Bloomberg News

Partner Quarterly Profit Tumbles as Competition Increases

November 24, 2011

(Updates with closing share prices starting in seventh paragraph.)

Nov. 23 (Bloomberg) -- Partner Communications Co., Israel’s second-largest mobile-phone company said third-quarter profit slid 44 percent as competition increased.

Net income fell to 172 million shekels ($46 million) from 309 million shekels a year earlier. Revenue rose 6 percent to 1.75 billion shekels. Earnings before interest, taxes, depreciation and amortization declined 17 percent to 529 million shekels.

“We see a margin squeeze in the sector due to the cuts in interconnect fees and the price war that began in the first quarter of the year,” Richard Gussow, a Tel Aviv-based analyst at Deutsche Bank AG, said by telephone. The median estimate of five analysts on Bloomberg was for third-quarter net income of 205 million shekels.

Israel’s Ministry of Communications, seeking to boost competition in the market, has issued licenses to new mobile telephone and virtual operators, among them Golan Telecom Ltd., a phone company whose partners include Xavier Niel, and Hot Telecommunication System Ltd., through its MIRS Communication Ltd. unit. Supermarket operator Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. will begin offering cellular services Dec. 5, TheMarker reported Nov. 20, without saying where it got the information.

Entry Point

The TA-Com index of telecommunications companies has dropped 31 percent in the past six months, compared with a 19 percent decline for the benchmark TA-25 Index. Partner has lost 42 percent over the period.

Following the decline, Partner’s share price “offers an attractive entry point,” Darren Shaw, a Herzliya Pituach, Israel-based analyst at UBS AG, wrote in a report.

The shares climbed 1.3 percent to close at 36.11 in Tel Aviv.

The company set a total third-quarter dividend of 140 million shekels, or 0.90 shekel a share, representing about 80 percent of profit for the period, it said.

Separately, Partner’s controlling shareholder Scailex Corp. said it was in talks to sell a 20 percent stake in its Israeli Samsung cellular operations to Greenstone Industries Ltd.

Scailex is controlled by Suny Electronic Inc., which is owned by Ilan Ben Dov, who is Partner’s chairman.

“Ben Dov needs to raise cash and is choosing to sell his Samsung distributionship as opposed to Partner, his key asset,” Deutsche Bank’s Gussow said.

Scailex dropped 1.2 percent to 21.30 shekels. Suny declined 8.5 percent to 14.20 shekels, the lowest level since July 2009.

--Editors: Susan Lerner, Shanthy Nambiar

To contact the reporters on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net; Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


China's Killer Profits
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus