Partner Communications Co. (PTNR:US) sank the most in six weeks in New York on concern billionaire Haim Saban’s buyout of the Israeli mobile phone company won’t infuse enough cash to fend off competition from smaller providers.
American depositary receipts of Partner, Israel’s largest mobile company, tumbled 4.3 percent yesterday, while Cellcom Israel Ltd. (CEL), the largest provider, dropped to the lowest level since September.
Saban Capital Group Inc., owner of the children’s Power Rangers franchise, will complete its acquisition of a 30.73 percent stake in Partner from Scailex Corp. today, according to Moshe Debby, a spokesman for Saban in Israel. Partner Chief Executive Officer Haim Romano will remain in his role, Debby said by phone from Tel Aviv.
Partner and Cellcom are struggling to win customers as new entrants Golan Telecom Ltd. and Hot Telecommunication System Ltd. offer packages valued as low as 9.99 shekels ($2.68) per month to attract users and meet the government’s target of capturing 7 percent of the market.
“The ownership change for Partner may be good in the future, but it will be very difficult for them to fight against market forces in the near term,” Sabina Podval, an analyst at Leader Capital Markets Ltd. (LDRC) who has the equivalent of a neutral rating on Partner and Cellcom, said by phone yesterday from Tel Aviv. “Hot and Golan can be expected to be very aggressive in the coming months as they try to achieve as much of a customer base as possible.”
Super Bowl Ad
The Bloomberg Israel-US Equity Index of the biggest New York-traded Israeli companies lost 0.9 percent to 85.38 yesterday. SodaStream International Ltd. (SODA:US) retreated as the maker of home soda machines said CBS Corp. (CBS:US) rejected the initial commercial that it wanted to screen during Feb. 3’s Super Bowl.
Partner, based in Rosh Ha’Ayin, Israel, fell to $5.52 in New York yesterday, the lowest level since Dec. 18. The company’s shares in Tel Aviv lost 0.5 percent today 20.44 shekels, or $5.48. Partner’s U.S. stock sank 32 percent last year, the second-worst performance after Cellcom in the Israel- US gauge.
Netanya, Israel-based Cellcom lost the most in a month in the U.S. yesterday, dropping 4.4 percent to $7.36. The shares fell for an eighth trading day in Tel Aviv, slipping 2.5 percent to 27.34 shekels, or $7.33. Israel’s TA-25 Index lost 0.9 percent to 1,186.50.
Saban -- who previously owned Bezeq Israeli Telecommunication Corp. (BEZQ), the nation’s dominant land-line operator -- agreed to pay 250 million shekels ($66.6 million) in cash and assume a $300 million debt that Scailex owes to Hong Kong’s Hutchison Whampoa Ltd. (13) Hutchison abandoned plans in August to become a Partner stakeholder. Saban purchased additional shares from Leumi Partners.
Partner, which lowered its service prices to compete with Golan and Hot, is expected to explore ways to cut costs and boost profitability, Leader Capital’s Podval said.
Hot, which also sells high-speed Internet and cable-TV services, began an offer this month for unlimited mobile telephone at 9.99 shekels for the first four months before the price increases to 99 shekels, according to its website. Golan has a similar deal for 49 shekels, which then converts to 99 shekels per month, the company said on its website.
“Investors are skeptical about Partner for the short term because if they were to lower their prices as much as Hot and Golan, they would simply be losing money,” Podval said.
Partner will report a 20 percent decline in 2012 sales, according to the mean of four analysts’ estimates compiled by Bloomberg. The company is scheduled to publish its year-end earnings results Feb. 21. Cellcom is expected to show an 8.9 percent decline in revenue for 2012, according to the average of eight analysts’ predictions.
Asaf Eshel, a spokesman for Partner, didn’t reply to an e- mail and phone calls requesting comment on competition from Hot and Golan.
SodaStream fell the most in three weeks, dropping 4.3 percent to $50.96 in New York.
“We had submitted an ad that we preferred to show, but it was not approved, perhaps due to it being too provocative regarding the bottled-soda industry,” Yonah Lloyd, the company’s executive director of corporate development, said yesterday in a statement sent by e-mail. “The ad that we will show at the game is a refreshed take on the ad that was banned recently in the U.K.”
The U.K. regulator Clearcast banned in November a SodaStream television commercial showing crates of bottled beverages exploding.
SodaStream, which is expected to report $425 million in sales in 2012, is buying one of CBS’s 30-second Super Bowl commercials, some of which cost more than $4 million, CBS Chief Executive Officer Les Moonves said at a Nov. 7 news conference.
Mellanox Technologies Ltd. (MLNX:US) fell for a third day, dropping 3.5 percent to $48.36 in U.S. trading. The maker of technology used to transfer and store data forecast on Jan. 23 first- quarter sales that missed analysts’ estimates.
Shares of Mellanox traded in Tel Aviv lost 3.9 percent to 179.20 shekels, or $48.01. Daily Globes said yesterday that Oracle Corp. (ORCL:US) may have raised its stake in Mellanox following last week’s decline. Deborah Hellinger, a spokeswoman for Oracle in New York, declined to comment on the report.
The Bank of Israel left its benchmark interest rate unchanged yesterday following a surprise cut last month that brought the rate to the lowest level in more than two years. Governor Stanley Fischer will step down June 30, in the middle of his second term, the bank said in an e-mailed statement today.
Israel issued 30-year dollar-denominated bonds abroad for the first time in 15 years as the government seeks to take advantage of sliding borrowing costs amid near-zero benchmark interest rates in the U.S. and Europe
The country, which also issued 10-year debt, raised $2 billion, the Finance Ministry said in an e-mailed statement today. This is the first time two maturities were issued together, and they were sold at the lowest ever rates for dollar-denominated notes, according to the statement.
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