Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), controlled by Ilan Ben Dov, reported lower profit and revenue for the first quarter of 2012, as regulations instituted by Minister of Communications Moshe Kahlon continued to hit Israel's mobile carriers.
Revenue fell 11% to NIS 1.57 billion ($423 million) for the first quarter from NIS 1.77 billion for the corresponding quarter. Net profit fell 43% to NIS 146 million ($39 million) (NIS 0.94 or $ 0.25 per share) from NIS 254 million. The company missed the analysts' consensus of NIS 1.56 earnings per share on NIS 1.61 billion revenue.
Partner CEO Haim Romano said, "The financial results of the first quarter reflect the company’s operations in a challenging period in the cellular market. Over the past year, the company has been preparing for changes in the industry, the intensification of the competition and the entrance of new competitors." He added, "As part of Partner’s preparations for the competition, and in response to market demands, the Company currently offers attractive tariff plans including unlimited plans and plans in which customers pay only according to usage."
Partner stated, "In light of recent developments in the telecommunications market, the company is updating its business plans and therefore the board of directors decided not to discuss at this time dividend distribution, but rather to discuss it later on."
Partner shed 1,440 jobs from the end of October 2011 through the end of April 2012, including 660 jobs during the first quarter and a further 80 jobs during April.
partner also reported a plunge in equipment sales, especially smartphones, which had offset falling service revenue in previous quarters. Equipment sales fell 41% to NIS 330 million for the first quarter from NIS 559 million for the corresponding quarter.
Service revenue rose 2% to NIS 1.24 billion for the first quarter from NIS 1.21 billion for the corresponding quarter, but would have fallen by 12% were it not for revenue from ISP and international calls carrier subsidiary 012 Smile Telecom Ltd. Mobile service revenue fell 12% to NIS 963 million for the first quarter from NIS 1.1 billion for the corresponding quarter, mainly due increased competition and lower roaming services revenue. Telephony service revenue rose 134% to NIS 320 million from NIS 137 million.
Cash flow from operations fell 10% to NIS 350 million for the first quarter from NIS 390 million for the corresponding quarter.
Average revenue per user (ARPU) fell 12% to NIS 101 per month during the first quarter from NIS 115 per month during the corresponding quarter, although average minutes of use (MOU) rose to 424 per user per month from 374 minutes.
Partner lost a net 29,000 mobile subscribers during the first quarter to 3.14 million at the end of March, and 2% fewer than a year earlier. It also lost a net net 7,000 telephony subscribers and 14,000 ISP subscribers. The churn rate rose to 8% during the first quarter from 7.3% during the corresponding quarter.
Looking ahead, Partner said, "In May 2012, two new cellular operators, Mirs Communications Ltd. (Hot Mobile) and Golan Telecom Ltd., have announced the launch of their services. In addition, two new mobile virtual operators (MVNO's), Alon Cellular Ltd. and Home Cellular Ltd., have announced the launch of their operations on May 13, 2012 and April 22, 2012, respectively. As a result, and in light of the current saturation of the cellular communications market, the market share of existing mobile operators could diminish and pricing for services are expected to be reduced." It added, "On May 2, Ministry of Communications published the final policy document with respect to increasing competition in the fixed-line telecommunications market."
Partner's share price fell 4.4% by midday on the TASE today to NIS 18.18, after falling 4.7% on Nasdaq yesterday to $764 million, giving a market cap of $764 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 23, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012