While HOT Mobile Ltd. led its competitors in new sign-ups for most of July, it was Golan Telecom Ltd. which continued its winning ways by the end of the month surpassing the former in net customer gain with almost 12,000 new subscribers to HOT's 9,000.
The fact Golan keeps poaching customers from the veteran mobile operators and maintaining its low prices helps serve the network in its struggles against the Ministry of Communications and reinforces its reputation as the most competitive firm.
HOT Mobile, however, continues to pay a painful price for its sub-par customer service, leading to churn rates from the company that are far higher than Golan's reflecting the favorable sentiment for the latter as opposed to the negative association with the former.
Sentiment must be the only explanation; otherwise, it is difficult to understand why HOT Mobile accepts the desertions, and why management is failing to slowdown the churn rate despite the low prices and the assorted benefits.
It is possible and this is a conjecture that HOT Mobile is not actually interested in fighting the phenomenon, as that would demand investments which management must not believe are in the interest of the firm.
It should be noted that HOT Mobile's fourth-quarter report showed tens of thousands of new subscribers, while simultaneously showing a decrease in revenue, meaning it subsidizes its mobile operations. But if prices are so low, what explains the monthly churn rate and why has customer retention not stopped the trend?
Among the veteran operators, Pelephone Communications Ltd. has managed to outperform Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL); it appears that the firm is actively working on maintaining its market share and minimizing churn which has been an expensive venture due to the expenses on advertisers who recruit and retain clients using low prices.
In July, Pelephone lost 4,700 subscribers, Partner lost 8,863, and Cellcom lost 9,193.
On the other hand, not much has changed for the virtual operators. Rami Levy maintains its forward momentum with a net increase of 2,700 clients, while YouPhone (sold to Pelephone) continues to lose subscribers.
Published by Globes [online], Israel business news - www.globes-online.com - on August 2, 2015
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