In a new survey on the global cellular market, Merrill Lynch says growth in ’53 matrix markets” will be 16% this year, lower than in 2005 and 2006, but that there is “potential for outperformance in 2008.” Israel is one of the markets covered in the survey.
Merrill Lynch’s cellular stock picks for Israel are Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR; LSE:PCCD) and Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ), the parent company of Pele-Phone Communications Ltd.
Merrill Lynch predicts that the Israeli cellular market will grow by 3.6% to 8.57 million subscribers (a penetration rate of 118%), after showing 6.3% growth in the fourth quarter of 2006, compared with the corresponding quarter.
Merrill Lynch predicts that Cellcom Israel Ltd. (NYSE:CEL) will increase its market share to 35% in 2007 from 34.8%. Partner will add subscribers and increase its market share to 32.4%, while Pele-Phone will see its market share slip a tenth of percentage point to 28.7%. MIRS Communications Ltd. will tread water and see its market share fall from 4.1% to 4%.
Merrill Lynch also predicts that markets shares will stay unchanged in 2008, and that subscriber growth will continue to slow, amounting to 1.8%.
Merrill Lynch predicts that Cellcom will see the highest growth in average minutes of use (MOU) per subscriber, widening the existing gap, which will affect the company’s revenue. Cellcom’s MOU is expected to rise to 342 in 2007 and 351 in 2008; Partner’s MOU will remain unchanged at 311; and Pele-Phone’s MOU will rise slightly from 322 in 2006 to 324 in 2007 and 325 in 2008.
Merrill Lynch predicts that Cellcom’s revenue will rise by 6% to NIS 5.3 billion in 2007; Partner’s revenue rill rise by 3.8% to NIS 5.12 billion; and Pele-Phone’s revenue will grow by less than 1% to NIS 3.93 billion. The aggregate revenue of Israel’s four cellular operators will grow by 3.7% to NIS 14.5 billion.
Published by Globes [online], Israel business news - www.globes.co.il - on April 11, 2007
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