The mobile telephony revolution which Israel has undergone in the past year has exceeded expectations. Prices have plummeted, and the veteran carriers are adapting to the new reality: the public is unwilling to pay more than NIS 100 a month for mobile telecommunications plans. This reality will result in the halving of the number of employees, and within a year or two, each carrier will probably have about 2,500 employees.
Those who try to denigrate the reform's achievements say that consumers' savings have been offset by thousands of laid-off employees, whom former Minister of Communications Moshe Kahlon encountered as unemployed in his capacity as Minister of Social Affairs. But at the end of the day, the reform's biggest achievement is not just the drop in prices, but that the public is no longer willing to accept the oligopolistic prices, which generated extra profits at its expense. At a time of public protest and an austerity budget, the public can be inspired by the mobile telephony sector in estimating the chances of a revolution in other markets.
The state of the mobile market on the revolution's first anniversary has already been reviewed on several occasions, but this time, "Globes" chose to show the change through the number of mobile customers who have switched carriers. Customers who have switched carriers are the real customers for examining trends, because the mobile market is saturated, and there are few new users.
When "Globes" obtained the churn data and cross-checked the numbers, different figures emerged for the extent of the churn. Usually when we publish the monthly data, there are no discrepancies between carriers, but when annual summaries are made, we see that the carriers have "slightly different" figures. One of the reasons for this is that, at the start of the competition, some of the customers who switched to the new carriers were not properly counted because of various computer problems. Nonetheless, all the data collected definitely reflect the same trends.
Pelephone lost the fewest subscribers
There was no dispute about one figure. Among the veteran carriers, Pelephone Communications Ltd. lost the fewest subscribers in the past year. It lost 137,000 subscribers, compared with 194,000 subscribers lost by Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and 197,000 subscribers lost by Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL).
Partner's figures were affected by its launch of the 012 Mobile brand in the third quarter of 2012. The carrier's churn rate fell sharply afterwards, but because 012 Mobile is a discount brand, it recruits and retains customers with very low prices, which erodes its revenue, possibly more than at its rivals. Cellcom, without an extra brand, lost the same number of subscribers, highlighting the extent of the blow taken by Partner.
In the first quarter of 2013, Partner had the lowest churn rate, of just 14,000 subscribers. Pelephone lost 31,000 subscribers and Cellcom lost 27,000.
Hot Mobile Ltd. has recruited 306,000 subscribers from the veteran carriers. The carrier says that it has 500,000 subscribers, indicating that it has recruited 200,000 new subscribers or subscribers who have taken an additional line. However, Hot Mobile also has a very high churn rate.
Golan Telecom Ltd. says that it has 257,000 subscribers. On the basis of churn figures, the carrier seems to have recruited 174,000 subscribers from other carriers, while the balance is apparently from either new subscribers or subscribers who have taken an additional line.
Published by Globes [online], Israel business news - www.globes-online.com - on May 19, 2013
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