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Cellcom Israel Announces Dissmisal of Purported Class Action Filed Against the Company
NETANYA, Israel, June 26, 2012 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (the "Company") announced that a purported class action filed against the Company and two other cellular operators, in December 2007, was dismissed without prejudice, at the request of the parties.
The purported class action lawsuit filed by plaintiffs alleging that the defendants have created environmental hazards by unlawfully building cell sites and therefore demanded that the defendants will compensate the public for certain damages, dismantle existing unlawfully built cell sites and refrain from unlawfully building new cell sites. Had the lawsuit been certified as a class action, the compensation claimed from the defendants was estimated by the plaintiffs to be NIS 1 billion.
Under the parties' agreement, which was approved by the court, the defendants will make a donation to certain non-profit organizations in an amount which is not material to the Company.
Morning Pollux, just saw your post while posting some new DD that upped rating to BUY. Been a lot going on for some time. Simplified as much as possible: Syria and Iran were initially dragging it down, most Israeli stocks get hurt when the fears of war get involved. But then Israel decided to try to lower the cost of living, and CELCOM USED to have monopoly on telecom in Israel, no longer. It really shattered their profits. Then a lot of class action lawsuits happened, charging them with sticking it to their customers with all kinds of extra fees, lost more customers who didn't trust them, and the civil suits won, one by one. Granted, some of their new competitors were named in the suits, so people didn't know where to run.
Then the government decided to bust up monopoly even more, doesn't allow institutions to hold too many shares of too many big companies, which meant they had to sell off shares, little consideration given other than to not get slammed with fines and penalties, so they dumped as fast as possible to meet the deadlines.
The latest outlooks that the company stated from a few months ago said the profits would continue to decline, primarily from the payouts of the lawsuits, added with a cut in dividends, brought the pps down to where it is now. Even with subtracting the 20% foreign withholding tax, it still pays a decent dividend and yes, is very affordable right now.
UBS Upgrades Cellcom Israel (CEL) to Buy 7:52 AM 6/25/2012 - StreetInsider
UBS upgraded Cellcom Israel (NYSE: CEL) from Neutral to Buy.
For an analyst ratings summary and ratings history on Cellcom Israel click here. For more ratings news on Cellcom Israel click here.
Shares of Cellcom Israel closed at $6.85 yesterday, with a 52 week range of $6.77-$28.79.
..
6:05 AM Cellcom Israel (CEL): Q1 EPS of NIS1.74 beats by NIS0.02. Revenue of NIS427M (-0.1% Y/Y) beats by NIS130M. (PR) SEEKING ALPHA
Cellcom Israel Announces Shelf Prospectus Amendment
Grupo Iusacell DE Cv (NYSE:CEL)
Today : Thursday 8 March 2012
Cellcom Israel Announces Shelf Prospectus Amendment
PR Newswire
NETANYA, Israel, March 8, 2012
NETANYA, Israel, March 8, 2012 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (TASE: CEL) (hereinafter: the "Company") announced today that, following its previous announcements, in preparation for a potential offering of new series of debentures to the public in Israel only, under the Company's shelf prospectus, the Company published today an amendment to the shelf prospectus and indenture filed within such shelf prospectus, or the Amendment, after having received the Israeli Securities Authority, or ISA, and the Tel Aviv Stock Exchange, or TASE, approvals. The amendment to the shelf prospectus includes also an undertaking of the Company to comply with certain reporting obligations under the Israeli securities law that relate to information to be provided to debenture holders (which have not previously applied to the Company pursuant to Israeli law as it is a dual company traded both in Israel and in the US).
The contemplated offering will require filing of a supplemental shelf offering report with the ISA and TASE.
The execution, timing, terms and amount of such contemplated offering have not yet been determined and are subject to a further approval of the Company's Board of Directors. There is no assurance that such offering will be executed, nor as to its timing, terms and amount.
For additional details regarding the Company's public debentures and additional undertakings of the Company included in the Amendment see the Company's annual report on Form 20-F for the year ended December 31, 2011 filed on March 7, 2012, under "Item 5. Liquidity and Capital Resources - Debt Service - Shelf prospectus" and " - Public Debentures".
The contemplated offering described in this press release, will be made, if made, in Israel to residents of Israel only. The said debentures will not be registered under the U.S. Securities Act of 1933 and will not be offered or sold in the United States. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any debentures.
Forward looking statement
The information included in this press release contains, or may be deemed to contain, forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). Said forward-looking statements, relating to the execution of the offering, the amount to be raised and the use of its proceeds are subject to uncertainties and assumptions about the shelf offering and market conditions and sufficient offers received for an adequate price. The actual conditions could lead to materially different outcome than that set forth above.
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the leading Israeli cellular provider; Cellcom Israel provides its approximately 3.349 million subscribers (as at December 31, 2011) with a broad range of value added services including cellular and landline telephony, roaming services for tourists in Israel and for its subscribers abroad and additional services in the areas of music, video, mobile office etc., based on Cellcom Israel's technologically advanced infrastructure. The Company operates an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Through its broad customer service network Cellcom Israel offers its customers technical support, account information, direct to the door parcel delivery services, internet and fax services, dedicated centers for the hearing impaired, etc. In August 2011, Cellcom Israel completed the acquisition of Netvision Ltd. 013 Netvision Ltd., its wholly owned subsidiary, is a leading Israeli provider of internet connectivity services and international calling services. Cellcom Israel, through its wholly owned subsidiaries also provides landline telephone communication services in Israel, in addition to data communication services. Cellcom Israel's shares are traded both on the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please visit the Company's website http://www.cellcom.co.il
Company Contact Yaacov Heen Chief Financial Officer investors@cellcom.co.il Tel: +972-52-998-9755
Investor Relations Contact Porat Saar CCG Investor Relations Israel & US cellcom@ccgisrael.com Tel: +1-646-233-2161
SOURCE Cellcom Israel Ltd.
04:59 AM 03/07/12
UPDATE 1-Cellcom sees better 2012 after Q4 profit sinks
* Q4 net profit falls 76 pct to 76 mln shekels
* Co had forecast outcome of 70-80 mln
* Revenue up 0.2 pct to 1.67 bln shekels
* To pay dividend of 0.72 shekels a share
(Adds details, CEO comment)
JERUSALEM, March 7 (Reuters) - Cellcom , Israel's largest mobile phone operator, reported a 76 percent drop in quarterly profit on Wednesday but predicted an improvement in 2012 due to its acquisition of internet service provider Netvision.
Cellcom posted fourth-quarter net income of 76 million shekels ($20 million), down from 319 million a year earlier. It had warned in January that net profit in the final three months of 2011 would be between 70 million shekels and 80 million.
Cellcom and rivals Partner and Bezeq unit Pelephone were hit in 2011 by a steep reduction in the fees mobile operators charge each other to connect calls and the elimination of exit fines for customers.
A lawsuit by customers and a deferred tax expense also weighed on Cellcom's results in the quarter. Cellcom is appealing against the court order that it should repay customers charges it implemented for providing call detail records, having previously provided them free.
Revenue increased by 0.2 percent to 1.67 billion shekels, while earnings before interest, taxes, depreciation and amortisation slid 32.6 percent to 425 million.
Cellcom said it had consolidated Netvision's results starting in the fourth quarter.
Nir Sztern, Cellcom's chief executive, said the company's main goals in 2012 were to cut costs by creating efficiencies and to continue upgrading its network to allow for surfing speeds of up to 84 megabits per second.
"We estimate that we will see the synergies of the merger (with Netvision) both in terms of income and expenses during 2012 and the following years," Sztern said.
"In 2012 and the upcoming years we will deepen our focus on cellular internet growth by continuing to introduce data devices, such as (for) tablets and smartphones," Sztern said.
Its subscriber base fell by 1.3 percent in 2011 to 3.349 million. Some 40 percent were customers of its third-generation (3G) network.
Cellcom said it would pay a quarterly dividend of 72 million shekels, or 0.72 shekels a share. Dividends in 2011 totaled 785 million shekels.
(Reporting by Steven Scheer; Editing by David Holmes)
((steven.scheer@thomsonreuters.com)(+972 2 632 2210)(Reuters Messaging: steven.scheer.thomsonreuters.com@reuters.net))
Thanks for the input. Even with the dividend cut and earnings drop, still seems like its trading at an oversold level.
Hard to say, Optimus. Israel has been adamant about reducing the cost-of-living in Israel. One way was to allow competition in the cellcom sector. Celcom lost it's monopoly, then got sued various times for "fuzzy math" charges to their clients. Now the government is making the MMs in their country give up their control. Celcom has now dropped it's dividend back to $.24, which after paying the 20% foreign tax, makes Celcom a lot less lucrative, though still better than most U.S. stocks. I believe there are still some outstanding lawsuits over excessive charges to their customers.
Cellcom Israel Announces Fourth Quarter and Full Year 2011 Results
Grupo Iusacell DE Cv (NYSE:CEL)
Today : Wednesday 7 March 2012
Cellcom Israel Announces Fourth Quarter and Full Year 2011 Results
PR Newswire
NETANYA, Israel, March 7, 2012
NETANYA, Israel, March 7, 2012 /PRNewswire/ --
2011 results reflect the impact of the regulatory changes and the increased competition
In 2011, we consolidated Netvision's results for September through December only
Cellcom Israel has begun an extensive process to increase efficiencies, including a reduction in headquarter positions, reducing costs and improving work processes, in order to lower expenses
Cellcom Israel declares a fourth quarter dividend of NIS 0.72 per share (totals approx. NIS 72 million), reaching an annual dividend for 2011 of approx. NIS 785 million
2011 Full Year Highlights[1] (compared to 2010):
¦Total Revenues decreased 2.3% reaching NIS 6,506 million ($1,703 million)
¦Revenues from content and value added services (including SMS) increased 4.9%, representing approximately 26.4% of service revenues[2]
¦EBITDA[3] decreased 18.7% to NIS 2,167 million ($567 million)
¦EBITDA margin 33.3%, down from 40%
¦Operating income decreased 26.6% to NIS 1,422 million ($373 million)
¦Net income decreased 36.1% to NIS 825 million ($216 million)
¦Free cash flow[3] decreased 43% to NIS 937 million ($245 million)
¦Cellular Subscriber base totaled approx. 3.349 million[4] at the end of December 2011
¦3G cellular subscribers reached approx. 1.331 million at the end of December 2011, representing 39.7% of total cellular subscriber base
Fourth Quarter 2011 Highlights[5] (compared to fourth quarter of 2010):
¦Total Revenues increased 0.2% to NIS 1,665 million ($436 million)
¦Revenues from content and value added services (including SMS) increased 0.7%, representing 31.4% of service revenues[2]
¦EBITDA decreased 32.6% to NIS 425 million ($111 million)
¦EBITDA margin 25.5%, down from 38%
¦Operating income decreased 54.2% to NIS 205 million ($54 million)
¦Net income decreased 76.2% to NIS 76 million ($20 million)
¦Free cash flow decreased 76.3% to NIS 100 million ($26 million)
¦The Company declared a fourth quarter dividend of NIS 0.72 per share
Cellcom Israel Ltd. (NYSE: CEL TASE: CEL) ("Cellcom Israel" or the "Company"), announced today its financial results for the fourth quarter and full year ended December 31, 2011. Revenues for the fourth quarter and full year 2011 totaled NIS 1,665 million ($436 million) and NIS 6,506 million ($1,703 million), respectively; EBITDA for the fourth quarter 2011 totaled NIS 425 million ($111 million), or 25.5% of total revenues, and for full year 2011 totaled NIS 2,167 million ($567 million), or 33.3% of total revenues; and net income for the fourth quarter and full year 2011 totaled NIS 76 million ($20 million) and NIS 825 million ($216 million), respectively. Basic earnings per share for the fourth quarter and full year 2011 totaled NIS 0.75 ($0.20) and NIS 8.28 ($2.17), respectively.
Commenting on the results, Nir Sztern, the Company's newly appointed Chief Executive Officer, summarized 2011 as a year of regulatory changes and increased competition, which eroded the Company's revenues and profitability.
Upon entry to his new position, in early 2012, Mr. Sztern said that he sees great importance in meeting and weathering all the new challenges ahead, and hopes to come out even stronger.
