Cellcom's mobile business continues its decline

Nir Sztern Photo: Sivan Faraj

Cellcom lost NIS 16 million in the first quarter as rising revenue from television services failed to offset the erosion in mobile telephony.

Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) posted a NNIS 16 million loss for the first quarter of 2019, which compares with a loss of NIS 35 million in the previous quarter. The company's mobile telephony services revenue continued to be eroded, totaling NIS 404 million in the first quarter, compared with NIS 416 million in the previous quarter and NIS 437 in the corresponding quarter of 2018.

Total revenue (including fixed-line services) was NIS 928 million, which compares with NIS 918 million in the previous quarter and NIS 933 million in the corresponding quarter. In other words, the improvement that the company is recording in revenue from television services and the wholesale market is still failing to offset the erosion of the mobile telephony business. Cellcom added 8,000 television subscribers in the first quarter.

As a result of the adoption of the IFRS 16 accounting standard, the company's EBITDA improved to NIS 243 million in comparison with EBITDA of NIS 187 million in the corresponding quarter, representing growth of 19.8%, and NIS 169 million in the previous quarter.

Operating profit fell to NIS 9 million in the first quarter, from NIS 14 million in the previous quarter, while cash flow totaled NIS 46 million, which compares with NIS 9 million in the previous quarter and NIS 84 million in the corresponding quarter. The improvement in cash flow is apparently due to better management of payments to suppliers.

Cellcom CEO Nir Sztern said, "Alongside the success of our strategy to expand our activities in the fixed-line segment, the intensity of the competition in the cellular segment continues to have a negative impact on the results of this segment.

"We continue the rapid deployment of Cellcom's independent fiber optic infrastructure in residential areas and expect the completion of the transaction for the sale of that fiber infrastructure to IBC, in the coming months (subject to the parties entering into a definitive agreement), together with the investment in IBC (subject to its approval), will contribute significantly to the results of the Company's operations and make a positive improvement to its free cash flow.

"The rapid deployment rate will enable more than 750 thousand households to be within fiber network coverage by the end of 2022, with connection to a high-speed, quality Internet infrastructure."

Published by Globes, Israel business news - en.globes.co.il - on May 28, 2019

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

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