Partner, Cellcom Lead Tel Aviv Drops on Competition Concern
January 30, 2012, 2:10 AM ESTBy Shoshanna Solomon and Gwen Ackerman
(Updates with closing share prices starting in second paragraph.)
Jan. 29 (Bloomberg) -- Partner Communications Co. and Cellcom Israel Ltd. led declines in Tel Aviv, narrowing the gaps with their U.S.-traded shares, amid concern that increasing competition will erode profit.
The shares of Partner, Israel’s second-largest mobile-phone company, slid to the lowest level in more than seven years, dropping 4 percent to 29.38 shekels, or the equivalent of $7.84, at the 4:30 p.m. close in Tel Aviv. The U.S. shares closed at $7.61 on Jan. 27. Cellcom slumped 4.6 percent to 53.90 shekels or $14.39, the lowest on record. The New York-traded shares closed at $14.62.
“There is a negative sentiment in the whole telecommunication sector following the increased competition on the back of the regulation,” said Ilanit Sherf, an analyst at Psagot Investment House Ltd. in Tel Aviv who has “sell” recommendations on Partner and Cellcom.
Israel’s Communications Ministry, seeking to boost competition in the mobile-communication and fixed-line markets, has forced providers to cut interconnect fees and issued licenses to new mobile-phone and virtual operators. The ministry also is seeking to introduce a ‘‘wholesale’’ fixed- line market. Citigroup Inc. last week recommended investors sell the shares of Partner and cut the price estimates on both Partner and Cellcom by more than 50 percent.
Selling Shares
Bezeq Israeli Telecommunication Corp., the country’s largest telecommunications company, closed at the lowest since March 2009, declining 3 percent to 6.31 shekels. Hot Telecommunication System Ltd., Israel’s second-biggest fixed line operator, declined 1.8 percent to 43.22 shekels, the lowest since October 2010.
Separately, Globes reported today that Ilan Ben-Dov, who owns a stake in Partner through his holdings in Scailex Corp., may sell all his shares of Partner, without saying from where it got the information. Scailex Corp. declined to comment on the report in a statement read over the phone.
Scailex is owned 78.71 percent by Suny Electronic Ltd., which is 73.14 percent by Ben-Dov, and 3.59 percent directly by Ben-Dov, according to data compiled by Bloomberg. Scailex said Dec. 26 it planned to sell part of its 44.54 percent stake in Partner.
--Editors: Susan Lerner, Shanthy Nambiar
To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net
To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net
