UPDATE 1-Israel's Cellcom warns of further weakness

Thu Feb 7, 2013 11:02am EST

JERUSALEM Feb 7 (Reuters) - Cellcom, Israel's largest mobile phone operator, warned of further revenue and profit erosion in the fourth quarter as the company suffers from increased competition and sinking prices.

Cellcom said on Thursday it expects to post quarterly revenue of 1.37-1.39 billion shekels ($371-$377 million), down from 1.45 billion shekels in the third quarter of 2012.

It also forecast net profit of 100-115 million shekels in the fourth quarter, compared with 124 million shekels the prior quarter.

Earnings before interest, taxes, depreciation and amortisation is projected at 360-375 million shekels for the three-month period.

Israel's mobile phone industry was turned upside down in 2012 with the entry of six new operators, sparking a price war - with unlimited calling plans for around $25 a month - leading to many customers switching companies.

"The expected results reflect the previously reported trends, including the heightened competition and material price erosion, as well as the company's efficiency measures," Cellcom said.

"These trends are expected to further adversely affect the company's results of operations in the first quarter of 2013 compared to the fourth quarter of 2012."

It added it would continue to implement efficiency measures in an effort to mitigate such effects.

Cellcom's final quarterly and 2012 results will be published in early March.

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