Israel cellular operator Cellcom quarterly profit, revenue fall
Cellcom sees decline in revenue, profit in Q2 due to rise of competition, prices. Company decides not to issue Q2 dividend to support balance sheet
Cellcom, Israel's largest mobile phone operator, reported a decline in revenue and profit in the second quarter due to strong competition and price erosion in the sector.
Net profit fell to NIS 67 million ($19 million) from 121 million a year earlier due mainly to the erosion in the price of cellular services as well as a significant decrease in equipment revenue, Cellcom said on Monday.
Revenue fell 17.5% to NIS 1.24 billion in the April-June period.
The results were largely in line with the company's preliminary estimate released at the end of July.
Israel's mobile phone industry was shaken up last year with the entry of six new operators, sparking a price war – with unlimited calling plans for $25 a month or lower. That led to steep drops in subscribers, revenue and profit at Cellcom and two incumbent rivals.
Despite the intense competition in the cellular market, the company succeeded in improving most parameters compared with the first quarter of 2013, which may not continue in future quarters, Cellcom said.
"Although a significant slowdown can be seen in the scope of net portability between the cellular companies, competition is still strong and price erosion continues, although at a lower level than before," Cellcom Chief Executive Nir Sztern said.
The company's board decided not to distribute a dividend for the second quarter to strengthen the company's balance sheet.
"The board of directors will re-evaluate its decision as market conditions develop, and taking into consideration the company's needs," said Chief Financial Officer Yaacov Heen, who is stepping down in September and will be replaced by Shlomi Fruhling.
Cellcom had 3.151 million subscribers at the end of the second quarter, down 5.5% from a year earlier.
Cellcom had provided the preliminary figures at the request of its controlling shareholder, conglomerate IDB Holding Corp , in connection with a debt arrangement at IDB.
