JERUSALEM, Aug 15 (Reuters) - Israel’s largest mobile phone operator Cellcom reported a steeper than expected second-quarter loss on Thursday, weighed down by a jump in financing costs and fierce competition in the mobile sector.
The company posted a net loss of 35 million shekels ($10 million) for the April-June period, compared with a 37 million shekel loss a year earlier. Revenue dipped 0.8% to 920 million shekels.
Cellcom, the first of Israel’s telecom groups to publish second quarter earnings, was forecast to lose 22.5 million shekels on revenue of 908.5 million, according to a Reuters poll of analysts.
Its bottom line included 52 million shekels of financing expenses due to higher interest rates stemming from the inflation rate rising to 1.5% in the quarter as the shekel appreciates against global currencies. It had 43 million shekels of financing expenses a year ago.
Israel’s mobile phone industry was shaken up in 2012 with the entry of a host of new operators, sparking a price war that led to steep drops in subscribers, revenue and profit for Cellcom and rival incumbents Partner Communications and Pelephone, a unit of Bezeq.
Cellcom’s mobile subscriber base fell 2.3% from a year ago to 2.745 million at the end of June. However, the number of subscribers to its internet-based TV service gained 22.6% to 239,000 while it grew the number of Internet customers by 12.1%.
Cellcom this week completed a deal to buy 70% of the Israel Broadband Co (IBC), which has exclusive rights to deploy fibre optics over infrastructure belonging to state-owned utility Israel Electric Corp.
“Following the completion of the transactions, the company is expected to substantially decrease its capital investments as early as 2020 and the expenses for wholesale market access payments as more and more customers transfer to IBC’s fiber-optic infrastructure,” said Chief Financial Officer Shlomi Fruhling.
Cellcom projects 750,000 households will have access to its fibre network by the end of 2022.
$1 = 3.5135 shekels Reporting by Rami Ayyub and Steven Scheer, editing by Deepa Babington