UPDATE 1-Cellcom Q1 profit up on cost cuts as revenue falls

* Q1 net profit up 27.5 pct to 348 mln shekels

* Revenue down 2.1 percent to 1.56 bln shekels

* To pay dividend of 3.36 shekel a share

(Adds details, CFO quote, share reaction)

JERUSALEM, May 26 (Reuters) - Cellcom (CEL.N) (CEL.TA), Israel's largest mobile phone operator, said on Monday its quarterly profit rose 27.5 percent, helped by efficiency measures.

Cellcom recorded first-quarter net income of 348 million shekels ($87 million), or 3.51 shekels per diluted share, compared with net income of 273 million shekels, or 2.76 shekels a share, a year earlier. [ID:nPnUKTU001]

"The growth in profitability is mainly attributable to our diligent cost management, which led to marketing, sales, general and administrative expenses remaining at the same level as in the first quarter last year," Cellcom Chief Financial Officer Tal Raz said in a statement.

On the heels of a decline in roaming revenue due to the weakening economy, revenue fell 2.1 percent to 1.56 billion shekels, with service revenues up 1.1 percent to 1.37 billion shekels.

Cellcom's subscriber base in Israel's saturated mobile phone market rose by 21,000 in the quarter to 3.21 million, of which 833,000 were customers of its third-generation (3G) network.

Rival Partner Communications (PTNR.O) said last week that it added 5,000 subscribers to 2.90 million. Partner posted flat quarterly profit and a 10.7 percent fall in revenues. [ID:nLL701202]

Cellcom said it would pay a cash dividend of 330 million shekels, or 3.36 shekels a share, on June 22.

Its shares were up 1.1 percent at 101.20 shekels at midday, compared with losses of 0.7 percent on the broader Tel Aviv bourse.

Cellcom's parent company, Discount Investment Corp, (DISI.TA) said separately on Tuesday that its first quarter net profit more than doubled to 392 million shekels [ID:LQ387700] ($1 = 4 shekels) (Reporting by Steven Scheer; editing by Karen Foster)