Israel's Pelephone net profit more than halved during Q2

Pelephone, the mobile division of Israel-based telecoms company Bezeq, blamed a 53.8 per cent year-on-year drop in net profit during the second quarter of 2015 on a loss of hosting revenues.

The mobile operator saw its net profit drop from ILS106 million (€24 million/$25.4 million) in the second quarter of 2014 to ILS49 million in the recent period, after revenues dropped 19.3 per cent year-on-year to ILS502 million due, in part, to the end of a hosting agreement with Hot Mobile at the end of December.

Revenue was also affected by a drop in tariff prices due to competition in the Israeli mobile market and the transfer of existing customers to lower-priced services, Bezeq said in its second-quarter earnings statement.

Pelephone's CEO Gil Sharon said the company had focused on customer retention and operational streamlining activities during the second quarter, which resulted in a quarter-on-quarter rise in net profit and stability in the company's subscriber base.

On a sequential basis, net profit increased 36.1 per cent, while subscriber numbers grew marginally from 2.565 million to 2.566 million.

"In the present quarter we implemented several initiatives, such as acquiring YouPhone's operations, which will enable us to grow our subscriber base," Sharon said, adding: "We also expanded our presence in the prepaid market, launching new programs at the end of April which enabled us to recruit more subscribers during the quarter.

"Thanks to these initiatives, this is the first quarter in some time that we have managed to stop the net churn."

Sharon said the company is gearing up to increase the bandwidth of its LTE network, after recently receiving 4G frequency allocations from the Ministry of Communications.

Bezeq's fixed-line business showed a similar trend in net profit during the second quarter, with the figure falling 40.5 per cent year-on-year to ILS482 million despite a 15.7 per cent rise in revenues.

Shaul Elovitch, Bezeq's chairman, said competition in Israel's telecom market increased due to changes the wholesale sector, adding that the operator will seek to compete by leveraging its "capabilities, developed through years of experience with infrastructure and service operations".

The operator appears to be preparing to offer more bundled services as part of that drive to stave off competition. "The next step in the consumer-oriented reform should be to eliminate structural separation, thereby expanding competition into service offerings as well," Elovitch said.

For more:
- see Bezeq's earnings statement (PDF)

Related articles:
Israel's Cellcom mulls purchase of rival Golan Telecom
Cellcom Israel, Golan Telecom seek approval for network-sharing deal
Israel awards LTE spectrum to 6 players
Cellcom, Pelephone follow Partner with LTE launches in Israel
Ericsson: LTE leads way as mobile broadband subscriptions hit 3.1B

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