IDB Holding Corp. Ltd. (TASE:IDBH) mobile phone unit Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) today reported that its profits were halved on lower revenue for the third quarter of 2013, but the company nevertheless will pay an NIS 85 million dividend.
Revenue fell 15.5% to NIS 1.22 billion ($346 million) from NIS 1.45 billion ($409 million) for the corresponding quarter of 2012. Service revenue fell 12% to NIS 1.01 billion for the third quarter from NIS 1.15 billion for the corresponding quarter, due to price erosion caused by increased completion, and equipment revenue fell 30% to NIS 211 million from NIS 300 million, due to lower handset sales. The drop in mobile services, ISP, international calls, and roaming services revenue was partly offset by higher hosting revenue
Net profit fell 58% to NIS 52 million ($15 million) (NIS 0.53 or $0.15 per share) for the third quarter from NIS 124 million ($35 million) for the corresponding quarter. The company attributed the drop to lower revenue and higher net financing expenses, which were partly due to a one-time NIS 7 million tax payment. Free cash flow fell 6% to NIS 389 million for the third quarter from to NIS 414 million for the corresponding quarter.
Cellcom's churn rate rose to 8.9% in the third quarter from 8.6% in the corresponding quarter. It had 3.16 million subscribers at the end of September, after adding a net 5,000 new subscribers during the third quarter. Average revenue per user (ARPU) fell to NIS 79.60 per month during the third quarter from NIS 86.70 per month during the corresponding quarter, but Minutes of Use per subscriber (MOU) rose to 461 minutes per month from 399 minutes, mainly because of the switch to marketing plans, which include unlimited air time minutes.
"Even in this quarter of intensified competition, the company continues to present improvement in its operational results compared with the previous quarter," said Cellcom CEO Nir Sztern. "Cellcom Israel continues to follow its strategy since the merger with Netvision and bases itself as a communications group. In the last quarter we launched a significant marketing campaign offering the group's cellular customers free home landline telephony for one year. This is a significant milestone for the future competition in the landline market, which constitutes one of the company's growth engines, and we believe in the regulator's willingness to encourage real competition in this market."
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2013
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