November 27, 2019 / 9:05 AM / 3 months ago

Cellcom Israel loss smaller than expected, plans to raise equity

TEL AVIV, Nov 27 (Reuters) - Israel’s largest mobile phone operator Cellcom fell to a small third quarter loss and blamed intense competition and price erosion in cellular services.

It reported a net loss of 2 million shekels ($576,635), compared with a net profit of 1 million a year earlier but better than the loss of 15.7 million forecast in a Reuters poll of analysts.

Revenue rose 3.1% to 938 million shekels versus the 929 million expected by analysts.

The company is preparing to raise equity “as soon as possible”, Chief Financial Officer Shlomi Fruhling, said without providing details.

Cellcom is in the midst of implementing a restructuring plan, CEO Nir Sztern said.

“The aim of the steps: strengthening the company’s balance sheet and return to profitability in light of the continued fierce competition in the Israeli communication market and the future investments which the company requires,” he said.

A reduction in some expenses had a positive impact by the end of the third quarter and is expected to increase in the coming quarters, he said.

Israel’s mobile phone industry was shaken up in 2012 with the entry of new operators, sparking a price war that led to steep drops in subscribers, revenue and profit for Cellcom and other incumbents.

Cellcom said more than 300,000 households are connected to the Israel Broadband Co fibre optics network, in which it holds a 70% stake.

Cellcom’s mobile subscriber base fell 2.1% from a year ago to 2.767 million.

Cellcom launched a lower-cost internet-based TV service in 2015 that it says had attracted 247,000 subscribers by the end of the third quarter, up 19.9% from a year earlier.

It also has 276,000 customers for its internet services, a drop of 2,000 from the second quarter as Cellcom focuses on moving customers to the fibre network.

$1 = 3.4684 shekels Reporting by Tova Cohen; editing by Steven Scheer and Jason Neely

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