Nir Sztern, Chief Executive Officer, said, "We believe that our strong basis as a leading cellular company along with the synergies derived from the merger with Netvision, will create an advantage that will enable us to endure these market changes.
For 2012 we have outlined several key goals. The first is to create efficiencies in current activities thereby reducing costs. In recent weeks, we began a process of increasing efficiency in order to significantly lower expenses. Simultaneously, we have taken efficiency measures following the merger with Netvision, which includes the integration of both companies' headquarters, the transition of Netvision's headquarter employees into Cellcom's headquarters in Netanya, the elimination of parallel positions and redundant costs, and transitioning to an organizational structure which will allow us to maximize the merger synergies. We estimate that we will see the synergies of the merger both in terms of income and expenses during 2012 and the following years.
An additional main goal is to continue creating value for our customers. This means, among others, giving our customers one of the best customer experiences in the cellular market. We are now in the midst of upgrading our cellular network to support future surfing speed of up to 84 Mbps, and nearing the end of upgrading our independent transmission network, to support high speed of up to hundreds of Gbps. Along the development of our network, we have shut down the TDMA network.
In 2012 and the upcoming years we will deepen our focus on cellular internet growth by continuing to introduce data devices, such as tablets and smartphones".
On Netvision results, Nir Sztern commented: "I am pleased with Netvision's excellent annual results, showing improvement and growth despite the intense competition in its fields of operation. Netvision ended 2011 with record profit.
"I believe in the management of the merged group which combines the best managers of both companies, and in its ability, together with the employees of both companies, to leverage our accumulated knowledge and skills for the benefit of our customers and shareholder, and to maintain our leading position."
Yaacov Heen, Chief Financial Officer, commented: "In our annual financial results for 2011, we consolidated Netvision's financial results as of September 2011, and so, Netvision's fourth quarter results are fully consolidated. We expect some of the cost savings potential of the Netvision merger to be reflected in 2012. The trend of revenues erosion continues in the first quarter of 2012 as well, and we expect that it shall be partly compensated for, by the said decrease of operating expenses. The fourth quarter results were impacted by three main factors: 1) seasonality, which had an adverse effect on the fourth quarter results compared with the third quarter of 2011. This was due to a seasonal decrease in inbound and outbound tourism, causing a decrease in roaming services revenues, as well as due to the occurrence of part of the Jewish holiday season, characterized by reduced usage, in the fourth quarter; 2) a decrease in equipment sales compared with the previous quarter; 3) one-time provisions, as previously reported during the fourth quarter of 2011. This was composed of a one-time provision in the amount of approximately NIS 33 million for deferred tax liabilities due to an increase in the corporate tax rate for the coming years and a one-time provision in the amount of approximately NIS 28 million, following a class action decided against the Company (a decision which the Company appealed with the Supreme Court). After elimination of these one-time effects, EBITDA for the fourth quarter of 2011 totaled approximately NIS 446 million and net income totaled approximately NIS 130 million.
"Netvision's contribution to EBITDA for the fourth quarter totaled NIS 63 million. We have updated the valuation of Netvision and found that there is no need for an impairment of the goodwill which was recognized following the acquisition of Netvision.
"We have concluded the year with free cash flow of NIS 937 million. We will distribute a cash dividend for the fourth quarter of 2011 in the amount of approximately NIS 72 million, representing approximately 95% of the fourth quarter net income, and so, our total dividends declared for 2011, amounted to approximately NIS 0.8 billion."
Main Consolidated Financial Results for 2011 (including Netvision's Results for September through December 2011 only) (compared to 2010):
Million US$
% of (convenience
Million NIS Revenues % Change translation)
2011 2010 2011 2010 2011 2010
Revenues - Services 4,759 5,860 73.1% 88.0% (18.8%) 1,246 1,533
Revenues - Equipment 1,747 802 26.9% 12.0% 117.8% 457 210
Total revenues 6,506 6,662 100.0% 100.0% (2.3%) 1,703 1,743
Cost of revenues - Services 2,126 2,671 32.7% 40.1% (20.4%) 556 699
Cost of revenues - Equipment 1,282 651 19.7% 9.8% 96.9% 336 170
Total cost of revenues 3,408 3,322 52.4% 49.9% 2.6% 892 869
Gross Profit 3,098 3,340 47.6% 50.1% (7.2%) 811 874
Marketing and Sales Expenses 990 756 15.2% 11.3% 31.0% 259 198
General and Administration Expenses 685 641 10.5% 9.6% 6.9% 179 168
Other Expenses, net 1 5 - 0.1% (80.0%) - 1
Operating income 1,422 1,938 21.9% 29.1% (26.6%) 373 507
Financing expenses, net 293 230 4.5% 3.5% 27.4% 77 60
Income before Income Tax 1,129 1,708 17.4% 25.6% (33.9%) 296 447
Income Tax 304 417 4.7% 6.2% (27.1%) 80 109
Net Income 825 1,291 12.7% 19.4% (36.1%) 216 338
Free Cash Flow 937 1,645 14.4% 24.7% (43.0%) 245 431
Main Financial Data by Companies:
Cellcom Israel without Consolidation
Netvision adjustments Consolidated
Netvision (*) (**) results
Sept-Dec
Change
2011 2010 (%) 2011 2011
Total
revenues 6,132 6,662 (8.0%) 400 (26) 6,506
Total
Services
revenues
(including
revenues
from
content
and value
added
services) 4,420 5,860 (24.6%) 365 (26) 4,759
Revenues
from
content
and value
added
services 1,167 1,112 4.9% - - 1,167
Equipment
revenues 1,712 802 113.5% 35 - 1,747
Operating
Income 1,425 1,938 (26.5%) 43 (46) 1,422
EBITDA 2,084 2,667 (21.9%) 83 - 2,167
EBITDA, as
a percent
of total
revenues 34.0% 40.0% (15.0%) 20.8% - 33.3%
(*) Since the merger transaction was completed on August 31, 2011, the consolidated financial results include Netvision's results for the months September through December 2011 only.
(**)Include inter-company revenues between Cellcom Israel and Netvision, and amortization expenses attributable to the merger.
Main Performance Indicators (data refers to cellular subscribers only):
Change
2011 2010 (%)
Cellular subscribers at
the end of the year (in
thousands) [6] 3,349 3,394 (1.3%)
Churn Rate for cellular
subscribers (in %) [7] 25.1% 20.5% 22.4%
Monthly cellular ARPU
(in NIS) 106.0 143.8 (26.3%)
Average Monthly cellular
MOU (in minutes) 346 335 3.3%
Financial Review
Revenues for 2011 decreased 2.3% totaling NIS 6,506 million ($1,703 million), compared to NIS 6,662 million ($1,744 million) last year. The decrease in revenues is attributed to an 18.8% decrease in service revenues as a result of the regulatory changes, from NIS 5,860 million ($1,534 million) in 2010 to NIS 4,759 million ($1,245 million) in 2011. The decrease in service revenues was partially offset by a 117.8% increase in equipment revenues, reaching NIS 1,747 million ($457 million) in 2011 compared to NIS 802 million ($210 million) in 2010. Revenues for 2011 include a one-time provision related to a repayment to some of our customers in the amount of approximately NIS 22 million ($6 million) due to a class action decided against us (a decision which we appealed with the Supreme Court). Revenues for 2010 include a one-time provision for a refund to all our subscribers in a total amount of approximately NIS 66 million ($17 million) related to the network malfunction we experienced in December 2010. Netvision's contribution to revenues for 2011 (since September 1, 2011) amounted to NIS 374 million ($98 million) (excluding inter-company revenues).
The decrease in service revenues resulted mainly from a significant decrease in interconnect fees paid to us by other local operators, due to the reduction in interconnect tariffs as of January 1, 2011, from the reduction of Early Termination Fees, due to a regulatory change, as well as from the ongoing airtime price erosion, due to the increased competition in the market. These decreases were partially offset by an increase of 4.9% in content and value added services (including SMS) revenues in 2011, which totaled NIS 1,167 million ($305 million), compared to NIS 1,112 million ($291 million) in 2010. Netvision's contribution to service revenues for 2011 (since September 1, 2011) amounted to NIS 339 million ($89 million) (excluding inter-company revenues).
The increase in equipment revenues resulted from an increase in the number of cellular handsets sold during 2011 compared to 2010, as well as from a change in the mix of handsets sold, in favor of smartphones and advanced 3G handsets. The increase in the number of handsets sold resulted from the accelerated competition following the regulatory changes. The increase in equipment revenues also resulted from an increase in accessories sales in 2011 compared to 2010. Netvision's contribution to equipment revenues for 2011 (since September 1, 2011) amounted to NIS 35 million ($9 million).
Revenues for the fourth quarter of 2011 increased by 0.2% totaling NIS 1,665 million ($436 million), compared to NIS 1,662 million ($434 million) in the fourth quarter last year. The increase in revenues is attributed to a 93.8% increase in equipment revenues, which rose from NIS 224 million ($59 million) in the fourth quarter last year, to NIS 434 million ($114 million) in the fourth quarter 2011. The majority of this increase was offset by a 14.4% decrease in service revenues, which totaled NIS 1,231 million ($322 million) in the fourth quarter 2011 as compared to NIS 1,438 million ($376 million) in the fourth quarter last year. Netvision's contribution to revenues for the fourth quarter of 2011 amounted to NIS 276 million ($72 million) (excluding inter-company revenues).
The decrease in fourth quarter 2011 service revenues resulted mainly from a significant decrease in interconnect fees paid to us by other local operators, due to the reduction in interconnect tariffs as of January 1, 2011, from the reduction of Early Termination Fees, due to a regulatory change, as well as from the ongoing airtime price erosion, due to the increased competition in the market. Revenues from content and value added services for the fourth quarter of 2011 totaled NIS 308 million ($81 million), compared to NIS 306 million ($80 million) in the fourth quarter of 2010. In addition, service revenues for the fourth quarter of 2011 were effected by the one-time provision for a repayment to some of our customers in the amount of approximately NIS 22 million ($6 million) due to a class action decided against us (a decision which we appealed with the Supreme Court), while service revenues for the fourth quarter of 2010 were effected by the one-time provision for a refund to all our customers in the amount of approximately NIS 66 million ($17 million) related to the network malfunction we experienced in December 2010. Netvision's contribution to service revenues for the fourth quarter of 2011 amounted to NIS 247 million ($65 million) (excluding inter-company revenues).
The increase in Fourth quarter 2011 equipment revenues resulted from an increase in the number of cellular handsets sold during the fourth quarter of 2011 compared to the fourth quarter of 2010, as well as a change in the mix of handsets sold, in favor of smartphones and advanced 3G handsets. The increase in the number of handsets sold resulted from the accelerated competition following the regulatory changes. The increase in fourth quarter 2011 equipment revenues also resulted from an increase in accessories sales. Netvision's contribution to equipment revenues for the fourth quarter of 2011 amounted to NIS 29 million ($8 million).
Cost of revenues for 2011 totaled NIS 3,408 million ($892 million), compared to NIS 3,322 million ($869 million) in 2010, a 2.6% increase. Cost of revenues for 2011 excluding Netvision's contribution decreased 5.4%. This decline resulted from a significant decrease in total interconnect fees paid to other local cellular operators following the reduction in interconnect tariffs as of January 1, 2011. The decrease in cost of revenues also resulted from a decrease in amortization expenses, attributed, among others, to capitalized handsets subsidies, due to a significant decrease in such subsidies. These decreases were partially offset by a significant increase in cellular handsets cost resulted mainly from an increase in the number of handsets sold during 2011 compared to 2010, as well as from a change in the mix of handsets sold, in favor of smartphones and advanced 3G handsets. Netvision's contribution to cost of revenues for 2011 (since September 1, 2011) amounted to NIS 264 million ($69 million) (excluding inter-company expenses).
Cost of revenues for the fourth quarter of 2011 increased to NIS 974 million ($255 million) from NIS 845 million ($221 million) in the fourth quarter last year, an increase of 15.3%. Cost of revenues for the fourth quarter of 2011 excluding Netvision's contribution decreased 7.8%. This decline resulted from the same reasons as for the decrease in the annual cost of revenues mentioned above. Netvision's contribution to cost of revenues for the fourth quarter of 2011 amounted to NIS 195 million ($51 million) (excluding inter-company expenses).
