Israel's Partner Communications Reports Steep Revenue Drop

Israel's second-largest mobile phone operator, known by its brand name, Orange, has cut investments amid increased competition.

Tomer Appelbaum

REUTERS - Partner Communications, Israel's second-largest mobile phone operator which operates under the Orange brand name, swung to a loss in the third quarter due to a drop in revenue amid intense competition.

Israel's mobile phone industry was shaken up in 2012 with the entry of a host of new operators, sparking a price war that led to steep drops in subscribers, revenue and profit at Partner and two incumbent rivals.

Partner said on Wednesday it lost 9 million shekels ($2.3 million) in the July-September period, compared with a 40 million shekel profit a year earlier. During the quarter, Partner had a one-time expense of 35 million shekels for an employee retirement plan.

Revenue slipped 9 percent to 1 billion shekels, while its subscriber base fell by 155,000 to 2.739 million.

Chief Executive Isaac Benbenisti said that in addition to the price erosion caused by competition, Partner has "limited ability to cut costs further" and that the company has already cut its investments in infrastructure in half this year.

"The erosion in operating profitability does not allow us to make the same volume of investments as in the past," he said.

Rivals Cellcom and Pelephone, a unit of Bezeq Israel Telecom, will issue results later this month.

Last week, market leader Cellcom said it plans to buy smaller rival Golan Telecom for about $300 million in the first major sign of consolidation in the sector.

($1 = 3.9027 shekels)