IBI Investment House Ltd. analyst Ori Licht says that yesterday's nationwide crash of Cellcom Israel Ltd's (NYSE:CEL; TASE:CEL) mobile network "will mainly hurt Cellcom's brand, and will result in a period of negative headlines that is liable to affect its battle against regulation. In any case, public opinion toward the mobile carriers is already poor, and this incident is liable to further affect the brand."
Licht added, "It is premature to quantify the financial consequences of the system crash. Nonetheless, you want to find a ray of light in the incident, we'll note the when new competitors are expected to enter the mobile market, it is possible to realize the great importance of investment in networks and their stability. This means that it is not easy being a mobile carrier and the present incident underscores the difficulty in setting up and operating a nationwide network."
Licht says that the level of service provided by Israel's mobile carriers is considered very high in global comparison. He said, "This is a very regrettable incident, but it is still within a reasonable timeframe. As the clock ticks, the damage to the company and its reputation grows."
Just two weeks ago, Meitav Investment House Ltd. analyst Gilad Alper cut his recommendation for Cellcom to "Underperform". Yesterday, he told "Globes", "We don’t yet have any idea what happened at Cellcom today, but if this is a one-time passing incident, it will have no effect on the brand."
Cellcom's share price rose 1% on the TASE today to NIS 122.50, and rose 0.9% at the opening in New York at $33.65, giving a market cap of $3.3 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on December 2, 2010
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