Gross profit for 2011 decreased 7.2% to NIS 3,098 million ($811 million) from NIS 3,340 million ($874 million) in 2010. Netvision's contribution to gross profit for 2011 (since September 1, 2011) amounted to NIS 110 million ($29 million). Gross profit margin for 2011 amounted to 47.6%, down from 50.1% in 2010. Gross profit for the fourth quarter 2011 decreased 15.4% to NIS 691 million ($181 million) from NIS 817 million ($214 million) in the fourth quarter of 2010. Netvision's contribution to gross profit for the fourth quarter of 2011 amounted to NIS 82 million ($21 million). Gross profit margin for the fourth quarter 2011 amounted to 41.5%, down from 49.2% in the fourth quarter of 2010.
Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for 2011 increased by 19.9% to NIS 1,675 million ($438 million), compared to NIS 1,397 million ($366 million) in 2010. SG&A Expenses for 2011 excluding Netvision's contribution increased by 5.4%. This increase reflects primarily the impact of the regulatory changes, resulting in an increase in the number of customers' queries to our sales and service centers, which led to an increase in the Company's sales and customer service force leading to an increase in payroll expenses, as well as an increase in sales commissions. The increase in sales commissions also resulted from an increase in the number of sales transactions in 2011 compared to 2010. These increases were partially offset by a decrease in amortization expenses related to capitalized sales commissions resulted from ceasing the capitalization of these commissions due to the absence of the required accounting conditions for such capitalization, following the regulatory change in relation to the reduction of early termination fees. Netvision's contribution to SG&A Expenses for 2011 (since September 1, 2011) amounted to NIS 113 million ($30 million), including amortization expenses of intangible assets, attributable to the merger, in the amount of NIS 46 million ($12 million).
SG&A Expenses for the fourth quarter of 2011 increased by 33% to NIS 487 million ($127 million), compared to NIS 366 million ($96 million) in the fourth quarter of 2010. SG&A Expenses for the fourth quarter of 2011 excluding Netvision's contribution increased by 9%. This increase mainly resulted from an increase in sales commissions and in professional consulting expenses related to the merger. These increases were partially offset by a decrease in advertising expenses and a decrease in amortization expenses related to capitalized sales commissions. Netvision's contribution to SG&A Expenses for the fourth quarter of 2011 amounted to NIS 85 million ($22 million), including amortization expenses of intangible assets, attributable to the merger, in the amount of NIS 35 million ($9 million).
Operating income for 2011 decreased 26.6% to NIS 1,422 million ($372 million) from NIS 1,938 million ($507 million) in 2010. Operating income for the fourth quarter 2011 decreased 54.2% to NIS 205 million ($54 million) from NIS 448 million ($117 million) in the fourth quarter last year.
EBITDA for 2011 decreased 18.7% to NIS 2,167 million ($567 million) from NIS 2,667 million ($698 million) in 2010. EBITDA, as a percent of revenues, totaled 33.3%, down from 40.0% in 2010. EBITDA for the fourth quarter 2011 decreased 32.6% to NIS 425 million ($111 million) from NIS 631 million ($165 million) in the fourth quarter last year. EBITDA for the fourth quarter 2011, as a percent of quarterly revenues, totaled 25.5% down from 38.0% in the fourth quarter of 2010. Netvision's contribution to EBITDA for 2011 (since September 1, 2011) and for the fourth quarter of 2011 amounted to NIS 83 million ($22 million) and NIS 63 million ($16 million), respectively.
Financing Expenses, net for 2011 increased 27.4% and totaled NIS 293 million ($77 million), compared to NIS 230 million ($60 million) in 2010. The increase resulted mainly from increased interest expenses and Israeli Consumer Price Index (CPI) linkage expenses, associated with the Company's debentures, in 2011, compared to 2010, due to the higher debt level following the issuance of additional debentures in 2011. The increase in financing expenses, net, also resulted from expenses in 2011 from foreign currency differences related to trade payables, which resulted from a depreciation of 7.7% of the NIS against the US dollar, compared to income from foreign currency differences in 2010, which resulted from an appreciation of 6% of the NIS against the US dollar in that year. These increases were partially offset by an increase in interest income, associated with handsets sales, as well as an increase in deposit interest income in 2011 compared to 2010, due to higher deposits balance and increased interest rate.
Financing Expenses, net for the fourth quarter 2011 increased 35.6% and totaled NIS 61 million ($16 million), compared to NIS 45 million ($12 million) in the fourth quarter last year. The increase resulted mainly from increased interest expenses, associated with the Company's debentures, in the fourth quarter of 2011, compared to the fourth quarter of 2010, due to the higher debt level following the issuance of additional debentures in 2011. The increase in fourth quarter 2011 financing expenses, net, was also due to a one-time provision recorded in the fourth quarter of 2011 for interest and CPI linkage expenses in relation to a repayment to some of our customers due to a class action decided against us (a decision which we appealed with the Supreme Court), while financing expenses, net, for the fourth quarter of 2010 included a one-time financing income related to a dispute with the Ministry of Communications regarding frequencies fees. These effects were partially offset by decreased CPI linkage expenses, associated with the Company's debentures, due to a 0.2% deflation in the fourth quarter of 2011 compared to a 1.2% inflation in the fourth quarter of 2010, as well as by an increase in interest income, associated with handsets sales.
Income tax for 2011 decreased 27.1% to NIS 304 million ($80 million) from NIS 417 million ($109 million) in 2010. The decrease in income tax mainly resulted from a decrease in income before income tax, as well as from the decreased corporate tax rate of 24% in 2011 compared with 25% in 2010. These decreases were partially offset by an increase in deferred tax liabilities and the recognition of a one-time deferred tax expense of approximately NIS 33 million ($9 million) recorded in the fourth quarter of 2011, following an amendment to the Israeli tax ordinance, so that corporate tax rate will increase to 25% commencing January 1, 2012 (whereas corporate tax rate was supposed to gradually decrease from 24% in 2011 to 18% in 2016).
Net Income for 2011 decreased 36.1% to NIS 825 million ($216 million) from NIS 1,291 million ($338 million) in 2010. Net income for the fourth quarter 2011 decreased 76.2% to NIS 76 million ($20 million) from NIS 319 million ($83 million).
Basic earnings per share for 2011 totaled NIS 8.28 ($2.17), compared to NIS 13.04 ($3.41) in 2010. Basic earnings per share for the fourth quarter 2011 totaled NIS 0.76 ($0.20), compared to NIS 3.28 ($0.86) in the fourth quarter last year.
Operating Review
New Cellular Subscribers - at the end of 2011 the Company had approximately 3.349 million cellular subscribers. During the fourth quarter of 2011 we removed approximately 52,000 subscribers from our cellular subscriber base following the shutdown of our TDMA network as of December 31, 2011, since such subscribers have not requested a transfer to the Company's other networks as of that date, as well as following a change to our previous policy, which allowed subscribers to change from post to prepaid subscription as a result of the reduction of Early Termination Fees in the cellular market in early 2011, as we found this change to be futile since most of those customers ceased using our services. After elimination of this removal, during 2011 the Company added approximately 7,000 net new cellular subscribers.
During 2011, the Company added approximately 191,000 net new 3G cellular subscribers to its 3G cellular subscriber base, out of which 49,000 in the fourth quarter 2011, reaching approximately 1.331 million 3G subscribers at the end of 2011. The Company's 3G cellular subscribers represented 39.7% of the Company's total cellular subscriber base at the end of 2011, an increase from the 33.6% 3G subscribers represented of total subscribers at the end of 2010.
The Churn Rate in 2011 totaled 25.1%, compared to 20.5% in 2010. The churn rate for the fourth quarter 2011 totaled to 6.0%, compared to 5.3% in the fourth quarter last year. Both annual and quarterly churn rates were primarily affected by the intensified competition and the regulatory change regarding the reduction of Early Termination Fees, enabling subscribers to terminate a contract with a commitment for a certain period by paying a negligible amount of early termination fee without having to wait to the end of the commitment period. Furthermore, both annual and quarterly churn rates were affected by the churn of pre-paid subscribers (characterized by lower contribution) and subscribers with collection problems. Both annual and quarterly churn rates are excluding the above mentioned removal of subscribers.
Average monthly cellular Minutes of Use per subscriber ("MOU") in 2011 totaled 346 minutes, compared to 335 minutes in 2010, an increase of 3.3%. MOU for the fourth quarter 2011 totaled 351 minutes, compared to 342 minutes in the fourth quarter 2010, an increase of 2.6%. The increase in the MOU for the fourth quarter was partially offset due to the occurrence of part of the Jewish holiday season, characterized by a reduced usage, in the fourth quarter in 2011, compared to it occurring in the third quarter in 2010.
The monthly cellular Average Revenue per User (ARPU) for 2011 totaled NIS 106 ($27.7), compared to NIS 143.8 ($37.6) in 2010. ARPU for the fourth quarter 2011 totaled NIS 95.4 ($35.0), compared to NIS 143.7 ($37.6) in the fourth quarter last year. Both annual and quarterly figures were affected, among others, by the reduction in interconnect tariffs and the ongoing airtime price erosion, which was partially offset by increased usage in 2011 and the fourth quarter 2011, compared with the corresponding periods in 2010.
Financing and Investment Review
Cash Flow
Free cash flow for 2011, after elimination of the net cash flows used for the acquisition of Netvision in the amount of NIS 1,458 million ($382 million) (net of cash acquired in the amount of NIS 120 million ($31 million)), decreased 43% to NIS 937 million ($245 million), compared to NIS 1,645 million ($431 million) generated in 2010. Free cash flow for the fourth quarter of 2011 decreased 76.3% and totaled NIS 100 million ($26 million), compared to NIS 422 million ($110 million) generated in the fourth quarter of 2010. Cash flows from operating activities for 2011 decreased, compared with last year, mainly due to the significant increase in sales of cellular handsets, which led to an increase in the immediate payment to vendors for handset purchases, as opposed to spreading the consideration when these handsets are sold to the Company's subscribers (usually in installments over a period of thirty six months). The decrease in service revenues, resulted from the regulatory changes, also contributed to the decrease in cash flows from operating activities. The decrease in cash flows from operating activities in 2011 was partially offset by a decrease in cash flows from investing activities excluding the cash flows used for the acquisition of Netvision.
Total Equity
Total Equity as of December 31, 2011 amounted to NIS 187 million ($49 million), primarily consisting of accumulated undistributed retained earnings.
Investment in Fixed Assets and Intangible Assets
During 2011 and the fourth quarter 2011, the Company invested NIS 520 million ($136 million) and NIS 234 million ($61 million), respectively, in fixed assets and intangible assets (including, among others, rights of use of communication lines and investments in information systems and software), compared to NIS 735 million ($192 million) and NIS 191 million ($50 million) in 2010 and the fourth quarter 2010, respectively. The decrease in investment in 2011 compared to 2010, resulted mainly from a decrease in capitalization of handsets subsidies and sales commissions in the amount of NIS 108 million ($28 million). In addition, the investment in 2010 included a payment of NIS 108 million ($28 million) pursuant to the acquisition of assets and operation of Dynamica in the second quarter of 2010.
Dividend
On March 6, 2012, the Company's board of directors declared a cash dividend in the amount of NIS 0.72 per share, and in the aggregate amount of approximately NIS 72 million (the equivalent of approximately $0.19 per share and approximately $19 million in the aggregate, based on the representative rate of exchange on March 2, 2012; The actual US$ amount for dividend paid in US$ will be converted from NIS based upon the representative rate of exchange published by the Bank of Israel on May 15, 2012), subject to withholding tax described below. The dividend will be payable to all of the Company's shareholders of record at the end of the trading day in the NYSE on May 2, 2012. The payment date will be May 17, 2012. According to the Israeli tax law, the Company will deduct at source 25% of the dividend amount payable to each shareholder, as aforesaid, subject to applicable exemptions. The dividend per share that the Company will pay for the fourth quarter of 2011 does not reflect the level of dividends that will be paid for future quarterly periods, which can change at any time in accordance with the Company's dividend policy. A dividend declaration is not guaranteed and is subject to the Company's board of directors' sole discretion, as detailed in the Company's annual report for the year ended December 31, 2011 on Form 20-F, under "Item 8 - Financial Information - Dividend Policy".
