Mobile cos offer massive end-of-year discounts

Israel's mobile carriers are offering massive end-of-year discounts as they compete for consumers and seek transform the market beyond recognition. Tuesday was the turn of Rami Levy Communications, which offered a 12-month NIS 49 monthly plan. Today, Golan Telecom Ltd. responded with a 12-month NIS 55 monthly plan that includes calls to 55 foreign destinations.

These campaigns follow those of Hot Mobile Ltd., which is offering a plan at NIS 69 per month for mobile services plus an ISP; Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) brand 12Mobile, which is offering a 12-month plan at NIS 59 per month; and equally aggressive customer retention plans by Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Pelephone Communications Ltd.

The end-of-year sales raise the questions: how long can the carriers continue to sell services at such low prices, and whether the sales will end when 2014 comes round.

Sources believe that so long as Golan Telecom continues its aggressive discounts to reach the Ministry of Communications target of 400,000 subscribers, in order for the carrier to get back its deposit, the carrier will continue to drive the market crazy. The carrier has reportedly passed the 370,000-subscriber mark, and sources believe that it will reach the ministry target by the end of the year.

The carriers believe that the sales campaigns will end in January, or in February at the latest, at which point there will be a return to NIS 70-80 monthly levels. However, as the past year has shown, this assumption is questionable, and the competition between the carriers is completely unforeseeable. At any moment, a carrier might initiate a new aggressive campaign, drawing the others into the fray.

Rami Levy's response is especially interesting, as the mobile virtual network operator (MVNO) has been losing subscribers at an increasing rate in recent months, according to the monthly mobility figures published by "Globes". Rami Levy, which is losing subscribers and is struggling to compete against the prices offered by Golan Telecom, Hot Mobile, and 012Mobile, responded yesterday with its own aggressive campaign in an effort to stop the hemorrhaging.

Without question, December will be a month of cutthroat competition between the mobile carriers, and consumers will be the big winners.

Published by Globes [online], Israel business news - www.globes-online.com - on December 4, 2013