Israel’s Cellcom falls to quarterly loss, urges regulatory intervention

Cellcom, Israel’s largest mobile operator, reported a steeper than expected quarterly loss, hurt by continuing revenue declines amid toughening competition and as it invests in a fibre optics network.

Shares in the company were down 4.5 percent at 15.50 shekels by 0933 GMT, having fallen as low as 15.30, equalling a near four-year low set a week ago.

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 for Cellcom and rival incumbents Partner Communications, and Pelephone, a unit of Bezeq.

“The Israeli telecommunications market is in a difficult state and without an urgent regulatory intervention to resolve the crisis a genuine damage to investments is expected,” CEO Nir Sztern said on Monday.

Cellcom said it slumped to a net loss of 35 million shekels ($9.7 million) in the fourth quarter from a 10 million shekel net profit a year earlier. Revenue slipped nearly 6 percent to 918 million shekels.

The company had been forecast to lose 9.7 million shekels on revenue of 936 million shekels, according to a Reuters poll of analysts.

Cellcom’s mobile subscriber base gained 1.2 percent from a year ago to 2.851 million at the end of 2018, but revenue per subscriber fell 10 percent last year.

Cellcom launched a lower-cost internet-based TV service in 2015 that it says had attracted 219,000 subscribers at the end of the December, up 28.8 percent from a year earlier. It also has 269,000 customers for its internet services, a 21.2 percent rise from a year ago.

Last year it agreed to buy 70 percent of the Israel Broadband Co (IBC), which has exclusive rights to deploy fibre optics over state-owned Israel Electric Corp’s infrastructure and last week it reached a for the Israel Infrastructure Fund to co-invest in IBC.

“The sale of Cellcom’s fibre-optic infrastructure to IBC is expected to benefit Cellcom’s cash flow, improve financial ratios, and reduce its level of capex in the coming years,” Sztern said.

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