May 28, 2019 / 7:17 AM / 6 months ago

UPDATE 1-Israel's Cellcom swings to Q1 loss, revenue slips

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TEL AVIV, May 28 (Reuters) - Israel’s largest mobile phone operator Cellcom swung to a loss in the first quarter, it said on Tuesday, blaming intense competition and price erosion in cellular services.

CEO Nir Sztern said the company has been able to expand activities in fixed-line services, but the “intensity of the competition in the cellular segment continues to have a negative impact on the results of this segment.”

Cellcom reported a net loss of 16 million shekels ($4.4 million) for the quarter, in line with a Reuters poll forecast and compared with a net profit of 7 million a year earlier.

Revenue slipped 0.5% to 928 million shekels, but beat a Reuters poll forecast of 907 million shekels.

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 other incumbents.

Last year Cellcom agreed to buy 70% of the Israel Broadband Co (IBC), which has exclusive rights to deploy fibre optics over infrastructure belonging to state-owned Israel Electric Corp. This month it signed a deal with Netflix to distribute the entertainment service on its Cellcom TV platform.

It expects 750,000 households will have access to its fibre network by the end of 2022.

Cellcom’s mobile subscriber base gained 1.1% from a year ago to 2.853 million, but revenue per subscriber fell 9% in the first quarter.

Cellcom launched a lower-cost internet-based TV service in 2015 that it says had attracted 227,000 subscribers by the end of the first quarter, up 23.4% from a year earlier. It also has 278,000 customers for its internet services, an 18.3% rise from a year ago.

Sztern said he also hopes an agreement reached with Cellcom’s workers’ union in the quarter will reduce expenses and have a “positive cumulative effect of approximately 54 million shekels on the company’s adjusted EBITDA for the years 2019-2020 compared with the previous collective agreement.” ($1 = 3.6074 shekels) (Reporting by Ari Rabinovitch; Editing by Steven Scheer and Susan Fenton)

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