In making the decision of dividend distribution, the Company's board of directors considered and determined the following: (1) the distribution complies with the Profit Test given that the Company's cumulative retained earnings, as such term is defined in the applicable Israeli law, as of December 31, 2011 (NIS 175 million) exceeds the amount of dividend declared (resulting in NIS 103 million after the declaration); (2) the distribution complies with the Solvency Test after considering the Company's financial condition, including the Company's free cash flow, the Company's financial debt balance, the Company's net debt, including the Company's investment portfolio, the Company's forecasted cash flows for the years 2012-2014 and the Company's ability to raise additional debt, all taking into consideration additional debt the Company's plans to raise in the near future; (3) the distribution complies with the license limitation and the Company's covenants related to dividend distribution; (4) the distribution of the dividend shall not materially adversely effect the Company's financial condition, including the Company's capital structure, leverage level, liquidity, the fulfillment of the Company's covenants and undertakings and the Company's ability to continue the Company's operation as conducted prior to the dividend declaration, including the Company's ability to fulfill our investments plans. In making the aforementioned determinations, which involve forecasts, the board assumed (a) the Company will continue to be leveraged at a rate complying with the Company's covenants and undertakings; and (b) market and regulation conditions will not change drastically.
Debentures
For information regarding the Company's summary of financial liabilities and details regarding the Company's outstanding debentures as of December 31, 2011, see "Disclosure for Debenture Holders" section in this press release.
Conference Call Details
The Company will be hosting a conference call on Tuesday, March 7, 2012 at 09:00 am EST, 06:00 am PST, 14:00 GMT, 16:00 Israel time. On the call, management will review and discuss the results, and will be available to answer questions. To participate, please either access the live webcast on the Company's website, or call one of the following teleconferencing numbers below. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
US Dial-in Number: 1-888-668-9141 UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0609 International Dial-in Number: +972-3-918-0609
at: 09:00 am Eastern Time; 06:00 am Pacific Time; 14:00 UK Time; 16:00 Israel Time
To access the live webcast of the conference call, please access the investor relations section of Cellcom Israel's website: http://www.cellcom.co.il. After the call, a replay of the call will be available under the same investor relations section.
Annual report for 2011
Cellcom Israel will be filing its annual report for the year ended December 31, 2011 (on form 20-F) with the US Securities and Exchange Commission today, March 7, 2012. The annual report will be available for download at the Cellcom Israel's website in the investor relations section of Cellcom Israel's website at: http://www.cellcom.co.il. Cellcom Israel will furnish a hard copy to any shareholder who so requests, without charge. Such requests may be sent through the Company's website or by sending a postal mail request to Cellcom Israel Ltd., 10 Hagavish Street, Netanya, Israel (attention: Chief Financial Officer).
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the leading Israeli cellular provider; Cellcom Israel provides its approximately 3.349 million subscribers (as at December 31, 2011) with a broad range of value added services including cellular and landline telephony, roaming services for tourists in Israel and for its subscribers abroad and additional services in the areas of music, video, mobile office etc., based on Cellcom Israel's technologically advanced infrastructure. The Company operates an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Through its broad customer service network Cellcom Israel offers technical support, account information, direct to the door parcel delivery services, internet and fax services, dedicated centers for the hearing impaired, etc. In August 2011, Cellcom Israel completed the acquisition of Netvision Ltd. its whose wholly owned subsidiary, 013 Netvision Ltd., is a leading Israeli provider of internet connectivity services and international calling services. Cellcom Israel, through its wholly owned subsidiaries, also provides landline telephone communication services in Israel, in addition to data communication services. Cellcom Israel's shares are traded both on the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please visit the Company's website http://www.cellcom.co.il
Forward-Looking Statements
The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial results, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: changes to the terms of our license, new legislation or decisions by the regulator affecting our operations, the outcome of legal proceedings to which we are a party, particularly class action lawsuits, our ability to maintain or obtain permits to construct and operate cell sites, and other risks and uncertainties detailed from time to time in our filings with the U.S. Securities and Exchange Commission, including under the caption "Risk Factors" in our Annual Report for the year ended December 31, 2011.
Although we believe the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We assume no duty to update any of these forward-looking statements after the date hereof to conform our prior statements to actual results or revised expectations, except as otherwise required by law.
The Company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). Unless noted specifically otherwise, the dollar denominated figures were converted to US$ using a convenience translation based on the US$New Israeli Shekel (NIS) exchange rate of NIS 3.821 = US$ 1 as published by the Bank of Israel on December 31, 2011.
Use of non-IFRS financial measures
EBITDA is a non-IFRS measure and is defined as income before financing income (expenses), net; other income (expenses), net; income tax; depreciation and amortization; share based payments. This is an accepted measure in the communications industry. The Company presents this measure as an additional performance measure as the Company believes that it enables us to compare operating performance between periods and companies, net of any potential differences which may result from differences in capital structure, taxes, age of fixed assets and related depreciation expenses. EBITDA should not be considered in isolation, or as a substitute for operating income, any other performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as measures of profitability or liquidity. EBITDA does not take into account debt service requirements, or other commitments, including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company's use. In addition, EBITDA may not be comparable to similarly titled measures reported by other companies, due to differences in the way these measures are calculated. See the reconciliation between the net income and the EBITDA presented at the end of this Press Release.
Free cash flow is a non-IFRS measure and is defined as the net cash provided by operating activities minus the net cash used in investing activities excluding short-term investment in tradable debentures or proceeds from sales of such debentures. See the reconciliation note at the end of this Press Release.
Cellcom Israel Ltd. (CEL) Q4 2011 Earnings Call March 7, 2012 9:00 AM ET
Operator
Welcome to the Cellcom Israel Ltd Fourth quarter and Year End 2011 Results Conference Call. (Operator Instructions). I would now like to hand the call over to Ms. Porat Saar of CCG Investor Relations. Ms. Saar, would you like to begin.
Porat Saar
Thank you Rachel. I would like to welcome all of you to the conference call and thanks Cellcom Israel’s Management for hosting this call today. With us here are Mr. Nir Sztern, CEO and Mr. Yaacov Heen, CFO.
Mr. Sztern will open by providing a summary of the main highlight for the fourth quarter and full year 2011 results followed by Mr. Heen who will review Cellcom Israel’s financial performance in further detail. Before I turn the call over to Mr. Sztern I would like to remind everyone within this call management’s prepared remarks contains forward-looking statements which are subject to risk and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore the company claims protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Reform Act of 1995 and in this Israeli Securities Law of 1968.
Actual results may differ from those discussed today and therefore we refer you to a more detailed discusses today and therefore we refer you to a more detailed discussion as a risk and uncertainties in company’s filings with the Securities and Exchange Commission.
Including on the risk factors and the company’s annual reports for the year ended December 2011, 20-F files today with the FCC. In addition, any projections as to the company’s future performance represent management estimates as of today March 7, 2012.
Cellcom Israel seems to have obligation to update these projects in the future of market conditions change. You should by now received a copy of the company’s press release, if you have not yet received please call CCG Investor Relations at 1-646-233-2161.
I would now like to hand the call over to Mr. Nir Sztern.
Nir Sztern
Thank you Porat. Good day everyone and welcome to our fourth quarter and full year 2011 earnings conference call. This is my first conference call with Cellcom Israel as CEO. I am very happy to be here today and I want to thank you all for being on the call. As you know 2011 was a very challenging year for our company, our 2011 financial results reflected impact on the regulatory changes which caused a significant decrease in interconnections paid to us by local operators as well as the reduction in early termination fees.
This along with the resulting increase competitiveness in our market eroded our profitability and revenues. However, we are also seeing rise in our 3G subscriber base which is increased by almost 34% over the last year which is a positive indicator as we plan in the coming years to deepen our focus on cellular internet and data services as a key growth engine.
As a new CEO what is important to me at this stage is to look ahead in 2012 and see how we can not only weather all the new changes but also to come out evens stronger. Let start our overarching objective for the company is to move beyond just a cellular company and become a communications.
Based on this I have several key goals for 2012, first of which is to create deficiencies and such help us reduce calls. In recent weeks the company began to process a cost reduction in order to significantly lower its expenses. As an initial step we have taken efficiency measures following our merger with NetVision to integrate both companies’ headquarters and bring the NetVision headquarters employees over to our Cellcom offices in Netanya.
We are in a process of eliminating duplicate costs and positions and moving to an organizational structure which will maximize the mergers synergies.
We estimate that we will see the synergies of the merger both in terms of income and expenses during 2012 and the following year. Our second goal is to continue to create volume for our customers. On this front we are currently in the midst of upgrading our cellular network to support future data speeds of up to 84 megabits per second. Along with the development of our network we have shut down the old TDMA network and upgraded its active customers to our advanced network at no additional cost. As we mentioned before, our commitment to giving our customer the best customer experience in the cell market was recognized by our report previously published in 2011 from the Public Trust which is a non-profit organization which determined that Cellcom Israel is a company with the least number of customer complaints despite having the highest number of subscribers. Customer service is a key strength for the company as far (inaudible) and we will continue our efforts in giving our customers the best customer service we can including the vast devices and service packages.
Our third quarter 2012 is to continue focusing on key growth areas for the company. This means we will focus on improving our data services. As a result of this we will continue focusing on 3G customers while offering the best tablets and smartphones to our customers. This is a key growth area for our industry and we are focused on tapping into it and finding new opportunities. In order to achieve these goals we will need to leverage our talent and channel it into generating new ideas for growth and development.
We have in our management team today the best from both NetVision and Cellcom Israel so I believe we have the right people in place in order to successfully realize our objectives. With a focus on private and business customers and services that span both mobile and fixed line solutions we are looking for ways to grow our company so that we can meet and even anticipate the needs of our customers and the dynamic communication market.
In closing I want to thank our employees and management for their efforts in 2011, I'm confident in their capabilities and determination in leading the company to success. As always we are committed to continuing our efforts to the benefit of our customers, shareholders and dedicated employees.
With that I would like to turn the call over to our CFO, Mr. Yaacov Heen for a review of our financials.
Yaacov Heen
Thank you Nir and good day to all of you. Now on our financial results for 2011, we consolidated NetVision’s financial results for September 2011 and so NetVision’s fourth quarter results are fully consolidated. As we have noted we have taken steps to integrate the two companies and create efficiencies and we have spread of the cost savings potential of the NetVision to be affected in 2012.
Looking forward to 2012 we see the trend of revenue erosion continuing into the first quarter and we expect that shall it be positively compensated for by a decrease in operating expenses. Regarding NetVision, its contribution to revenues for the fourth quarter totaled 276 million shekels excluding intercompany revenues and it fourth quarter EBITDA contribution totaled 63 million shekels. We have updated the evaluation of NetVision and found that there is no need for impairment of the goodwill which was recognized following the acquisition of NetVision.
Now turning to our consolidated results. Revenue for 2011 totaled 6.51 billion shekels, decreasing by 2.2% but NV service revenue decreased by 18.8% totaling 4.76 billion shekels. Revenues from content and value added services increased by 4.9% making up about 26.4% of our services and revenues from equipment by 117.8% totaling 1.75 billion shekels.
Revenue for the fourth quarter increased by 0.2% totaling 1.67 billion shekels. Operating for the year decreased by 26.6% totaling about 1.42 billion shekels. For the fourth quarter operating income decreased by about 54.2% totaling 205 million shekels. In 2011 EBITDA decreased by 18.7% totaling 2.17 billion shekels and net income for 2011 decreased by about 36.1% totaling 825 million shekels.
Looking at our fourth quarter results they were impacted by three main factors. The first factor was seasonality, which had an adverse effect on the fourth quarter results compared with the third quarter due to seasonal decrease in inbound and outbound cost of tourism which caused a decrease in roaming service revenues. It was also effected in part by the occurrence of the Jewish holiday season in the fourth quarter which is factorized by reduced usage.
The second factor was a decrease in equipment sales compared with the previous quarter and finally there were one-time expenses as reported during the fourth quarter of 2011. These expenses are composed of a one-time provision in the amount of approximately 33 million shekels for deferred tax liabilities due to an increase in the core order tax rate for the coming year and one time provision in the amount of approximately 28 million shekels following a transaction decision against the company, a decision which the company appealed with the Supreme Court.
