was ILS44 million, up nearly 267% from ILS12 million a year earlier.

In operational terms, at the end of June 2016 Cellcom had a total mobile subscriber base of 2.812 million, down marginally from the 2.848 million it reported a year earlier. Monthly cellular ARPU improved, however, at ILS66.0 in 2Q16, up from ILS65.5 in the corresponding quarter of 2015. Cellcom noted it had ‘approximately 136,000 households in the internet infrastructure field, compared to approximately 32,000 households at the end of the second quarter of 2015’, while it counted 87,000 pay-TV customers, up from 37,000.

Israel, Cellcom