* Q3 profit down 38 percent to 124 million shekels
* Q3 revenue falls 13 percent to 1.45 billion shekels
* Opts against paying dividend for third quarter
JERUSALEM, Nov 13 Cellcom, Israel's
largest mobile phone operator, said it expects further declines
in revenue in the fourth quarter after a price war in the sector
sent revenue and profit down sharply in the third quarter.
Cellcom said on Tuesday it earned 124 million
shekels ($32 million) in the quarter, down 38 percent from the
year-earlier period. Revenue slipped 13 percent to 1.45 billion
shekels and earnings before interest, taxes, depreciation and
amortisation fell 20 percent to 430 million shekels.
Israel's mobile phone industry was turned upside down this
year with the entry of six new operators, sparking a price war -
with unlimited calling plans for around $25 a month - and
leading to many customers switching companies.
"We continue to see the company's revenue erosion due to the
transfer of subscribers to the new marketing plans, launched
during the second and third quarters of 2012, in response to the
heightened competition," Yaacov Heen, Cellcom's chief financial
officer said. "We expect this erosion to continue in the fourth
quarter as well."
Cellcom said it was implementing efficiency measures to
adjust its expense structure to revenue levels, which would
continue into 2013. Such steps led to a 58 percent rise in free
cash flow to 414 million shekels.
Cellcom's subscriber base edged down 1.6 percent to 3.338
It said the number of subscribers would start to grow as it
won a contract with Israel's military, while a plan combining
mobile and landline phone services had brought it a net 5,000
customers last quarter. Cellcom also said it sought new revenue
streams through examining the entry into Internet TV.
Three operators, including Cellcom, had dominated the sector
for more than 12 years until regulatory changes at the start of
2011 forced providers to slash the fees operators charge each
other to connect calls and to scrap exit fines for customers,
hurting revenue and earnings.
For the second straight quarter, Cellcom opted against
paying a dividend, saying it wanted to strengthen its balance
sheet. The board, it said, will re-evaluate its decision in
coming quarters as market conditions develop.
Last week, Bezeq unit Pelephone, Israel's
third-largest mobile provider, reported a 41 percent drop in
quarterly profit while revenue fell 26 percent.