After determination of these one-time expenses EBITDA for the fourth quarter of 2011 totaled 446 million shekels and net income totaled approximately 130 million shekels. Turning to our KPI, MOU for 2011 totaled 346 minutes compared to 335 minutes in 2010, an increase of 3.3%. For the fourth quarter MOU totaled 351 minutes, compared with 342 minutes in the same quarter last year, an increase of 2.6%.
ARPU for 2011 totaled 106 shekels compared with 143.8 shekels in 2010. ARPU for the fourth quarter 2011 totaled 95.4 shekels compared with 143.7 shekels in the same quarter last year. During 2011 we generated a free cash flow of 937 million shekels and 100 million shekels during the fourth quarter and we distributed the cash dividend for the fourth quarter of 2011 in the amount of approximately 72 million shekels representing approximately 95% of the fourth quarter net income and so our total dividend declared for 2011 amounted to approximately 0.8 billion shekels.
With that I would like to open the call to questions. Operator.
Question-and-Answer Session
Operator
(Operator Instructions). The first question is from David Kaplan of Barclays Capital. Please go ahead.
David Kaplan – Barclays Capital
I have three questions. One of them have to be subscriber and the second thing have to be (inaudible), just mentioned as far as pricing erosion in the first quarter of 2012. So if I start with subscribers, you wrote off 52,000 subscribers. So it’s 52,000 subscribers in the fourth quarter. Can you explain what that write off was about and why we do see in interim, how that plays out there? And then on the revenue side, Yaacov, you just mentioned that you expect to see further erosion in Q1 this year. Is that on a relative basis, the same rate of erosion that we saw in 2011 or at a slower pace? Those are my questions.
Yaacov Heen
So because we have done it at the end of December so usually we calculate the ARPU and the MOU according to the average number. So that’s why you cannot see. In fact even though you know everybody can calculate it because it’s 52,000 customers. If you want to divide it to 12 you can see that the impact is negligible but as I said, because it’s done at the end of December that’s why we didn’t recalculate the ARPU and MOU and about the second question, about the impact of, in the first quarter, as usual, for us it’s very important to say something about the price erosion.
We can say that it’s not the same ratio that we saw in the last year but we expect again, because of the impact in the fourth quarter is not there for the full quarter. So technically we can see in the first quarter the full impact which continues the price erosion of 2011 and as we said, we expect that with our measures regarding the cost structure we are going to compensate a significantly (inaudible).
Operator
The next question is from Mitchell (inaudible).
Unidentified Analyst
My name Dr. Mitchell (inaudible) and I am calling from Hollywood, Florida. I want to wish you a (inaudible). I have a fairly extensive holding in the company and right now I am looking at about 60% loss in my principal and needless to say I am not very happy about that. I have two questions, Mr. Sztern I know that you are new in the position so it may be difficult but the regulation from the government has been in the air for at least a year maybe two and my first question is why hasn’t the company been preemptive in terms of cost cutting knowing that there is going to be decline in revenues, there have to be based upon how the government wants to open up the cellular networks in Israel for increased competition. That’s number one and number two is do you see the dividend is being secure at this point and number three if you can look into your crystal ball where do you see the company if we are having this conversation next forum, where do you see the stock and a guess I can’t hold you to that. Thank you.
Nir Sztern
To answer your question, in terms of the preemptive cost cutting, it's a little bit difficult for me to answer the company’s policy in 2011. What I can do now is looking forward to more competition in 2012, what we are doing right now is exactly that.
We are cost cutting, also to compensate for the loss of revenues that came from the regulation in 2011 but also a notification for what’s coming in 2012. We saw throughout 2011 did a lot of cost cutting but as we mentioned before 2011 also saw an increase in competition and with that we have to increase the cost relative to the demand that occurred in the market in order to retain our subscriber base, so alongside ways a lot of cost cutting we had increase in expenses in order to maintain our market share and that’s why you can’t see the full impact of the cost cutting 2011.
Obviously for 2012 we are a doing a lot more in terms of cost cutting using the or leveraging the merger with NetVision to reunite the most significant cost cutting as we can.
To answer your, can you repeat the other two. The question will obviously it's a bit difficult for me to answer that, I can tell you that we are doing as I mentioned in my opening statement. We are doing a lot of cost cutting, we are focusing our revenue growth in terms of doing a lot in the data services, sending a lot more devices and getting a lot more customers using a smart phone, using tablets, using modems to get them to use our server network in the coming years.
We are in the network to give the best possible service that we can. Can you repeat the question on the dividend?
Yaacov Heen
Yes you see the dividend is being enrolled and again I realize that things have a way of changing certainly there is a lot of the potential political term loan in the area and whatever that may affect, it's the overall economy of Israel but be that as it may, do you see the dividend is being secured.
Nir Sztern
Just to remind, our dividend policy is connected almost 100% to our net income so we believe as we saw last year when the revenues and of course the net income is down like this quarter so the dividend is also down in the same ratio. So that’s why we would like to continue unless there is real dramatic change in the market in our resource but so far we can continue with our dividend policy because the same ratio that the net income is own is also with a dividend but we want to consider the debt level and our ability to continue with the dividend policy.
So that’s why for the moment we don’t expect a change and as you can see the Board of Director decided to continue with the current policy.
Operator
The next question is from Bill Rosenberg from RBC Capital Markets.
Bill Rosenberg – RBC Capital Markets
Just one quick clarification and there again I understand net income but is the policy itself is unchanged also in 2012?
Nir Sztern
The dividend is not guaranteed and it's according to the decision of our Board of Directors. So, I would say that this is the best that I can tell you, you can say if we came to continue because we always consider both our shareholders and our debt holders and if we can continue with these policy, we are going to continue with that.
Bill Rosenberg – RBC Capital Markets
Okay thanks and I was wondering on seasonality, what seasonality do you see going into 2012 with all the changes in the market due to more normalized seasonality in 3Q and 2Q or do you think that the market changes are sort of growing up.
Nir Sztern
With the same seasonality usually the fourth quarter is the weakest quarter in the year, you know unfortunately if you are talking about three years ago and three years ago, because of the growth, the internal growth we can compensate on the seasonality but this quarter we have both the price evaluation and the seasonality so that’s why we have emphasized, we emprise the industry are and also in our conversation.
Bill Rosenberg – RBC Capital Markets
One last question if I can make, in that 2012 I was wondering if you see the equipment sales continuing very strong.
Nir Sztern
You know the equipment sales in on hand it's increased the EBITDA but we would prefer to focus more on our service revenues and I cannot tell you about the levels because we try to reduce this, it depends on the competition environment. As we have mentioned our focus is the EBITDA and we are very happy with opportunity that now (inaudible) is available also in Israel we served it at the end of 2012 and we believe that we can continue with that and even increases during 2012. You know when you look at the global market this is a trend and we believe that it should be the same in Israel. So the impact of that of course is has to sales also.
Operator
The next question is from Maura Shaughnessy of MFS Investment Management. Please go ahead.
Maura Shaughnessy – MFS Investment Management
Couple of questions; is there any update as to the timing of the high commission ruling at a commission?
Nir Sztern
No unfortunately there is no news from the Secretary of (inaudible) we know that they are looking into we have seen few developments recently and especially that were targeted into the limelight, our recent development is that the amount of make, that was just recently published but in terms of the high committee there is no (inaudible).
Maura Shaughnessy – MFS Investment Management
Okay but waiting for the deal in this one, as an expression goes. Can you be a little bit more specific on the cost side? Your margins have been crushed over the last year. The question has already been asked why didn’t you do this sooner but I am not going to ask that again. Can you be more specific and quantity what you're going to do on the cost side?
Nir Sztern
Well obviously I can't quantify it unfortunately but I can tell you a little bit of what we are doing right now. As I said we're trying first of all to leverage the energy with NetVision and doing a lot of cost cutting there. What we're doing is we're seeing where our duplicate costs are, whether they are in terms of personnel or rent or buildings or even the headquarters of NetVision that has moved into Netanya also in terms of the systems and infrastructure where we're looking into everything that the two companies did and what we're doing is we're cutting the duplicates and that's the one thing that we're doing and we've seen that there are lot of duplicates that it can be significant of cost cutting.
Besides that we're looking into everything the company is doing and we are trying to streamline all the business processes. We're looking into everything we're doing and whether there are places that we can cut that will not significantly harm our business but can improve our cost cutting. So we're doing that and we've been doing that for the last two or three months and will start seeing the results of the cost cutting in 2012.
Maura Shaughnessy – MFS Investment Management
So what does that mean? Does that mean in the second half of 2012? The issue with NetVision, you should be able to quantify that. That's an isolated issue in some regard. So what is the timing of that?
Nir Sztern
So we'll start seeing the effect of the cost cutting immediately in the first half of 2012. We said that we expected from the beginning, of course the impact will be higher in the second quarter and third quarter because a part of the labor cost is just in the middle of the quarter but about the cost reduction, this time we have used the cost of the, especially in the headquarter and we didn’t touch the cost of the service because we believe that we should keep our level of service in a very high level, especially with, before the competition.
So last year because of the increase of the competition we have a lot of expenses regarding the customer service and that's why even though we are just cost in the head quarter we couldn’t really slow it because comparing to what we have to add to the customer service it was almost insignificant and this year we can see that we stabilized the level of service and now it's the right time to reduce and to take advantage of the (inaudible) and to reduce the duplication and also to increase our efficiency. So to address your point it's going to be in the first quarter.
Maura Shaughnessy – MFS Investment Management
Okay. Can you just give an outlook for the interest cost expectations for the year? Obviously your debt has gone up a bit here and just your expectations there, what your cost of debt is now and et cetera?
Nir Sztern
You mean the financial expenses?
Maura Shaughnessy – MFS Investment Management
Yes.
Nir Sztern
This is of course because our debt level is in the highest or that's why the total financial expenses was high. If you take roughly the growth that and you multiply by between 6 to 7% which is a number that represents the financial expenses for full year.
Maura Shaughnessy – MFS Investment Management
And what was your average cost of debt in 2011?
Nir Sztern
It was about 5.5% to 6% because in the fourth quarter in Israel we saw deflation so that's why it was benefit but usually it was more than 6%.
Maura Shaughnessy – MFS Investment Management
And what's the expectation for inflation in Israel this year?
Nir Sztern
At the beginning of the year it was about 2-2.2% and right now it's close to 2.5%.
Maura Shaughnessy – MFS Investment Management
And what percent of your debt now is inflation rate?
Nir Sztern
It's about two third of it. Two third of it is 70%. Its CPR link and the other part is nominal.
Maura Shaughnessy – MFS Investment Management
Okay. And in terms of charges that were taken in the fourth quarter. Is there a chance that the class action, the 28 million being reversed, anytime soon?
Nir Sztern
According to our analysis, we believe that yes, but that is a decision we have to accrue that accrued that immediately and the processes in Israel are not so fast so I cannot say that we expect it in the first half of 2012 even all the year. So it's something that it's not in our hand.
Maura Shaughnessy – MFS Investment Management
And the tax rate expectations for '12 versus '11?
Nir Sztern
25%, so it's an increase of 1%. This is right now the lowest we didn’t expect any change in that.
Maura Shaughnessy – MFS Investment Management
And in terms of what you're seeing actually out there for MBNOs and the impact on the marketplace in some of the new competition that eventually will get there. Any news on that front?
Nir Sztern
Well we see one MBNO occurring in the market levy and we know of others that are planning. We don't know when do to our planning to launch and obviously to new EMTS operator also I have no idea when they are launching. But we'll see the new competition coming in 2012 definitely.
Operator
The next question is from James Breen of William Blair. Please go ahead.
Louie DiPalma – William Blair
It appears that you are upgrading your existing 3G network, the HSPA+ at 84 megabit per second instead of taking the alternative route with LTE. Can you talk about the CapEx projections for the HSPA+ upgrade?
Nir Sztern
First of all we are doing two things while we are upgrading the network, first of all we're rolling out the 850 megahertz frequency for the country which will improve our in building coverage and upscale a better customer experience to our subscriber base. By doing that we are achieving two things. We are improving the network coverage, we're also upgrading to the (inaudible) and the roll off of the network is what we call MPE ready which means that if and when frequencies will be allocated or when we decide to go into the LTE, we'll be in a good position to roll out quickly an LTE network.
