Bloomberg News

Hutchison Whampoa No ‘Magician’ to Partner CFO: Israel Overnight

August 22, 2012

Partner Communications Co. (PTNR:US), Israel’s second-largest mobile phone provider, is “doing all the right things” and can regain market share even after Hong Kong-based Hutchison Whampoa Ltd. (13) abandoned plans to become a stakeholder, Chief Financial Officer Ziv Leitman said.

“We don’t think they had a crystal ball to come in and turn around the company,” Leitman, the CFO of Rosh Ha’Ayin, Israel-based Partner said by phone yesterday. “We were not expecting a magician from Hong Kong to come and tell us how to manage the company. We are doing all the right things taking into account competition and regulations in the market.”

Units of Hutchison and the Li Ka-Shing Foundation Ltd. canceled a deal yesterday to acquire a majority stake in Scailex Corp., which owns 44.5 percent of Partner. The buyers terminated the agreement reached in June after they discovered “adverse findings” and a decline in Partner’s operations while reviewing the deal, Scailex said in a regulatory filing.

American depositary receipts of Partner, which have lost 56 percent this year as rising competition in the sector reduces revenue, rebounded yesterday, gaining 3.1 percent. The company was the lead gainer on the Bloomberg Israel-US Equity Index of the biggest New York-traded Israeli companies yesterday. The gauge dropped 0.3 percent to 84.

Partner’s shares gained 4.3 percent today, the most in a week, to 16.18 shekels, or the equivalent of $4.02, at the close in Tel Aviv. Israel’s TA-25 Index fell 0.3 percent, trimming its advance this year to 2.7 percent, compared with a 12 percent advance for the Standard & Poor’s 500 Index. The Bloomberg US- Israel index has increased 3.4 percent.

Re-Entry in Israel

“Investors think Hutchison may offer to buy a stake in Partner from bondholders or the public,” Ilanit Sherf, an analyst at Psagot Investment House Ltd. said today by phone. Sigalit Tamary, a spokeswoman for Hutchison in Israel, declined to comment.

Billionaire Li Ka-Shing’s biggest company was set to enter the Israeli telecommunications market again after its unit sold a 51 percent stake in Partner to Scailex, the investment firm owned by entrepreneur Ilan Ben Dov, for $1.4 billion in 2009.

Subsidiaries of Hutchison and the Li Ka-Shing Foundation had agreed to acquire a 75 percent stake in Scailex for $125 million from Suny Electronic Ltd., the Hong Kong-based company said on June 5.

Partner has lost more than half its market value since the start of the year as the Israeli government boosted competition in the industry and reduced costs for customers. The country’s three biggest telecommunications operators are the worst performers on the TA-25 Index in 2012.

“When outlook and market prices reflect such a negative scenario, how do you quantify another piece of bad news,” Gil Dattner, an analyst at Bank Leumi Le-Israel Ltd., said by phone from Tel Aviv. “There’s a hurricane going on outside, and this is just another rain. It’s not good, but not the top concern for everyone right now.”

ARPU Unchanged

Partner reported second-quarter net income of 120 million shekels, or $30 million, on Aug. 14, a 41 percent drop from the same period last year. There was no change in average revenue per user of 101 shekels, or $25.16, from the previous quarter, it said in the statement.

“Partner’s shares are in line with the telecom industry in Israel unfortunately,” Leitman said. “Our results were pretty good taking into account the circumstances.”

New York shares of Partner increased to $3.93 yesterday, after a 5 percent decline on Aug. 20 on speculation the deal would be terminated. The stock slipped to a nine-year low of $3.12 on July 24.

Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq stock market, the most of any country outside the U.S. after China. The nation is also home to more startup companies per capita than the U.S.

Cellcom, Mellanox

The Israel shares of Cellcom Israel Ltd. (CEL:US), the nation’s largest mobile-phone operator, retreated 2.3 percent to 28 shekels, or $6.96. The Netanya, Israel-based company has tumbled 56 percent this year, the most on the TA-25 index.

Mellanox Technologies Ltd. (MLNX:US), the Israeli maker of technology used to transfer and store data, rose 0.7 percent to $114 yesterday, the highest since it was listed in February 2007. Its Tel Aviv shares fell 1.1 percent to 458.8 shekels, or $114.04, today.

To contact the reporters on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net; Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • PTNR
    (Partner Communications Co Ltd)
    • $7.39 USD
    • -0.03
    • -0.41%
  • CEL
    (Cellcom Israel Ltd)
    • $11.46 USD
    • -0.13
    • -1.13%
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