Taking on the Discounters, Partner Sacrifices Profits

New cellular competitors spur veteran company to offer a new low-cost brand.

Partner is fighting back against its new competitors in the cellular arena, launching a new low-cost brand on Sunday with a NIS 88 per month price tag for unlimited calls and messages.

Partner is taking advantage of its 012 Smile overseas long distance subsidiary and has named the new venture 012 Mobile. The new brand is aimed directly at Golan Telecom and HOT Mobile, which offer NIS 89 and NIS 99 calling plans respectively.

012 Mobile will be able to offer the low prices as it is offering self service through its website, Facebook page and via e-mail - but will be skimping on telephone customer service. It will also be piggybacking on Partner's network.

The NIS 88 monthly package - a shekel less than HOT Mobile's, and not by chance - included unlimited calls and messages, but only 500 megabits of Internet usage. It also includes overseas calls to the United States and Canada, though not to other destinations. The NIS 98 package will offer one giga of Internet and free calls to 41 countries, though only to fixed-line phones.

The company will charge NIS 49 for the Sim card, which must be ordered over the Internet, and will be sent to the subscriber's home. 012 Mobile will not sell phones.

Partner has decided to sacrifice its profits this year and the next in an attempt to kill off its new competitors, said Tsahi Avraham of Clal Finance. "Partner set a new lower limit in cellular competition with the launch of its 012 Mobile brand," he said.

Golan and HOT will lose their major advantage - price - and if Golan were forced out of the market, prices would start to creep upward again, said Avraham.

As to Cellcom and Pelephone, Avraham suggested they will have no choice but to lower prices and compete.

"Partner's strategic move seems critical," said Uri Licht of IBI. "Assuming Pelephone and Cellcom also launch such packages, it may very well slow down the rate of recruiting new subscribers for the new competitors."

A few more difficult quarters are on the way before the market returns to a new equilibrium, he said.