UPDATE 2-Partner Comms Q1 profit flat as recession bites
* Revenue falls 10.7 pct to 1.412 billion shekels
* To pay dividend of 1.54 shekels a share
* Relying on VoB, ISP services to offset mobile weakness
(Adds details, comments from CEO and analyst, shares)
JERUSALEM, May 21 (Reuters) - Partner Communications (PTNR.O) (PTNR.TA), Israel's second-largest mobile phone operator, reported flat quarterly net profit and said non-cellular activities would help the company in 2009.
"In this quarter we have succeeded in mitigating the recession impact on our cellular business profitability," said David Avner, Partner's chief executive.
He said the business environment had stabilised since February and now had "better clarity."
But the company, which operates under the Orange brand name, reiterated its February outlook, saying profitability for 2009 remains the same, with capital expenditures on fixed assets expected below 600 million shekels.
Partner's Nasdaq-listed shares were down 2.9 percent at $16.86 in morning trade.
Gilad Alper, an analyst at the Nessuah Excellence brokerage, said Partner has succumbed to the effects of a recession.
"The overall picture does not look good, though neither is it catastrophic," he wrote in a client note.
First-quarter net profit amounted to 296.4 million shekels ($71 million), or 1.93 shekels per share, compared with 296.3 million shekels, or 1.88 shekels a share, a year earlier. [ID:nBw215395a].
Revenue slipped to 1.412 billion shekels from 1.581 billion shekels, with service revenues down 2.9 percent to 1.336 billion shekels. Partner cited lower roaming revenues as a result of the recession as well as government mandates that reduced intrerconnect fees and billing intervals to one second from 12.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 2.6 percent to 552 million, with its EBITDA margin reaching 39.1 percent of total revenues.
Alper said he was looking for net income of 266 million shekels, EBITDA of 539 million shekels and revenues of 1.519 billion shekels.
Partner said its subscriber base rose 2.8 percent to 2.903 million -- a 34.1 percent market share -- behind that of market leader Cellcom (CEL.N) (CEL.TA), which reports its results next week. It had 1.021 million customers on its 3G network.
Partner remained ahead of Pelephone, a unit of Bezeq Israel Telecom (BEZQ.TA). Pelephone on Wednesday reported a 41 percent rise in quarterly net profit to 230 million shekels,helped by a 2.9 percent rise in subscribers to 2.669 million. [ID:nLK955918].
Helping to offset a competitive and saturated mobile market, Partner is banking on a move to Voice over Broadband (VoB) and as an Internet service provider to boost revenues during the downturn.
The company declared a dividend of 237 million shekels, or 1.54 shekels a share, to be paid on July 8.
Partner is 52 percent owned by Hong Kong's Hutchison Telecommunications International (2332.HK), which is controlled by Hutchison Whampoa (0013.HK). (Editing by David Cowell) ($1 = 4.02 shekels)
