Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) posted a NIS 46 million loss for the second quarter of 2020, bringing its net loss for the first half of the year to NIS 89 million. The financials released by the telecommunications company this morning show a continuing decline in revenue and a switch to an operating loss, and erosion in EBITDA, partly as a result of expenses arising from a voluntary retirement scheme. At the end of the second quarter, Cellcom owed bondholders and financial institutions NIS 3.2 billion.
Revenue totaled NIS 855 million ($247 million) in the second quarter of 2020, which compares with NIS 920 million ($265 million) in the second quarter last year, representing a decrease of 7.1%. Revenue from mobile telephony fell 8.6% to NIS 532 million, of which NIS 385 was from services and NIS 147 million from equipment sales. Average monthly revenue per mobile user was NIS 46.9, down from NIS 48.1 in the previous quarter. The decline is mainly explained by a decline in roaming services as a result of coronavirus pandemic, and continuing erosion of mobile telephony prices. At the end of the quarter the company had 2.7 million subscribers.
Landline services - telephone, Internet, and television - yielded revenue of NIS 364 million, 2.9% less than in the corresponding quarter.
Cellcom's adjusted EBITDA was NIS 222 million in the second quarter, 4.7% less than in the corresponding quarter. Free cash flow totaled NIS 24 million, which compares with NIS 55 million in the corresponding quarter.
"In the second quarter we dealt with the impact of the coronavirus crisis which led to a decrease in the company's revenues," said Cellcom CEO Avi Gabbay. "Thanks to a quick response by the company's management in cooperation with the employee's representatives, we were able to reduce operating expenses and offset a significant part of the effects of the crisis and provide a very good service to our customers, despite the limitations of the pandemic quarantine and the social distance-working requirement.
"We are currently continuing to take comprehensive and in-depth actions to generate further efficiencies and improve the company's financial and operational parameters. The steps we are taking today are expected to allow the company to deal with the coronavirus crisis and emerge from it a more efficient and focused company.
"We recently successfully concluded our participation in the frequency tender which includes the 5G frequencies. We are very pleased with the results, that will enable us to launch a new network and we intend to provide our customers with a fast, widely deployed and quality network.
"Currently, there are over 400,000 households at buildings that are connected to IBC's fiber infrastructure. We continue to focus on transferring our internet and television customers to fiber infrastructure while improving the segment profitability, and reducing payments to Bezeq.
"I am pleased to announce that we have received all the regulatory approvals required for the purchase of Golan Telecom. The execution of the transaction will strengthen Cellcom Israel's position as a leading communications company and is expected to make a significant addition to the company's adjusted EBITDA and free cash flow."
Areli Beker, the company's replacement CFO, said: ""The company's board of directors decided not to distribute dividends for the second quarter of 2020, in light of the continued increased competition in the market and its negative impact on the company's operating results and in order to continue to strengthen the company's balance sheet. The board of directors will review its decision in accordance with the development of market conditions and, taking into account the company's needs."
Published by Globes, Israel business news - en.globes.co.il - on August 17, 2020
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