Cellcom’s Q2 Revenue Drops 17.5% Due to Strong Competition

While the company’s subscriber base has remained stable, its average monthly revenue per user dropped from NIS 90.30 per user in Q2 2012 to NIS 79.70 this past quarter.

Cellular company Cellcom Israel declared a 17.5% drop in revenue in the second quarter, in its earnings report delivered on Monday. The drop, from NIS 1.5 billion in the second quarter last year to NIS 1.23 billion this year, was due to reduced income from both services and cellular devices

The company's net profit for the quarter fell 44.6% to NIS 67 million, from NIS 121 million in the same quarter last year.

Cellcom's cellular phone subscriber base has stayed relatively stable at 3.15 million. While the company reported a loss of 15,000 subscribers since the end of the first quarter, it stressed that all were pre-paid phone users.

CEO Nir Sztern said that prices were continuing to fall, albeit at slower pace than previously, due to strong competition. The average Cellcom subscriber generated NIS 79.70 per month in revenue in the quarter, an 11.7% drop from the same quarter last year, when average monthly revenue per user was NIS 90.30. At the same time, Cellcom subscribers increased their use of cell phone minutes from 375 minutes per user in the second quarter last year to 468 minutes this past quarter. The number of cell phone customers switching between companies dropped significantly during the quarter, Sztern said.

Cellcom announced that it would continue its policy of not distributing a shareholder dividend, in order to strengthen it's balance sheet. In that respect, the company did see some improvement, with cash flow increasing 21.5% over the same quarter in 2012 to NIS 345 million. Cellcom also reported that its financing expenses had dropped significantly from the same quarter last year, due to the retirement of over NIS 700 million in debt and lower inflation.

Tali Mayer