Louie DiPalma – William Blair
Okay and do you think Cellcom will be able to roll out LTE before its competitor, especially given the fact that the Apple iPhone 5 is rumored to have LTE and the iPhone is a significant product portfolio.
Nir Sztern
We're watching closely to see how LTE is developing both in terms of handset manufacturers. We're looking forward to tonight's announcement to see where everyone's going with LTE. We're also looking forward to what's going on here in terms of regulation and so on. We haven't decided up yet and if we will then we'll definitely tell you about it.
Operator
(Operator Instructions). The next question is from Dan Howard at Deutsche Bank. Please go ahead.
Dan Howard – Deutsche Bank
Couple of questions. Firstly, could you just clarify a comment that you're trying to reducing equipment revenue, why that should be the case and secondly how is the gross margin on those equipment revenues in the fourth quarter.
Nir Sztern
Last year was a totally different year. Usually we like very much to upgrade the customers with an advanced handset because they increase first the experience and the data usage and of course the Apple but last year because of the competitive environment, so we saw that we upgrade the customers, in one pay for the handset more and we get less from the customers. So that's why we have to do it very carefully and we believe handset sales itself this is not our purpose. Our purpose is to sell to our customers and to give them the best offer that we can by offering them the best handset with reasonable price and the main Apple version mainly came because of this rebate that we have to give the customer back the handset price during the 36 installment. So that's why I am not saying this is our main purpose. We continue with our strategy to analyze the upgrade and the new sales for the customer that we believe we can keep or upgrade revenues from those customers and as I said before, the main opportunity is coming from a totally new devices and opportunity connected to the tablet and since we started this, we can see that the positive reaction from our customers and of course in Israel that the coverage itself is very good, so we can take advantage of retail offer and new opportunity to our customers regarding that when the new tablet that came relatively to the world, lately to Israel.
Dan Howard – Deutsche Bank
And in terms of the gross margin on the equipment in Q4?
Nir Sztern
As to the sales of the 25%, 26% its surplus of the year.
Dan Howard – Deutsche Bank
And then just one more question, when you look at the combination on the one hand is the climbing ARPU and then on the other hand obviously the NetVision merger which brings in more revenues on a consolidated basis for the full year of 2012 when you compare it to the full year of 2011. Would you expect your top line to be up, flat or down?
Nir Sztern
We don't give guidance for the year, so we gave…
Dan Howard – Deutsche Bank
That's very broad.
Nir Sztern
I know. But you know, I have to be this year, because of the two new competitors, everybody has this assumption, so we believe that we have to be conservative and give you the best we can. Really at the value added information and not to say that we expect the same topline or less because again the impact of these two new competitors everybody has is assumptions and usually we don't give guidance about the revenue.
Operator
The next question is a follow up question from David Kaplan of Barclays Capital. Please go ahead.
David Kaplan – Barclays Capital
Yes, if I can just quickly follow up to go to the another question about the discoveries on later asked about your network and your upgrade. Can you talk a little bit about actually all this network, the CDMA network, is that still been running. Has that probably been shut down and have any subscribers then were written off now from the CDMA networks?
Nir Sztern
Yes, as we mentioned in the PR statement, we've shut down the CDMA network at the end of 2011 and actually saw the subscriber that we've eliminated our CDMA subscribers that did no migrate to CDMA network.
David Kaplan – Barclays Capital
Okay, so was there any accelerated depreciation related to that or has that already been accounted for?
Nir Sztern
No, we don't expect any other impacts. All of the impact was already in the fourth quarter. We try of course very hard to encourage those customers to the new network. The depreciation is 100% already depreciated in the last year. You have to remember that this network was alive more than we expected before.
David Kaplan – Barclays Capital
And I guess just one question, could you help me understand the delta was still on at CDMA network which is hard to actually believe that they were still there. Where did they go, if you were ever able to move them over as they prevent that they went to different networks.
Nir Sztern
Again, those customers want new front of course we gave them and take advantage of every contact with those customers during the last two years to offer them the new answers and the customers who are all biggest users or they didn’t want to transcend, finally we have to probably central because we need to expect them also.
Operator
There are no further questions at this time. Mr. Sztern, would you like to make the concluding statements?
Nir Sztern
Yes, thank you. Again, I want to thank everybody for joining Cellcom Israel's fourth quarter and full year 2011 earnings conference call. I look forward to hosting you again at our next call. Have a good day.
Operator
Thank you. This concludes the Cellcom Israel LTD fourth quarter and year end 2011 results conference call. Thank you for your participation. You may go ahead and disconnect.
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The divy could be what triggered the CEL off.. I just like the long term outlook here (charts). I SMELL short selling.. .. Could dip a bit more, I just think not so much and playing the weekly and daily will pay off here imo.
let me know what u think bro
i had originally been interested here because of the excellent divvy they had
they have certainly fallen a lot
~ $CEL ~ Possibly going long scan results (Daily and Weekly) for for the week of March 1st 2012 - Daily and Weekly views.
Chart results for you to ponder with me.. These are technical scans only, Click next or previous at the top of the page to see my others. Twitter: @MACDgyver ---> CEL <---
Keyword: MACDscan ----> http://tinyurl.com/MACDscan
Buy low.. $CEL high on radar!!
UPDATE 1-Israel seeks to break up large conglomerates
(Recasts, add details, quotes from prime minister, central bank chief)
By Ari Rabinovitch and Steven Scheer
JERUSALEM, Feb 22 (Reuters) - Israel's government, under pressure to lower the cost of living, said on Wednesday it would break up some of the country's largest conglomerates as part of a plan to reduce concentration and boost competition in the economy.
Israel has one of the highest concentrations of corporate power in the developed world and the Finance Ministry said the country's 10 largest business groups controlled 41 percent of the market value of public companies.
"There is no phenomenon of concentration in the OECD like in the Israeli economy," Prime Minister Benjamin Netanyahu told a news conference where a government panel presented its final recommendations.
"I am a proponent of competition and against monopolies and cartels," said Netanyahu, who as finance minister a decade ago implemented free market and economic structural reforms.
The main recommendations, which need cabinet and parliamentary approval, include requiring conglomerates with significant financial and non-financial assets to divest.
Holding companies structured like pyramids will have to limit their tiers of subsidiaries in a move designed to change the current set-up, in which parent companies often own publicly listed units which in turn have their own listed subsidiaries.
Under the new rules, existing groups will be allowed no more than three tiers of subsidiaries and new conglomerates two.
Institutional investors must also curb credit issuance.
Companies will have four years to comply with the new rules. The panel published interim recommendations last September.
Israel's conglomerates have been partly blamed for driving up prices of basic goods, leading to mass protests last summer which are expected to resume in coming weeks. The government is also under pressure to stem the tide of debt settlements due to their impact on pensions.
"Today we are talking about concentration, but a very important factor related to increased competitiveness is imports," Bank of Israel Governor Stanley Fischer said. "We must continue to liberalise imports -- that is the best way to increase competitiveness in the economy."
WHAT TO KEEP, WHAT TO SELL
According to the recommendations, companies cannot hold a bank or other financial firm with assets above 40 billion shekels ($11 billion) as well as a non-financial company of more than 6 billion shekels or revenue.
As a result, the IDB Group would have to divest Clal Insurance or other key holdings such as Cellcom , Israel's largest mobile phone operator. And Delek Group would have to decide between keeping insurance company Phoenix and brokerage Excellence Nessuah or its massive fuel business -- which includes a number of offshore natural gas wells.
Also, private equity firm Apax Partners would need to choose between food maker Tnuva or the Psagot brokerage.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a Special Report on Israel's economic concentration
click on:
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
"This report is not intended as an attack on the business sector. Everyone realises that the economy cannot be managed on the basis of government production alone," said Fischer.
"We have to rely on the business sector, but must ensure that it operates efficiently and without influencing the political system."
Earlier this month, IDB said it planned to merge two of its intermediate holding companies to simplify its pyramid-type structure and reduce costs. Discount Investment Corp would buy the portion of Koor Industries it does not already own.
($1 = 3.77 shekels)
(Additional reporting by Tova Cohen; Editing by Helen Massy-Beresford)
((steven.scheer@thomsonreuters.com)(+972 2 632 2210)(Reuters Messaging: steven.scheer.thomsonreuters.com@reuters.net))
Keywords: ISRAEL ECONOMY/COMPETITION
I disagree on that with today's news. Israel's gov is breaking up conglomerates, etc., to reduce the cost-of-living. Yes, CEL was already hit hard because of this policy, CEL has a number of competitors now. CEL must find additional sources of revenue, if the gov doesn't get in the way too much. Anything CEL tries to do, like run media corps, the Israeli gov will heavily scrutinize it. On the positive note, the Israeli gov is dictating that any company cannot have more than 4 levels or hiarchy.
Now is the time to get into CEL IMO...
... although CEL has been beaten up with bad news, still think it is oversold and worth AT LEAST $25-$28. Profit forecast may be down 20%, but that doesn't justify 60% drop in PPS! I think it has buyout/merger potential.
i know
i was just commenting on recently
not much going on there on the board
If you check back, I initially said hello to you a long time ago on CEL, LOL
funny u posted here johnsym
i was just looking over my list and noticed there has been no commentary on cel for a while
low and behold
u show up
Cellcom Israel Announces Preparations to Raise Debt
Grupo Iusacell DE Cv (NYSE:CEL)
Today : Thursday 19 January 2012
Cellcom Israel Announces Preparations to Raise Debt
NETANYA, Israel, January 19, 2012 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (TASE: CEL) (hereinafter: the "Company") announced today that its Board of Directors has instructed the Company to commence preparations for raising debt by offering to the public, in Israel only, additional series D debentures or debentures of new series, in an aggregate principal amount of up to approximately NIS 200-300 million, under the Company's shelf prospectus.
In preparation to the potential offering of a new series of debentures, the Company published today an amendment to the indenture filed within such shelf prospectus and filed such amendment and a draft amendment to the shelf prospectus with the Israeli Securities Authority, or ISA and the Tel Aviv Stock Exchange, or TASE. The amendment provided the following additional undertakings by the Company, in regards to such new series, if offered by the Company: negative pledge, a covenant not to distribute more than 100% of the profits available for distribution as dividends according to the applicable Israeli law, a covenant to have the debentures rated by a rating company (in as much as under the Company's control) and an obligation to pay additional interest for certain ratings decreases. The Company also provided in the amendment additional causes for immediate repayment of the new series in any of the following events: cross default, failure of the Company's main business to be communications, suspension of trading of the debentures over a certain period and default on the Company's above undertakings regarding dividend distributions and rating of the debentures (over a certain period). The offering of new series of debentures, if so decided, is subject to the filing of a final amendment to the shelf prospectus and approval of the ISA and TASE to such amendment. The contemplated offering, under both options, will also require filing of a supplemental shelf offering report with the ISA and TASE.
The execution, timing, terms and amount of such contemplated offering have not yet been determined and are subject to a further approval of the Company's Board of Directors. There is no assurance that such offering will be executed, nor as to its timing, terms and amount.
The Company intends to use the net proceeds of such contemplated offering, if executed, for general corporate purposes, which may include financing its operating and investment activity, refinancing of outstanding debt under the Company's debentures, and continued dividend distribution as customary in the Company, subject to the decision of the Company's board of directors from time to time.
See "Item 5. Liquidity and Capital Resources - Debt Service" of the Company's annual report on Form 20-F for the year ended December 31, 2010, the Company's current report filed on May 16, 2011, under "Other developments during the first quarter of 2011 and subsequent to the end of the reporting period - Issuance of Debentures", the Company's current report filed on August 8, 2011, under "Other developments during the second quarter of 2011 and subsequent to the end of the reporting period - Shelf Prospectus and Decision to raise Debt" and the Company's current report filed on November 15, 2011, under "Other developments during the third quarter of 2011 and subsequent to the end of the reporting period - Debt Raising" for details of the Company's shelf prospectus and public debentures; "Item 8. Financial Information - A. Consolidated Statements and Other Financial Information - Dividend Policy" for details of the Company's dividend policy.
