Cellcom sees further fall in revenue in 2013

The mobile carrier’s fourth quarter revenue fell 15.5% from the corresponding quarter but net profit rose 48.7% due to streamlining.

4 March 13 13:34, Globes’ correspondent

Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), the mobile carrier unit of Nochi Dankner’s IDB Holding Corp. Ltd. (TASE:IDBH), today reported lower revenue and profits in 2012, and expects the decline to continue in the first quarter of 2013.Fourth quarter revenue fell 15.5% to NIS 1.41 billion ($377 million) from NIS 1.67 billion for the corresponding quarter of 2011, but net profit rose 48.7% to NIS 113 million ($30 million) (NIS 1.14 or $0.31 per share) from NIS 76 million.

Full-year revenue fell 8.7% to NIS 5.94 billion ($1.59 billion) from NIS 6.51 billion in 2011. Net profit fell 35% to NIS 531 million ($142 million) (NIS 5.34 or $1.43 per share) in 2012 from NIS 825 million in 2011. Free cash flow from operations rose 21% to NIS 1.13 billion in 2012 from NIS 937 million in 2011.

Cellcom CEO Nir Sztern warned, “The low price levels in the market together with the intensified competition and the transition to offering of aggressive marketing plans by some of our competitors, led to a significant decrease in revenues. These trends are expected to further adversely affect the Company’s results of operations in the first quarter of 2013.”

Cellcom CFO Yaacov Heen added, “We expect further erosion in revenues in the first quarter of 2013, which will lead to further erosion of profitability.

Cellcom added that it would not distribute a dividend for the fourth quarter of 2012, in order to further strengthen its balance sheet at this time of market uncertainty.

Sztern said that the company’s streamlining measures were already saving NIS 550 million a year. “We intend to continue the efficiency measures in 2013 as well,” he added. He also cited the merger with sister company, ISP and telephony provider 013 NetVision Ltd. to create a wide range of landline and mobile services.

Cellcom had 3.2 million subscribers at the end of 2012, 12,000 fewer than a year earlier. NetVision added 32,000 landline subscribers during the year to reach 112,000 subscribers at the end of 2012. The churn rate rose to 31.5% in 2012 from 25.1% in 2011, which the company attributed to the intensified competition in the cellular market.

Average Minutes of Use per subscriber rose12.7% to 390 minutes per month in 2012 from 346 minutes in 2011, as subscribers switched transition to marketing plans with unlimited air time minutes. Average revenue per user (ARPU) fell to NIS 87.50 per month in 2012 from NIS 106 in 2011, due to price reductions.

Published by Globes [online], Israel business news – www.globes-online.com – on March 4, 2013

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