Cellcom reports revenue, EBITDA declines in 2016 citing impact of cellular competition

16 Mar 2017

Israel’s Cellcom has published its financial results for the year ended 31 December 2016, revealing declines most of its major financial indicators as CEO Nir Sztern confirmed his company ‘continued to be affected by the intensity of the competition in the cellular market’.

In the year under review Cellcom generated a total turnover of ILS4.027 billion (USD1.047 billion), down 3.7% from ILS4.180 billion in 2015, while service revenues dropped 3.2% year-on-year to ILS3.033 billion. Service revenues in the cellular segment totalled ILS2.162 million in 2016, a 4.9% decline compared to the previous year, mainly the result of the ongoing price erosion and churn linked to competition in the domestic market, partially offset by an increase in revenues from national roaming services. Meanwhile, service revenues in the fixed line segment stood at ILS1.071 million in the twelve-month period, representing a 0.8% y-o-y increase, with the company’s activities in the broadband and pay-TV sectors helping offset lower turnover from long-distance calling services.

EBITDA for 2016 declined by 1.6% to ILS858 million, while as a percent of revenues it totalled 21.3%, up from 20.9% in 2015. According to Cellcom, the lower EBITDA was mainly the result of the ongoing erosion in service revenues, offset to some extent by lower operating expenses, which the operator said had been achieved in part through efficiency measures. Despite the lower revenues and EBITDA, net profit in the financial year increased, standing at ILS150 million in 2016, up from ILS97 million a year earlier.

In operational terms, at the end of 2016 Cellcom had a mobile subscriber base of 2.801 million, down 1.2% y-o-y, with the cellular churn rate for the year reported as 42.4%, up from 42.0% in 2015. Monthly blended ARPU for 2016 meanwhile totalled ILS63.3, down from ILS65.0 in the previous year, with price erosion again targeted as the primary reason for the decline. In the fixed line arena, Cellcom reported 163,000 customers in the ‘internet infrastructure field’ at 31 December 2016, up from 95,000 a year earlier, while pay-TV subscribers numbered 111,000 at that date (Dec-15: 63,000).

Commenting on the company’s performance, Shlomi Fruhling, Cellcom’s Chief Financial Officer, said: ‘2016 was characterised by growth in the fixed line segment as well as continuous competition in the cellular segment, which was reflected by an erosion of service revenues compared to last year.’

Israel, Cellcom