Israeli mobile operator Cellcom profit up more than forecast
TEL AVIV May 14 (Reuters) - Cellcom, Israel's largest mobile phone operator, reported a 70 percent jump in quarterly profit due in part to cost-cutting measures implemented as the company faced intensified competition.
Net profit rose to 114 million shekels ($33 million) in the first quarter from 67 million a year earlier, Cellcom said on Wednesday. Revenue dipped 10.2 percent to 1.13 billion shekels.
Cellcom was forecast to earn 86 million shekels on revenue of 1.18 billion, according to a Reuters poll.
The company's selling, marketing, general and administrative expenses fell 15.6 percent in the quarter due to efficiency measures, which led to a decrease in payroll and other expenses.
Finance costs fell 41 percent due to a drop in interest expenses.
Israel's mobile phone industry was shaken up in 2012 with the entry of six new operators, sparking a price war that led to steep drops in subscribers, revenue and profit at Cellcom and two incumbent rivals.
"We expect the price erosion and high competition to continue in the coming quarters while the company's ability to continue implementing efficiency measures to mitigate the decrease in revenues will be reduced," Cellcom Chief Executive Nir Sztern said.
Cellcom said it would not pay a dividend for the first quarter given the continued intensified competition in the market and its adverse effect on the company's revenue.
"The board of directors will re-evaluate its decision as market conditions develop and taking into consideration the company's needs," Cellcom said.
In the third quarter Cellcom paid a quarterly dividend of 85 million shekels but did not pay one for the fourth quarter.
Sztern said Cellcom was preparing for a quick launch of a 4G network supporting LTE advanced technology.
Cellcom had 3.049 million subscribers at the end of the first quarter, down 3.7 percent from a year ago. ($1 = 3.4565 Israeli Shekels) (Reporting by Tova Cohen)
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