March 16, 2015 / 9:10 AM / 5 years ago

UPDATE 1-Israel's Cellcom Q4 net profit drops, banks on TV service

* Q4 net profit 55 mln shekels vs 54 mln forecast

* Revenue 1.14 bln shekels vs 1.11 bln forecast (Adds details, CEO, CFO quotes, background)

TEL AVIV, March 16 (Reuters) - Cellcom, Israel’s largest mobile phone operator, posted a sharp fall in net profit and lower revenue for the fourth quarter on Monday reflecting aggressive price competition in the sector.

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 falls in subscribers, revenue and profit at Cellcom and two incumbent rivals.

Competition in 2014 led to “an erosion of the company’s service revenues, which is expected to continue into 2015,” Chief Financial Officer Shlomi Fruhling said.

Quarterly net profit fell 46 percent to 55 million shekels ($13.6 million), in line with a forecast of 54 million in a Reuters poll of analysts.

Revenue fell 5.7 percent to 1.14 billion shekels versus 1.11 billion in the poll.

Cellcom, like its rival Partner Communications, is banking on a wholesale market, launched last month, that will allow the company to lease DSL and cable infrastructure to provide multi-channel TV and other services.

The company said it expects “Cellcom tv” to surpass 20,000 customers in the first quarter of 2015, above its original expectations.

“The combination of Cellcom tv with the opening of the fixed-line market to competition through the wholesale market, presents an opportunity for growth in revenues, among others, through marketing triple packages at attractive prices,” Chief Executive Nir Sztern said.

Shares in Cellcom were up 5 percent to 20.53 shekels in morning trade in Tel Aviv.

It had 2.967 million cellular subscribers at the end of 2014, down 4 percent.

The company’s board decided not to distribute a dividend for a fifth consecutive quarter.

Last week rival Partner Communications said it earned 24 million shekels in the fourth quarter, down 48 percent from a year earlier as revenue fell 2 percent to 1.11 billion shekels.

$1 = 4.0331 shekels Reporting by Tova Cohen; editing by Jason Neely

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