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[November 13, 2012]

Cellcom profit slashed but results beat estimates

Nov 13, 2012 (Globes - McClatchy-Tribune Information Services via COMTEX) -- Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), controlled by Discount Investment Corporation (TASE: DISI), reported third quarter results this morning. The mobile telephony company's revenue fell 13 percent in comparison with the corresponding quarter of 2011 to NIS 1.448 billion. Net profit plummeted 37.7 percent to NIS 124 million. On the other hand, the company's cash flow soared 58 percent to NIS 414 million.

The consensus analysts' estimate compiled by "Globes" and Psagot was for earnings per share of NIS 0.84 on revenue of NIS 1.35 billion. Actual earnings per share were NIS 1.25, well ahead of the estimate.

EBITDA (earnings before interest, tax, depreciation and amortization) fell 19.9 percent to NIS 430 million, while operating profit fell 31.5 percent, to NIS 239 million.

Cellcom's subscriber numbers fell 1.6 percent to 3.338 million at the end of September 2012, in comparison with September 2011, and the churn rate rose by 50.9 percent to 8.6 percent. Monthly ARPU (average revenue per user) fell 17.5 percent to NIS 86.7, while monthly MOU (minutes of use) per subscriber rose 11.7 percent to 399 minutes.

In April, Cellcom won the tender to provide cellular services to the IDF for three years, and it appears that the start of taking on IDF subscribers assisted the company in adding 5,000 subscribers during the quarter, as did its "Cellcom Total" plan combining mobile and fixed-line services.

The company has decided not to distribute a dividend.

Cellcom CEO Nir Sztern said, "The company has taken aggressive efficiency measures, which led, so far, to an annual savings run rate of approximately NIS 480 million, while focusing on operational excellence. It is our intention to continue the efficiency measures in the fourth quarter this year, as well as in 2013.

"We continue to leverage and expand the comprehensive services we provide as a communications group, addressing all customer segments, and seeing great success with our "Cellcom Total" marketing plan, which was launched in July of this year, followed by "Cellcom Total for Businesses", a beneficial, comprehensive communications package for small and medium businesses. At the same time, we witness Netvision's contribution to the company's success, presenting a third quarter EBITDA of NIS 75 million, through leveraging Cellcom-Netvision synergies, and reducing cost redundancies between the companies" "In the third quarter, the company recruited approximately 5,000 net new subscribers. This is an impressive achievement in light of the intense competition. The positive net adds is a result of the "Cellcom Total" success as well as the beginning of IDF subscribers' transfer to our network, whereas the majority of the IDF subscribers will be joining in the following quarters. This quarter, the Company also presented a record growth of private landline telephony subscribers." On the decision not to distribute a dividend, CFO Yaacov Heen said, " The company's board of directors decided not to distribute a dividend for the third quarter of 2012, in order to strengthen the company's balance sheet at this time of market uncertainty. The board of directors will re-evaluate its decision in the coming quarters as market conditions develop, and taking into consideration the company's needs." ___ (c)2012 the Globes (Tel Aviv, Israel) Visit the Globes (Tel Aviv, Israel) at www.globes.co.il/serveen/globes/nodeview.asp fid=942 Distributed by MCT Information Services

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