Increased fixed line revenues fail to offset downturn in mobile sector for Cellcom

7 Aug 2017

Israeli multi-service operator Cellcom recorded a year-on-year increase in net profit in the second quarter of 2017, despite revenues and EBITDA declining when compared to the year earlier period.

In the three months ended 30 June 2017 Cellcom generated a total turnover of ILS962 million (USD275 million), representing a 6.5% drop from the ILS1.03 billion it reported for 2Q16. Service revenues were similarly lower, standing at ILS731 million in 2Q17 (down 6.5% y-o-y), with higher turnover from fixed line services failing to offset a notable decline in the mobile sector. Cellcom attributed a 10.6% annual increase in fixed revenues – to ILS292 million – to services provided under its network sharing agreement with Golan Telecom which came into force at the start of the reporting period. By comparison, mobile service revenues slumped by 15.2% y-o-y to ILS481 million, with Cellcom saying this was partly due to ‘the gap between the national roaming services revenues in [2Q16] and the revenues for rights of use in cellular networks according to the network sharing agreement with Golan’, while also citing the ongoing erosion of mobile service prices, and customer churn due to high levels of competition. EBITDA in 2Q17 totalled ILS237 million, roughly flat when compared to the ILS238 million reported for the corresponding period in 2016. Net income meanwhile increased by 2.3% y-o-y to stand at ILS45 million in the quarter under review.

In operational terms, at the end of June 2017 Cellcom had a mobile subscriber base of 2.779 million, down from 2.812 million a year earlier, with monthly ARPU declining to ILS57 in 2Q17, from ILS66 million a year earlier. More positively, the company reported a total of 189,000 internet infrastructure customers, representing annual growth of 39%, with pay-TV subscribers increasing by more than 57% y-o-y to 137,000.

Israel, Cellcom