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Pelephone - Strong Annual Growth but Still in Third Place
As we predicted in Issue 93 of The Mobile World Briefing, Pelephone remained the third largest operator in the Israeli market at the end of Q3 2007. With 2.56m customers at the end of September, Pelephone was 236k short of nearest rival Partner's total customer base and 457k short of market leader Cellcom. This represents a marginal improvement on the deficits recorded at the end of September 2006, which were 260k and 462k respectively. Net additions in the quarter stood at 47k, up slightly on the Q3 06 figure of 43k, although on a proportionate basis, growth was almost exactly the same with a 1.9% quarterly increase in the total customer base in both quarters.
Incidentally, Cellcom also recorded a quarterly growth rate of 1.9% in Q3 07, although Partner led the way with 2.3%. On an annual basis, Pelephone outpaced both with a growth rate of 8.2%, 1.5pp ahead of Cellcom and 1.7pp ahead of Partner.
Pelephone also leads the Israeli market in terms of the size of its 3G customer base.
Although it does not have a W-CDMA network like Cellcom and Partner, its CDMA2000 1x EV-DO technology competes directly with the 3G offerings of its rivals. At the end of Q3, Pelephone's 3G customer base stood at 652k, compared to Partner's 488k and Cellcom's 281k. This represents an impressive 169.4% annual growth, with Q3's 127k net additions the highest figure ever recorded in the market, breaking Pelephone's own record of 108k in Q4 2006. The ten-fold growth in Cellcom's 3G base in the year to 30th September 2007 gave it a 19.8% share of the 3G market at the end of Q3, compared to 5.7% a year earlier, but most of this share was taken from Partner, with Pelephone losing only 3.6pp in the year to finish Q3 on 45.9%.
On a financial basis, Pelephone is very much the third-placed operator in the market with quarterly revenues of NIS 1203m, 31% lower than Cellcom's and 33% below Partner's. Moreover, Pelephone's 5.1% increase in revenue was significantly lower than the growth rates recorded by Cellcom and Partner (7% and 10% respectively). An annual decline in ARPU of NIS 7 to NIS 135 at the end of Q3 07 was the price to pay for Pelephone's market-leading annual customer growth rate, and obviously impacted on revenue growth. In terms of EBITDA, an 18.9% annual growth rate was much more encouraging, although a Q3 total of NIS 340m was still well short of Partner's 539m and Cellcom's 559m. At 28.3%, the EBITDA margin was also the lowest of the three operators by some distance (33.7% for Partner, 35.6% for Cellcom) despite a 3.3pp improvement on an annual basis.
Posted to the site on 23rd November 2007
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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