Mobile carrier Cellcom Israel Ltd's (NYSE:CEL; TASE:CEL) net profit for the second quarter was halved on lower revenue. The board of directors decided not to distribute a dividend, which will affect its parent company, Nochi Danker-controlled IDB Holding Corp. Ltd. (TASE:IDBH) unit Discount Investment Corporation (TASE: DISI).
Lower equipment sales reduced revenue by 5.7% to NIS 1.5 billion ($382 million) for the second quarter from NIS 1.59 billion ($405 million). Equipment sales fell 31% to NIS 316 million from NIS 458 million, which was partly offset by a 4.5% in service revenue to NIS 1.18 billion from NIS 1.13 billion. If the NIS 259 million revenue contribution ISP and international calls carrier unit 013 NetVision Ltd.) is excluded, Cellcom's revenue fell 22%.
Net profit fell 50.4% to NIS 121 million ($31 million) (NIS 1.22 or $0.31 per share) for the second quarter from NIS 244 million ($62 million) for the corresponding quarter.
Cellcom lost a net 29,000 subscribers during the second quarter to 3.33 million subscribers at the end of June, and the churn rate rose to 8.1% during the quarter from 6.4% during the corresponding quarter.
Average revenue per user (ARPU) fell 16.5% to NIS 90.30 per month during the second quarter from NIS 108.20 per month during the corresponding quarter, despite a 9.6% increase in average monthly cellular minutes of use (MOU) per subscriber to 375 minutes from 342 minutes.
Cellcom CEO Nir Sztern said that the second quarter results reflected "the successful continued implementation of the company's strategy: the Netvision merger, operational excellence and the transition into a communications group." He added that the launch of the Cellcom Total plan, an unlimited package for three cellular subscribers, internet and landline services, was the first step towards materializing the company's future growth potential as a communications group. Additional measures include new mobile credit card business, plans for Internet television (IPTV) service
Sztern cautioned that the impact of the new carriers in the market was not yet felt in full, and the full impact would be seen in the coming quarters.
Cellcom's share price fell 3.8% in early trading on the TASE today to NIS 24, after falling 3.3% in New York yesterday to $6.14, giving a market cap of $611 million.
Published by Globes [online], Israel business news - www.globes-online.com - on August 14, 2012
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