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Cellcom Profits Down 38% Due to Increased Competition

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Israel's Cellcom has announced that its third quarter revenues fell by 13% to NIS 1,448 million (USD370 million), while net profits fell by more than a third down by 37.7% to NIS 124 million (USD32 million).

The decrease in revenues is attributed to a 36.4% decrease in equipment revenues, which totaled NIS 300 million ($77 million) in the third quarter 2012, as well as to a 3.8% decrease in service revenues. Netvision's contribution to total revenues for the third quarter of 2012 totaled NIS 261 million ($67 million) excluding inter-company revenues. Excluding Netvision's contribution, total revenues decreased by 24.3% compared with the third quarter last year.

The drop in profits was despite the company taking aggressive efficiency measures, which led, so far, to an annual savings run rate of approximately NIS 480 million.

The mobile customer base also fell by 1.6% over the year to 3.39 million as the churn rate jumped to 8.6%. The increase in the churn rate mainly resulted from the increased competition in the market following the entrance of the new operators during the second quarter 2012.

The ARPU fell by 17.5% to NIS 86.7, although average voice call minutes rose by 11.7%.

In the third quarter of 2012, the Company added approximately 19,000 net new 3G cellular subscribers to its 3G subscriber base, reaching approximately 1.45 million 3G subscribers at the end of September 2012, representing 43.4% of the Company's total cellular subscriber base.

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Tags: cellcom  Israel