Six months after trying to push up prices in the mobile communications market in Israel, Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) has upset the entire market with an aggressive campaign at a fixed price for an unlimited period. The campaign netted the company 17,000 new subscribers in April (subscribers joining the company minus those leaving, excluding new customers who did not previously subscribe to any mobile phone services). The main loser in this competition was Partner, which lost nearly 15,000 subscribers in April.
Other companies also lost subscribers as a result of Cellcom's campaign. Golan Telecom, which responded by renewing its lifelong package (NIS 29 a month for 100 gigabytes), lost 2,500 subscribers during the month. Hot Mobile, which also briefly offered lifelong packages, lost 3,500 subscribers. Pelephone also came out on the short end, losing over 6,000 subscribers.
Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) says that it lost no more customers this month than in the preceding months. The company attributed its subscriber losses mainly to its failure to recruit new subscribers. The company is simply unwilling to sell cheaply and pay high commissions to marketers.
The number of Partner's subscriber losses is very alarming, because it represents a consistent trend that has lasted for several years. Its explanations that it is unwilling to sell through marketers who charge commissions may be right, but the company's lack of success in subscriber recruitment cannot be attributed to charging higher prices than everyone else - the contrary is the case. Partner is offering very attractive prices, but is still losing more subscribers than any of its competitors.
Cellcom's bargain was officially available for only 36 hours on election day. In practice, however, the company's marketers, including on the social networks, extended the campaign beyond this time period, in view of its achievements and the public's response.
It turns out that there is a market for customers looking for lifelong packages on exactly the format led by new player We4G, controlled by Xfone. We4G continued its positive momentum in April, despite Cellcom's bargain, and the demand is likely to induce the company to offer more bargains later this year. We4G picked up over 10,000 net subscribers in April.
Cellcom is offering an 80-gigabyte package, unlimited in time, for NIS 24.90 a month. Cellcom is saying officially that it can raise the price whenever it wants, and is therefore not calling the bargain a lifelong package, but the company is nevertheless stating that it does not plan to change it.
Rami Levy and 019 Mobile recruited only 500 net subscribers in April.
The mobile phone companies tried desperately to raise their prices only six months ago. The competition in the mobile phone market shows that prices are falling. It will be interesting to see the first quarter results reported by the companies.
Published by Globes, Israel business news - en.globes.co.il - on April 30, 2019
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