Cellcom Israel Ltd.'s (NYSE:CEL; TASE:CEL) revenue fell 14% in the fourth quarter pf 2013, as competition in the telecommunications sector intensified. The company is not distributing a dividend for the quarter, stating in its report, "The company's board of directors decided not to distribute a dividend for the fourth quarter of 2013, given the intensified competition and its adverse effect on the company's results and in order to further strengthen the company's balance sheet."
The company, part of the IDB group, released its financials today. It made a profit of IS 102 million in the fourth quarter, 9.7% less than in the fourth quarter of 2012. Revenue totaled NIS 1.2 billion. For 2013 as a whole, the company posted a 17% decline in revenue to NIS 4.9 billion, while its profit plummeted 46%, to NIS 651 million.
In the fourth quarter, the company had cash flow of NIS 308 million from regular activities, 7% more than in the fourth quarter of 2102. Revenue from services fell 8.3% to NIS 977 million, and operating profit fell 10% to NIS 170 million. EBITDA (earnings before tax, interest, depreciation and amortization) fell 10%, to NIS 335 million.
At the end of 2013, Cellcom had 3.092 million subscribers, after losing a net 43 thousand subscribers over the year. The churn rate among mobile subscribers was 36.8%, compared with 31.5% in 2012. Average monthly revenue per user was NIS 78.5 last year, compared with NIS 87.5 the year before, representing a decline of 10.2%.
Cellcom CEO Nir Sztern said, "Again in this year of aggressive competition, Cellcom Group continues to present good financial results, which are reflected in a free cash flow (after investments) of approximately NIS 1.2 billion. The efficiency measures we implemented following the merger with Netvision led to savings at an annual run rate of approximately NIS 640 million. In 2013 alone we presented actual savings of over NIS 200 million in selling, marketing, general and administrative expenses, compared to last year.
"This year we continued with the profitability focused strategy and the expansion of our product offerings to landline services, both of which had satisfactory results, as reflected in the moderation of ARPU and revenues erosion in the last quarters.
"I expect that the competition and consequently price erosion in the cellular market will continue in the coming year. However, we will continue to focus on efficiency measures, and we expect that in the long run, a shared passive infrastructure for our network will allow significant savings in operating expenses, and a shared 4G (LTE) network will assist in reducing investments in that area, if such sharing agreements are approved."
CFO Shlomi Fruhling added, "This year, we continued to strengthen the company's balance sheet, made repayments of principal on our debentures in an amount of over NIS 1 billion from internal resources without raising new debt and decreased our net debt by over NIS 700 million to approximately NIS 3.8 billion."
Published by Globes [online], Israel business news - www.globes-online.com - on March 6, 2014
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