Cellcom, Partner Gain as Competition Seen Waning: Tel Aviv Mover

Cellcom Israel Ltd. and Partner Communications Co., the country’s two largest mobile phone providers, rallied for a third day on bets competition in the cellular market may be stabilizing.

Cellcom, the biggest gainer on the index, rose 4 percent to 33.56 shekels, the highest since Dec. 23 at the close in Tel Aviv. Shares of Partner, Israel’s second-largest mobile carrier, increased 1.6 percent to 25.33 shekels, the highest level since Dec. 2. The benchmark TA-25 Index advanced for a third day, adding 0.2 percent. Bezeq Israeli Telecommunication Corp., which provides wireless services via its Pelephone Communications Ltd. unit, advanced 1 percent.

The shares of the three carriers have been among the worst performers on the TA-25 in the past 12 months as new operators including Hot Telecommunication System Ltd. and Golan Telecom Ltd. entered the market offering aggressively packaged deals as the government opened the sector to competition.

There is “growing optimism that special deals that plagued the cellular market over the last few months are possibly coming to an end,” Gilad Alper, a senior analyst at Tel Aviv’s Excellence Nessuah Brokerage Ltd., said today in an e-mailed note, in which he upgraded both Cellcom and Partner. “We expect to see average revenue per user beginning to creep up as early as the third quarter as special deals are expiring.”

Alper expects “dire” first-half 2013 results from the impact of special deals initiated in the last couple of months. He boosted Cellcom to buy from hold and increased the price estimate to 38 shekels from 28 shekels. Partner was raised to hold from underperform with a price projection of 23 shekels from 18 shekels.

Cellcom’s average revenue per user dropped to 88 shekels ($24.23) per month in 2012 compared with 106 shekels in 2011, according to data compiled by Bloomberg. User revenue at Partner dropped to 97 shekels a month in 2012 from 111 shekels a month in 2011, the data show.

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