Cellcom pledges action as net plummets

Israel-based carrier Cellcom Israel blamed regulatory changes and tougher competition for a 36.1% fall in net income during 2011.
The telco’s net fell to 825 million Shekels (€164 million) in 2011, as revenue dropped 2.3% year-on-year. Figures for the fourth quarter offered little relief, with revenues flat at 1.6 billion Shekels and net income falling a whopping 76.2% year-on-year to 76 million Shekels. The firm’s EBITDA margin fell from 40% in 2010 to 33.3% in 2011, and from 38% in 4Q10 to 25.5% in the most recent quarter.
Despite the lower earnings, newly-appointed chief executive Nir Sztern says the telco is in good shape following a merger with ISP Netvision in August. "We believe that our strong basis as a leading cellular company along with the synergies derived from the merger…will create an advantage that will enable us to endure these market changes,” he states.
Sztern says the firm will focus on making its current activities more efficient through 2012 in a bid to cut costs, and predicts synergies from the Netvision merger will quickly boost earnings and reduce expenses. The telco will also look to improve its customer experience, he says, adding that upgrades to its cellular network will enable it to offer data rates up to 84-Mbps.
“In 2012 and the upcoming years we will deepen our focus on cellular internet growth by continuing to introduce data devices such as tablets and smartphones,” Sztern says.

Data services were one of the few bright spots in Cellcom’s 2011 results, with revenues from content and value added services (including SMS) growing 4.9% year-on-year. The sales generated 26.4% of the telco’s overall service revenue during the year.