Reuters – Cellcom, Israel’s largest mobile phone operator, reported a 70% jump in quarterly profit due in part to cost-cutting measures implemented as the company faced intensified competition.
Net profit rose to ILS 114m ($33m) in the first quarter from ILS 67m a year earlier, Cellcom said on Wednesday. Revenue dipped 10.2% to ILS 1.13bn.
Cellcom was forecast to earn ILS 86m shekels on revenue of ILS 1.18bn, according to a Reuters poll.
The company’s selling, marketing, general and administrative expenses fell 15.6% in the quarter due to efficiency measures, which led to a decrease in payroll and other expenses.
Finance costs fell 41% due to a drop in interest expenses.
Israel’s mobile phone industry was shaken up in 2012 with the entry of six new operators, sparking a price war that led to steep drops in subscribers, revenue and profit at Cellcom and two incumbent rivals.
“We expect the price erosion and high competition to continue in the coming quarters while the company’s ability to continue implementing efficiency measures to mitigate the decrease in revenues will be reduced,” Cellcom Chief Executive Nir Sztern said.
Cellcom said it would not pay a dividend for the first quarter given the continued intensified competition in the market and its adverse effect on the company’s revenue.
“The board of directors will re-evaluate its decision as market conditions develop and taking into consideration the company’s needs,” Cellcom said.
In the third quarter Cellcom paid a quarterly dividend of ILS 85m but did not pay one for the fourth quarter.
Sztern said Cellcom was preparing for a quick launch of a 4G network supporting LTE advanced technology.
Cellcom had 3.049 million subscribers at the end of the first quarter, down 3.7% from a year ago.