Cellcom Drops Most This Month on Competition ConcernJessica Summers
Cellcom Israel Ltd., Israel’s largest mobile phone provider, fell the most in almost four weeks, tracking declines in its New York-traded shares on growing concern price competition will erode earnings.
Shares of the Netanya, Israel-based company dropped 1.7 percent, the most since May 30, to 32.50 shekels, or the equivalent of $8.93, at the close in Tel Aviv. The company’s U.S. shares posted their first weekly decrease in five, falling 3.6 percent to $8.87 on June 21.
New wireless providers, including Golan Telecom Ltd. and Hot Telecommunication System Ltd., have spurred price discounts that Standard & Poor’s Maalot cited in cutting the company’s local credit rating on June 20 to the fifth-highest investment grade. Cellcom’s net debt to earnings before interest, taxes, depreciation and amortization surged to a record 2.91 in the first quarter, and sales are forecast to plunge to the lowest level since at least 2004 this year, according to the average estimate of seven analysts surveyed by Bloomberg.
“There have been new, progressive startups that have come in with pricing which has undercut the large players,” Chaim Fromowitz, an executive vice president of Bank Leumi USA, said in a telephone interview from New York. “It’s causing them a lot of consternation.”
Cellcom’s decline last week in New York trimmed its 2013 advance to 7.1 percent. The stock tumbled 51 percent in 2012 for the biggest loss among Israeli companies traded in the U.S.