The contemplated offering described in this press release, will be made, if made, in Israel to residents of Israel only. The said debentures will not be registered under the U.S. Securities Act of 1933 and will not be offered or sold in the United States. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any debentures.
In preparation for the contemplated offering, the Company also provides the following information:
The fourth quarter of 2011 was characterized by reorganization of the Company's operations, following the acquisition of Netvision Ltd. or Netvision, as the Company began the combination of both companies' business operation into a communications group, including the implementation of efficiency measures, in order to benefit the synergies thereof. The Company has not yet finalized its results for the fourth quarter of 2011. However, based on preliminary estimates (which are subject to change), the previously announced adverse effects of several regulatory changes on the Company's results of operations, which have and are expected to continue affecting the Company as well as enhanced effects of seasonality and one time effects during Q4/2011, including a class action decided against the Company (see the Company's current report filed on November 15, 2011 and the Company's current report filed on December 8, 2011), adversely affected the Company's results of operations, whereas efficiency measures and synergies pursuant to the Netvision merger are not yet reflected in Q4/2011 results. It is currently estimated that the Company's EBITDA (including Netvision) for Q4/2011 shall be approximately NIS 440-450 million before the one time effect of the class action, and approximately NIS 420-430 million including that one time effect, and the other financial parameters for that period shall be similarly affected. Net income for Q4/2011 shall also be affected by the previously disclosed one time deferred tax expense, due to an increase in deferred tax liability, following the increase of corporate tax (see the Company's current report filed on November 15, 2011, under the financial statements as at September 30, 2011- Note 11). Net income before the one time effects of the class action and deferred tax liability is currently estimated to be approximately NIS 120-130 million, and 70-80 Million including those one time effects.
Risk factors relating to the Company's recently acquired wholly owned subsidiary - Netvision:
Integration of Netvision's business may cause us operating difficulties and expenditures.
The process of integrating Netvision's business into our operations may result in unforeseen operating difficulties and large expenditures and may require significant management attention that would otherwise be available for our ongoing business. These risks may be further intensified due to a number of potential factors, including, among others: changes in the regulatory environment in the Israeli telecommunications market, unanticipated costs or liabilities, multiplicity of information and engineering systems, loss of key employees of Netvision and unrealistic goals or projections for the Netvision business or the merged group, whether due to regulatory changes or otherwise. In addition, changes in the financial condition, business or operations of Netvision may significantly affect our financial condition and results of operations.
Changes in the regulatory environment could adversely affect Netvision's business.
Netvision is subject to regulation on its ongoing operations and could therefore be significantly impacted by decisions of regulators, changes in laws, regulations or government policy affecting its business activities. The uncertainties and risks surrounding the regulatory framework of the Israeli telecommunications market, some of which we are currently unable to foresee or assess, could negatively affect Netvision's business and prospects. Netvision's operations in ISP services, landline telephony and international calling services are highly regulated. A change in the competitive structure of the market or a change in the regulation on structural separation of different types of services may adversely affect Netvision's results of operations and its ability to compete with other large players in the market, such as Bezeq and Hot.
The current policy of the Ministry of Communications is to encourage new entrants into the telecommunications market in order to increase competition and reduce fees and prices paid by consumers. See our annual report on Form 20-F for the year ended December 31, 2010 under "Item 3. Key Information - D. Risk Factors - Risks related to our Business - We face intense competition in all aspects of our business" as well as under "Item 4. Information on the Company - Competition", our current report on Form 6-K filed on June 16, 2011, under "Item 3 - Approval of merger between the Company's subsidiary and Netvision Ltd. - Summary of the Material Provisions of the Appraisal prepared by the Appraiser - Discounted Cash Flow Analysis", and our current report on Form 6-K filed on November 15, 2011, under "Other developments during the third quarter of 2011 and subsequent to the end of the reporting period - Regulation - Recommendations regarding Landline wholesale market" regarding the recommendations of a public committee appointed by the Ministry of communications to examine Bezeq's tariffs structure, tariffs for landline wholesale services and review the possible annulment of the structural limitations currently imposed on Bezeq and its subsidiaries, published in October 2011 .
Opening the market to additional competition, permitting telecommunications companies to offer bundled services, the recommendations regarding the structural separation and Bezeq's tariffs supervision may have a material adverse effect on Netvision's results of operation as they will enable increased competition in the markets in which Netvision operates. Moreover, it could specifically position Bezeq and Hot, whose existing infrastructure and ability to offer bundled services may significantly harm Netvision's competitive position to provide its customers with landline telephony, ISP services and international telephony. Bezeq and Hot have the advantage of owning their own infrastructure and being able to offer landline, international telephony and ISP services, as well as multichannel television independently of any third party support. If they are allowed to bundle these services, they will have an advantage over other service providers such as Netvision that do not own their own infrastructure.
In addition, the Ministry of Communication has published a hearing on November 2011, in relation to proposed regulation of the underwater international telecom connection from Israel, proposing certain limitations on the agreements with Med Nautilus, Netvision's provider, which shall, among others, limit the discounts and capacity Med Nautilus may provide. Further, Bezeq International, one of Netvision's main competitors in the ILD and ISP markets has recently deployed an underwater cable. Adoption of such changes and the deployment of such cable by Netvision's competitor may harm Netvision's results of operations and competitive position as it shall force Netvision to purchase capacity at less favorable prices, and more so in comparison to its competitor.
Netvision is exposed to risks relating to network infrastructure and information systems and is dependent on services it receives from its external suppliers.
Netvision does not own an independent network for providing the services it offers to its customers. Therefore, Netvision is dependent on its infrastructure providers, such as Med Nautilus, which provides underwater international telecom connections, Bezeq and Hot, which provide broadband connectivity and landline infrastructure. In some cases, these providers are substantially the sole providers of such infrastructure and cannot be replaced. Netvision is also dependent on foreign telecommunications operators for its international communications. Therefore, a termination or amendment of terms of an agreement with any of the infrastructure providers or a with some of the foreign operator at once, disruption in or refusal to provide such infrastructure services, as well as regulatory changes affecting the terms of infrastructure services Netvision receives, may have a material adverse affect on Netvision's ability to provide its services to customers or the profitability of such services.
Netvision's operations are dependant on various information systems. The unauthorized entry to or disruption of operation of these information systems, including due to cyber attacks, may result in damage to Netvision and its customers, including due to inability to provide certain services or provide them with disruptions or inability to bill for services rendered, loss of data of Netvision or that of its customers stored with Netvision, all of which may expose Netvision to legal claims and liability, although Netvision has taken steps to prevent such attacks. Further, attack of Netvisions' customers' information systems, protected by Netvision's data security products, may also expose Netvision to legal claims and liability.
Alternative technology may cause a decline in Netvision's international calling services.
In recent years there has been a decline in use of international calling services through international operators such as Netvision. This is due to, among other things, the development of alternate technologies, such as voice-over-IP, which enable international calls without the services of an international operators. These technologies also pose an alternative to landline communications. If this trend continues and alternate technologies improve or if new ones are developed, the competition in market will increase, which may have a material adverse effect on Netvision's results of operations.
Netvision is required to make large investments in technology and network, which may require additional funds from us or from external sources and may harm our financial condition.
Netvision is required to invest large sums in fixed assets annually in order to maintain a leading, technologically advanced, telecommunications services. This includes increasing the bandwidth of its broadband services to meet increasing consumer demand. Netvision's fixed assets' investments in the years 2009 and 2010 were approximately NIS 103 million (approximately $27 million) and NIS 65 million (approximately $17 million) respectively. This may require Netvision to obtain additional funding from us or from external sources, and may harm our financial condition.
Forward looking statement
The information included in this press release contains, or may be deemed to contain, forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). Said forward-looking statements, relating to the execution of the offering, the amount to be raised and the use of its proceeds are subject to uncertainties and assumptions about the receipt of the ISA and TASE's approvals for the amendment to the shelf prospectus, the shelf offering and market conditions and sufficient offers received for an adequate price. Said forward-looking statements, relating to the Company's expected results for Q4/2011, are subject to uncertainties and assumptions regarding the 4Q/2011 final results of operations which are currently still in the processing stage and any unexpected events which might effect such results. The actual conditions could lead to materially different outcome than that set forth above.
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the leading Israeli cellular provider; Cellcom Israel provides its approximately 3.391 million subscribers (as at September 30, 2011) with a broad range of value added services including cellular and landline telephony, roaming services for tourists in Israel and for its subscribers abroad and additional services in the areas of music, video, mobile office etc., based on Cellcom Israel's technologically advanced infrastructure. The Company operates an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE and TDMA networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Through its broad customer service network Cellcom Israel offers its customers technical support, account information, direct to the door parcel services, internet and fax services, dedicated centers for the hearing impaired, etc. As of 2006, Cellcom Israel, through its wholly owned subsidiary Cellcom Fixed Line Communications L.P., provides landline telephone communication services in Israel, in addition to data communication services. Cellcom Israel's shares are traded both on the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please visit the Company's website http://www.cellcom.co.il
Company Contact Yaacov Heen Chief Financial Officer investors@cellcom.co.il Tel: +972-52-998-9755
Investor Relations Contact Porat Saar CCG Investor Relations Israel & US cellcom@ccgisrael.com Tel: +1-646-233-2161
SOURCE Cellcom Israel Ltd.
Cellcom Israel warns of sharply lower Q4 profit
Reuters, Thursday January 19 2012 * Sees EBITDA of 420-430 mln shekels including class action
* Expects net profit of 70-80 mln including one-off items
* Plans to raise up to 300 mln shekels in debt offering (Adds details on Q4 outlook, background)
TEL AVIV, Jan 19 (Reuters) - Israel's largest mobile phone operator Cellcom said its fourth-quarter profit would be sharply lower after regulators clipped the fees they make and due to one-off costs including a lawsuit from customers.
Efficiency measures and synergies it expects from its acquisition of Internet service provider Netvision are not yet reflected in the fourth-quarter results, it said on Thursday.
Cellcom also said it was planning to raise up to 200 million to 300 million shekels ($53 million-$79 million) in a public debt offering in Israel.
The company estimated earnings before interest, tax, depreciation and amortisation (EBITDA) including Netvision for the quarter will be 440 million to 450 million shekels before the effect of a class-action lawsuit and 420 million to 430 million after it. Cellcom is appealing against the court order that it should repay customers charges it implemented for providing call details records, having previously provided them for free.
In the year-ago quarter Cellcom had EBITDA of 631 million shekels and adjusted EBITDA of 682 million.
Net income will also be affected by a previously announced deferred tax expense following the increase in corporate taxes. Net income before the lawsuit and deferred tax liability is estimated to be 120 million to 130 million shekels, and 70 million to 80 million afterwards.
In the fourth quarter of 2010 Cellcom posted net profit of 319 million shekels and adjusted net profit of 348 million.
Cellcom's Tel Aviv listed shares were down 1.7 percent at 60.25 shekels in late trading, compared with gains of 0.5 percent on the broader market.
Cellcom plans to use the proceeds of the debt offering, if executed, for general corporate purposes, which might include financing its operating and investment activity, refinancing of outstanding debt and continued dividend distribution.
Cellcom and rivals Partner and Bezeq unit Pelephone were hit at the start of 2011 by a steep reduction in fees mobile operators charge each other to connect calls and the elimination of exit fines for customers. The regulatory changes hurt profits at the three companies in 2011. ($1 = 3.78 shekels) (Reporting by Tova Cohen; Editing by Steven Scheer)
© 2012 Guardian News and Media Limited or its affiliated companies
he just wants the lowest pps this will go to from u
anyone can dig up news LOL
but
can u give him the lowest pps in say the next 12 months ?
that
would be worth reading LOL
Cellcom Israel Announces Purported Class Action Decided Against the Company
Grupo Iusacell DE Cv (NYSE:CEL)
NETANYA, Israel, December 8, 2011 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (the "Company") announced today that a purported class action filed against the Company in March 2008, in the District Court of Central Region was decided against the Company. The lawsuit was approved as class action in August 2009, in relation to the allegation that the Company breached the agreements with its subscribers by charging them for a call details records service, previously provided free of charge, without obtaining their consent. The total amount claimed was estimated by the plaintiffs to be approximately NIS 440 million. The Court accepted the allegation and ordered the Company to repay its customers the sum charged for the service in the amount of approximately NIS 22 million plus interest and linkage differences from the date of each payment made by the subscribers, an amount of NIS 200,000 to be paid to the plaintiffs and a fee for the plaintiffs' attorney equal to 10% of the sum to be repaid plus VAT.
