Golan Telecom Ltd. was triumphant in 2013 in the mobile market: the company ended the year with 134,000 net new subscribers. The company’s arch-rival Hot Mobile Ltd. gained only 67,000 net new subscribers last year, less than half Golan Telecom. This is a significant achievement for Golan, and a failure for Hot Mobile, whose number of new subscribers dropped drastically from the previous year, and reflects the many problems that have come to light for Hot Telecommunication Systems Ltd. (TASE: Hot.B1) over the year, primarily in terms of service.
In Hot Mobile’s defense, the company outperformed Golan in new subscribers. However, the main problem for Hot Mobile, which the company seems unable to solve, is a high abandonment rate. Many customers switch to Hot Mobile, but then don't hesitate to return to the company they had left, or take advantage of the promotional deals, and then leave. The carrier is also hit by the many veteran MIRS (walkie talkie phone) subscribers who have left. Hot Mobile has recently taken steps to stabilize the service.
Competing tooth and nail
In December, as throughout 2013, Golan led Hot Mobile by a significant gap. Golan’s policy has proven more effective, employing an easy-to-implement and effective strategy: online subscriptions, and minimum interaction with customers. The entire year was marked with aggressive deals from all the companies, so it cannot be said that any one company lost more because its deals were not attractive enough - all the companies competed tooth and nail this year, and Golan’s accomplishment is deserved.
Among the big companies, 2013 will go down as a particularly bad year for Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), which lost 106,000 mobile customers - an exceptionally high number compared with Pelephone Communications Ltd. and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). Cellcom is the company with the most subscribers in Israel. Partner (including 012 Mobile) marks an impressive accomplishment after being the biggest loser among the major companies in 2012; in 2013 the company simply succeeded in attracting subscribers, losing only 60,000, and Pelephone ended the year with a net loss of 77,000 customers.
In December, Cellcom suffered a very big loss of customers, shedding 16,500 subscribers. In the mobile market, sources were quick to say that this showed the company’s latest campaign, launched in mid-December (handing out gifts to customers to enhance loyalty) had not proven itself, as evidenced by the unusually high rate of abandonment.
However, it is difficult to assess the effectiveness of such a campaign in such a short period of time, and the question of whether the company will succeed in increasing the loyalty of its remaining customer base is still unanswered. That said, the market leans toward price and promotions, and increasing customer loyalty by distributing gifts is a very difficult task.
More than anything else, the last year has proven that the mobile market, and the behavior of its consumers, leans heavily towards the operators who were most aggressive in their promotions. It became clear that during periods when the operators reduced prices, they had a high volume of concentrated activity, and the converse was true too. This indicates that a fairly consistent group of customers switched repeatedly between operators looking for the current best deal.
Among the virtual operators, in 2013, YouPhone was the most successful company. The company registered 43,000 net new subscribers, compared with its competitor, Rami Levy, which lost 4,300 net mobile subscribers. Home Cellular registered 1,000 new subscribers, and Telzar, the new player in the market, had 1,700. In December, Rami Levy launched an aggressive campaign offering service for NIS 49/month, and was therefore crowned as winner. However, in annual terms, Rami Levy’s activity has been on a downward trajectory for almost the entire year.
In summary, the overwhelming majority of new subscribers are those who switch between companies. The rest of the subscribers, who are not switching companies, are new subscribers who did not previously have a mobile number, or those who purchased an additional line. Therefore, the churn rate is still relevant in the analysis of consumer activity in the market. According to estimates, the rate of new customers (with new phone lines) that the companies register is around 20%; the vast majority of new subscribers are those who have switched their line from another carrier.
Published by Globes [online], Israel business news - www.globes-online.com - on January 1, 2014
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