Cellcom, Partner Drop on Citi Competition View: Tel Aviv Mover
Cellcom (CEL) Israel Ltd. and Partner Communications Co. (PTNR), Israel’s two largest wireless operators by number of subscribers, fell after Citigroup Inc. (C) said competition will continue to hit revenues.
Cellcom shares dropped as much as 2.5 percent before declining 0.6 percent to 46.53 shekels at 3:34 p.m. in Tel Aviv. Shares of Partner slid as much as 2 percent and declined 0.3 percent to 31.85 shekels. The benchmark TA-25 Index advanced 0.7 percent.
Increased competition fueled a price war and eroded market share as newcomers like the mobile phone unit of Hot Telecommunication System Ltd. and Golan Telecom Ltd. cut prices to gain market share. Cellcom’s average revenue per user, or ARPU, dropped to 79.6 shekels ($22.76) in the third quarter from 86.7 shekels in the year-earlier period, while Partner’s user revenue fell 13 percent to 84 shekels, data compiled by Bloomberg show.
“Market share wars remain the name of the game,” Citigroup analyst Michael Klahr wrote in an e-mailed note to clients. “The market is being complacent if it thinks that ARPU and service revenues bottomed in 2013. Recent network sharing deals that reduce newcomers’ capital outlay actually provide more room for them to cut prices.”
Partner said in November it entered a 15-year network-sharing arrangement with Hot Mobile. Cellcom in December agreed to share networks with Pelephone Communications Ltd. and Golan.
Tel Aviv-based Klahr raised Cellcom’s price estimate to 38.5 shekels from 34 shekels and Partner’s to 28.2 shekels from 16.5 shekels.
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