Cellcom profit plummets as fiber optic project moves ahead

Nir Sztern Photo: Sivan Faraj

Israel Infrastructure Fund signed an agreement to buy half of Cellcom's fiber-optic venture stake.

Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) today reported an agreement with the Israel Infrastructure Fund for a joint investment in the IBC fiber-optic project. Cellcom also reported its third quarter results.

The report said that the investment would be in equal shares. Since Cellcom owns 70% of the venture, each of the two companies will have a 35% stake. Cellcom is also negotiating with Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and HOT Telecommunication Systems Ltd. (TASE: HOT) for cooperation in the venture for deploying fiber optics on Israel Electric Corporation's (IEC) (TASE: ELEC.B22) infrastructure.

Bezeq Israeli Telecommunication Co. Ltd.'s (TASE: BEZQ) share price fell 4% on the TASE in response to the report.

Cellcom CEO Nir Sztern said, "The entry of Israel Infrastructure as an equal partner in IBC, subject to completion of the deal, is an important step in the venture's progress and in the advancement of Internet infrastructure in Israel. We believe that entering IBC in partnership with Infrastructure Fund, together with IEC, will soon revolutionize Internet infrastructure in Israel and put Cellcom in a leading competitive position in the advanced landline infrastructure market."

97% decrease in net profit

Cellcom finished the third quarter with NIS 910 million in revenue, 6.7% less than its NIS 975 million in revenue in the third quarter of last year. Revenue from services fell from NIS 737 million in the third quarter of 2017 to NIS 737 million in the third quarter of this year, a 3.4% drop.

Operating profit totaled NIS 33 million, 60.2% less than Cellcom's NIS 83 million operating profit in the second quarter of last year. Net profit plummeted from NIS 32 million in the third quarter of 2017 to NIS 1 million in the third quarter of this year, a 96.9% loss of profit. Cellcom posted a NIS 32 million loss in the preceding quarter caused by a provision for employee retirement.

Published by Globes, Israel business news - en.globes.co.il - on November 22, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Nir Sztern Photo: Sivan Faraj
Nir Sztern Photo: Sivan Faraj
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