Cellcom reports net profit slump in 1Q17 on lower revenue, increased finance expenses

24 May 2017

Israel’s Cellcom cited continued competitive pressures and price erosion as the core factors as it revealed a 6.2% year-on-year decline in revenues for the first three months of 2017. In publishing its latest financial results, the multi-service operator reported a total turnover of ILS959 million (US2D264 million) in the three months ended 31 March 2017, down from ILS1.02 billion in 1Q16, while service revenues fell to ILS739 million from ILS774 million. EBITDA totalled ILS201 million in 1Q17, meanwhile, representing a drop of 15.5% from the corresponding period a year earlier, with the company’s EBITDA margin standing at 21.0%, down from 23.3%. Net financing expenses increased by almost 30% y-o-y to ILS31 million – attributed mainly to ‘lower deflation of the Israeli Consumer Price Index’ – and net profit in the quarter under review slumped to just ILS26 million in 1Q17, representing a 55.9% annual decline.

In operational terms, at the end of March 2017 Cellcom’s mobile subscriber base totalled 2.79 million, down from 2.81 million a year earlier, with the quarterly churn rate increasing from 11.1% in 1Q16 to 12.0% a year later. Monthly ARPU meanwhile was ILS60.2, down from ILS65.2. More positively, the number of ‘internet infrastructure’ accesses continued to climb, reaching 173,000 at the end of the reporting period, up from 121,000 at end-March 2016, while pay-TV subscriber numbers rose by more than 65% y-o-y to 124,000.

Commenting on the company’s performance, Cellcom CEO Nir Sztern said: ‘Revenues for the first quarter of 2017 were affected by the continued competition and price erosion in service revenues in the cellular segment and a decrease in revenues from national roaming compared to the first quarter of last year. The decrease in service revenues in the cellular segment was partially offset by growth in service revenues from the fixed line segment in respect of television and wholesale market services.’

Israel, Cellcom