Cellcom unilaterally cuts supplier payments

Cellcom
Cellcom

As it struggles with falling telephony charges and high debt, Cellcom has notified all its suppliers that payments to them will be reduced by 10%.

Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) has notified all its suppliers of a 10% reduction in its payments to them. The move is across-the-board for all suppliers. The notification was sent by the company's CFO Shlomi Fruhling.

The reduction is part of Cellcom's general effort to deal with the situation in which it finds itself because of continuing price erosion in the mobile telephony market and its sizeable debt.

Cellcom is in the midst of negotiations with its workers committee on a recovery plan that is meant to lead to layoffs of up to 1,000 employees, expenditure cuts amounting to NIS 150 million, and the raising of NIS 400 million capital.

Fruhling stated in his letter to Cellcom's suppliers that prices applying to all products and services supplied to Cellcom would be lowered by 10% from this November until the end of 2020.

Cellcom's move raises the fear that all Israel's mobile carriers will follow in its footsteps. The carriers are generally aware of the price levels of suppliers in the market, and so there may ensue a chain reaction that will hurt some of the suppliers. It is not yet clear how Cellcom's suppliers will react to its unilateral move, which may well have wider repercussions.

Published by Globes, Israel business news - en.globes.co.il - on October 27, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018