Cellcom (CEL) Israel Ltd. and Partner Communications Co. (PTNR:US) advanced after Israel’s two largest wireless operators by subscriber numbers reported higher profits following cost cuts.
Cellcom shares rose 3.7 percent, the most since Dec. 1, to 45.07 shekels at 12:37 p.m. in Tel Aviv. Partner gained 2 percent, the biggest jump since April 10, to 30.09 shekels as the benchmark TA-25 Index slid 0.1 percent. The shares were the worst performers on the index in 2012 as the government opened the cellular market to competition.
Cellcom’s first-quarter net rose 70 percent to 114 million shekels as the company cut expenses 15 percent. Partner said profit in the same period rose 68 percent to 52 million shekels as the cost of revenue fell 6 percent. Monthly average revenue per user declined 6 percent at Partner and 1.6 percent for Cellcom as intensified competition eroded prices of cellular services, the companies said.
“Competition continues to take its toll, but both companies are focusing on cutting costs,” Liat Glazer, an analyst at Petach Tikva-based Excellence Nessuah Brokerage Ltd., said today by phone. “This year will be a transition year as we await regulation that will enable the companies to enter into new growth segments.”
The Ministry of Communications is promoting a fixed-line wholesale market that will allow companies to expand their services to customers to include television. The regulator also has to approve proposed network-sharing agreements among operators that may lead to further savings.
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