Israeli cellular provider Cellcom Israel Ltd. (CEL) Monday reported a 19.4% increase in profit for the third quarter, driven mainly by higher revenues from content and value added services as well as a tax gain.
Net income for the quarter was NIS 289 million or NIS 2.91 per share, up from NIS 242 million or NIS 2.44 per share last year. In US dollars, net income was US$76.9 million or US$0.77 per share for the quarter.
Latest quarter results included one-time tax gain of about NIS 41 million, or US$11 million stemming from the Israeli parliament enactment of the law of "Economic efficiency improvement", which provides, among others, for a gradual reduction of the Corporate tax rate from 25% in 2010 up to 18% in the year 2016 onward.
Excluding one-time items, net income was NIS 259 million or US$69 million for the quarter.
On an average, five analysts polled by Thomson Reuters expected the company to report earnings of $2.63 per share for the quarter. Analysts' estimates typically exclude special items.
Quarterly revenues increased 1.5% to NIS 1.68 billion from NIS 1.65 billion last year, due to a 0.9% increase in revenues from services and a 7.1% increase in handset and accessories' revenues. In US dollars, the company recorded revenues of US$446 million, compared to US$439 million in the prior-year quarter.
Revenues from services were NIS 1.49 billion, up slightly from NIS 1.48 billion a year ago, due mainly to a 32.4% increase in revenues from content and value added services, including SMS, compared to last year. Revenues from content and value added services surged to NIS 229 million from NIS 173 million in the year-earlier quarter. Handset and accessories' revenues increased to NIS 182 million from NIS 170 million in the previous year.
Yaacov Heen, chief financial officer, commented, "Our record revenues, operating income and EBITDA were primarily achieved due to a 32.4% increase in revenues from content and value added services as well as growing landline revenues."
Excluding one-time tax provision, EBITDA for the quarter was NIS 670 million, higher than NIS 653 million a year earlier.
Gross profit for the quarter increased 2.6% to NIS 819 million from NIS 798 million in the previous year. Gross profit margin increased to 48.9% from 48.4% last year.
The churn rate in the third quarter totaled to 4.9%, compared to 4.4% in the previous year. Cellcom noted that the quarterly churn remains primarily impacted by the churn of lower contribution pre-paid subscribers and subscribers with collection problems.
Average monthly subscriber minutes of use totaled 338.1 minutes, up 0.5% from 336.3 minutes in the comparable period.
The monthly average revenue per user, or ARPU, dropped 2.5% to NIS 150.4 from NIS 154.3 in the prior year, due to lower roaming revenues recorded during the third quarter following the decline in tourism.
At the end of September, Cellcom had about 3.259 million subscribers, of which the company added 31 thousand net new subscribers, mostly post-paid. Cellcom added about 64 thousand new 3G subscribers to its 3G subscriber base, reaching around 941 thousand 3G subscribers at the end of September.
Cellcom said its 3G subscribers represented 28.9% of its total subscriber base at the end of the third quarter, an increase from 21.5% a year ago.
For the nine-month period, net income was NIS 911 million or NIS 9.17 per share, higher than NIS 746 million or NIS 7.52 per share a year ago. Year-to-date, revenues edged down to NIS 4.84 billion or US$1.29 billion from NIS 4.85 billion in the comparable period.
On November 15, Cellcom declared a cash dividend of NIS 2.90 per share, which will be payable to all the company's shareholders on December 14, of record at the end of the trading day in the NYSE on December 2, 2009.
CEL closed Friday's regular trading at $30.76 per share on the New York Stock Exchange.
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