Cellcom records 3.9% drop in turnover in Q3

15 Nov 2016

Israel’s Cellcom has reported a 3.9% year-on-year drop in total turnover for third quarter of 2016, as increased revenues from fixed line services failed to offset the continued decline in mobile revenues.

In the three months ended 30 September 2016 Cellcom generated total revenues of ILS992 million (USD264 million), compared to ILS1.032 billion in the corresponding period a year earlier. Consolidated service revenues totaled ILS758 million, meanwhile, representing a 3.9% fall from ILS789 million in Q3 2015. In the wireless arena, Cellcom recorded revenues of ILS729 million in Q3 2016, down from ILS787 million, with wireless services revenues totalling ILS534 million, compared to ILS572 million. Such declines, Cellcom said, was mainly due to the ‘ongoing erosion in the price of [mobile] services and churn of customers as a result of the competition in the cellular market’. By comparison, Cellcom reported fixed line revenues of ILS315 million in the period under review, up from ILS295 million, with fixed line service revenues climbing by 3.4% y-o-y to ILS276 million, with internet and pay-TV services pointed to as key drivers.

EBITDA for the third quarter of 2016 decreased by 11.1% to ILS209 million, with Cellcom saying this fall resulted mainly from the ongoing erosion in service revenues and from an adverse effect of ILS40 million in the third quarter of 2016 after it claimed rival Golan Telecom did not pay the full agreed consideration for national roaming services already rendered. Net income for the quarter meanwhile stood at ILS33 million, representing a 17.5% drop from the ILS40 million reported in Q3 2015.

In operational terms, at the end of September 2016 Cellcom had a mobile subscriber base numbering 2.822 million, down marginally from 2.832 million a year earlier, with the company reporting a churn rate of 10.5% in Q3 16 (Q3 15: 10.1%) and an average revenue per user (ARPU) of ILS62.8 (Q3 15: ILS66.0). In the fixed line segment, Cellcom reported that it had 146,000 internet infrastructure connections at the end of September 2016, more than double the 70,000 it had a year earlier, while pay-TV accesses climbed from 50,000 to 99,000 over the same period.

Commenting on the quarterly performance, Cellcom’s chief executive Nir Sztern was cited as saying: ‘The third quarter was characterised by continued growth in the fixed line segment in an environment of aggressive competition. The results of the quarter were affected by a decrease in revenues recognized in relation to national roaming services, due to Golan not paying the full agreed monthly consideration. Other than this adverse effect, the Company’s results in this quarter, both in the financial parameters and in the operational parameters, were good, similar to the previous quarter.’

Israel, Cellcom