The Company believes the decision to be mistaken and intends to appeal the decision and request to stay proceedings until the appeal is decided.
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the leading Israeli cellular provider; Cellcom Israel provides its approximately 3.391 million subscribers (as at September 30, 2011) with a broad range of value added services including cellular and landline telephony, roaming services for tourists in Israel and for its subscribers abroad and additional services in the areas of music, video, mobile office etc., based on Cellcom Israel's technologically advanced infrastructure. The Company operates an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE and TDMA networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Through its broad customer service network Cellcom Israel offers its customers technical support, account information, direct to the door parcel services, internet and fax services, dedicated centers for the hearing impaired, etc. As of 2006, Cellcom Israel, through its wholly owned subsidiary Cellcom Fixed Line Communications L.P., provides landline telephone communication services in Israel, in addition to data communication services. Cellcom Israel's shares are traded both on the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please visit the Company's website http://www.cellcom.co.il
Company Contact Yaacov Heen Chief Financial Officer investors@cellcom.co.il Tel: +972-52-998-9755 Investor Relations Contact Porat Saar CCG Investor Relations Israel & US cellcom@ccgisrael.com Tel: +1-646-233-2161
SOURCE Cellcom Israel Ltd.
It will pay $.51 per share. You MUST hold it the FULL business day before the ex-div date of the third of January. You can sell it on Jan 3.
when do you must have this share if you want the dividend?
it will be how much?
that's supposed to be $16
typo
and i really don't know
don't have a crystal ball
but i imagine w are close to the lows
perhaps part of the weakness is due to the being reduced
How much lower will the pps of CEL go?
i was not aware of a class action lawsuit
far as pps is concerned
when i first saw this last yr i remember the 52wk low was around $6 if i'm not mistaken
have not looked at things in a while
so i suppose depending on the lawsuit , could go much lower
i'll take a peek when i have some time and see what i can find out
I answered the ex-divie date in Post 50. Back to your question of how much farther the PPS will fall- who knows. It dropped 40% on the financial report, now almost -52% off it's 52-week high, but the dividends had been steadily dropping over the 52 weeks from a high of $.83 per quarter to the Jan 2012 payout of $.51. The PPS is back up $.50 from it's low, and the div yield presently sits at 16.71%, which is 1% higher from where it was 6 months ago. Just take a look at the pps chart over the last 90 days, go from there in your decision, you've got slightly less than a month before ex-div date, and the nearer we get, the higher the pps as investors move in for the divie.
I'm not sure which Class Action Lawsuit (CAL) you're referring to. Celcom Israel has had CAL after CAL filed against them for years, in hope someday the lawyers will get lucky. Some of these are as old as 2008. If you look at AT&T and Verizon, you will see the same going on, just CEL is very open about it and mentions it in PRNEWSWIRE, where they pay to announce it. You won't be that lucky in searching for AT&T and Verizon lawsuits. The August 4th lawsuit anouncement is pathetic, 9 lawsuits filed suing for millions each over a cellphone outage that lasted something less than a day:
NETANYA, Israel, August 4, 2011 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (TASE: CEL) (hereinafter: the "Company"), announced today the dismissal of several purported class actions filed against the Company in December 2010, by plaintiffs alleging to be the Company's subscribers, claiming compensation for damages in connection with the network malfunction that occurred on December 1, 2010.In December 2010 nine purported class actions were filed against the company in relation to such network malfunction. Three purported class actions (for the claimed amounts of approximately NIS 200 million, 57 million and NIS 22 million) were dismissed following their respective plaintiff's request. In May 2011, the court approved a procedural agreement among the plaintiffs of the other six lawsuits, according to which all but one of these six purported class actions will be withdrawn at their respective plaintiffs' request, and that the purported class action for the claimed amount of approximately NIS 61 million will remain pending and, to the extent requested by the other plaintiffs until June 2011, be amended to include causes of actions and remedies alleged in any of the other five purported class actions. One purported class action (for the claimed amount of approximately NIS 1.18 billion) was dismissed as part of a procedural agreement. Three purported class actions (for the claimed amounts of approximately NIS 1.32 billion, NIS 1.3 billion and NIS 990 million) were dismissed after having failed to comply with the Courts' orders regarding the procedural agreement. The plaintiffs in the eighth lawsuit (for the claimed amount of NIS 25 million) also requested to withdraw, as part of the procedural agreement. To date, no amendment to the remaining purported class action (according to the procedural agreement) was requested.
For additional details see the Company's annual report on Form 20-F for the year ended December 31, 2010, under "Item 8 - Financial Information - A. Consolidated Statements and Other Financial Information -Legal Proceedings".
NETANYA, Israel, November 2, 2011 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (the "Company") announced that a purported class action lawsuit against the Company was filed in the District Court of Jerusalem, by plaintiffs alleging to be subscribers of the Company, in connection with the allegation that the Company raised tariffs for business customers, unlawfully and in violation of its agreements with them.
The total amount claimed from the Company, if the lawsuit is certified as a class action, is estimated by the plaintiffs to be at least hundreds of millions of NIS.
At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
NETANYA, Israel, August 23, 2011 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (the "Company") announced that a purported class action lawsuit against the Company and two other cellular operators was filed in the District Court of Central Region, by plaintiffs alleging to be subscribers of the defendants. The plaintiffs allege that the defendants unlawfully and in violation of their licenses charged their subscribers based on units which are different than the units allegedly required by the defendants' licenses, for calls initiated or received by the subscribers while abroad.
The plaintiffs did not state any estimate of the total amount claimed from any of the defendants, if the lawsuit is certified as a class action.
At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
1/3/12 for a pay-date of 1/19/12
you might want to add dividend.com to your favorites
http://www.dividend.com/dividend-stocks/technology/wireless-communications/cel-cellcom-israel/
What is the current ex-dividend date for CEL?
How much lower do you think the pps of CEL will go with this class action lawsuit being filed and a poor 4th quarter?
Nov 15 (Reuters) - Cellcom , Israel's largest mobile phone operator, warned that price erosion and regulatory changes which sliced into third-quarter earnings would continue to weigh on results in the fourth period. Cellcom and rivals Partner and Bezeq unit Pelephone were hit at the start of 2011 by a steep reduction in fees mobile operators charge each other to connect calls and the elimination of exit fines for customers. "The cellular market underwent changes this year that significantly affected the level of competition and acceleration of price erosion, causing a decrease in revenues and profits," Cellcom CEO Amos Shapira said in a statement. "Notwithstanding, Cellcom Israel has continued to maintain its leading position, and even strengthen its position among its competitors." Yaacov Heen, chief financial officer, said the reduction of interconnect fees and price erosion would "continue to affect our results for the fourth quarter(Thomson Reuters 08:54 AM ET 11/15/2011
Cellcom Israel Announces Third Quarter 2011 Results
Grupo Iusacell DE Cv (NYSE:CEL)
Today : Tuesday 15 November 2011
Cellcom Israel Announces Third Quarter 2011 Results This quarter continued to reflect the continued impact of the regulatory changes and the increased competition, as previously expected and reported
PR Newswire
NETANYA, Israel, November 15, 2011
NETANYA, Israel, November 15, 2011 /PRNewswire/ --
In this quarter we consolidated Netvision's results for September only
Cellcom Israel declares a third quarter dividend of NIS 1.90 per share (totals approx. NIS 189 million)
Third Quarter 2011 Highlights including Netvision's Results for September Only[1] (compared to the third quarter 2010):
¦Total Revenues totaled NIS 1,665 million ($449 million) compared to NIS 1,729 million ($466 million)
¦Total Revenues from services totaled NIS 1,193 million ($321 million) compared to NIS 1,509 million ($407 million) as a result of the regulatory changes and the increased competition
¦Revenues from content and value added services (including SMS) increased 2.4%, reaching 26.6% of services revenues[2]
¦EBITDA[3]totaled NIS 534 million ($144 million) compared to NIS 716 million ($193 million)
¦EBITDA margin 32.1% compared to 41.4%
¦Operating income totaled NIS 349 million ($94 million) compared to NIS 534 million ($144 million)
¦Net income totaled NIS 199 million ($54 million) compared to NIS 332 million ($89 million)
¦Free cash flow[3] totaled NIS 262[4] million ($71 million) compared to NIS 513 million ($138 million)
¦Cellular Subscriber base totaled approx. 3.391 million at the end of September 2011
¦3G cellular subscribers reached approx. 1.282 million at the end of September 2011, representing 37.8% of total cellular subscriber base
¦The Company declared third quarter dividend of NIS 1.90 per share
1. On June 15, 2011, the Company and Netvision Ltd. ("Netvision") entered into a merger agreement. Netvision is a leading company in the Israeli communications market, which provides international long distance services, internet services (ISP), telephony services and other communication services. The transaction was completed on August 31, 2011. The consolidated financial results for the third quarter 2011 therefore include the results of Netvision only for the month of September 2011.
2. Excluding Netvision's services revenues.
3. Please see "Use of Non-IFRS financial measures" section in this press release.
4. The free cash flow for the third quarter 2011 is after elimination of the net cash flows used for the acquisition of Netvision in the amount of NIS 1,457 million (net of cash acquired in the amount of NIS 122 million).
Cellcom Israel Ltd. (NYSE: CEL TASE: CEL) ("Cellcom Israel", the "Company"), announced today its financial results for the third quarter of 2011. Revenues for the third quarter 2011 totaled NIS 1,665 million ($449 million); EBITDA for the third quarter 2011 totaled NIS 534 million ($144 million), or 32.1% of total revenues; and net income for the third quarter 2011 totaled NIS 199 million ($54 million). Basic earnings per share for the third quarter 2011 totaled NIS 2.00 ($0.54).
Commenting on the results, Amos Shapira, Chief Executive Officer said, "In the third quarter of 2011, we continued to see the impact of the regulatory changes, which came into effect at the beginning of the year, on our Company's results, as previously expected and reported. Likewise, we also see the impacts of the merger with Netvision, which was completed at the end of August, with September being the first month in which we consolidated Netvision's results in our financial statements. While the consolidation of Netvision's results in our financial report is only for September, I can say with great satisfaction that Netvision has demonstrated impressive results for its third quarter financial earnings, demonstrating growth in most parameters compared with the third quarter last year, among them a 24% increase in operating income and an 8% increase in EBITDA.
The cellular market underwent changes this year that significantly affected the level of competition and acceleration of price erosion, causing a decrease in revenues and profits. Notwithstanding, Cellcom Israel has continued to maintain its leading position, and even strengthen its position among its competitors, both financially and public image wise. In the third quarter, we continued to improve our customer service following the challenges we faced at the beginning of the year, due to market changes. I believe that our focus throughout the years on every aspect concerning customer service is what created such a change in the cellular market and is what makes us today the leading cellular company in terms of financial and image parameters. The-Marker, an Israeli business newspaper, recently published an annual survey, regarding the cellular companies customers' recommendation index, which noted that although the Israeli cellular market's public image on the whole requires improvement, Cellcom Israel is the only company in the sector to improve compared with last year and moves to the leading position in the sector. This index joins other recent and similar publications over the past few months such as Globes' - another Israeli business newspaper- "2011 Brands Index" and complaints index from the "Israel Consumer Council" and the "Public Trust" organization. All of the above publications demonstrated that although Cellcom Israel is the largest cellular company in Israel, the number of Cellcom Israel's customer complaints is the lowest in the industry. While I am pleased with the improvements in our customer service, we will continue our efforts in order to maintain this improvement trend.
The Company's image as an attractive workplace was also substantially reinforced. According to a recent survey, Cellcom Israel was ranked number one among cellular companies in Israel for students entering the workforce and ranked number five for Israeli companies overall. Our advantage in competing for the best employees in Israel is a very important competitive tool for the Company in the market, both for now and in the future. Strong financial results as compared with our competitors, along with the strengthening in all our image parameters, better position us towards the additional challenges expected in the communications industry in the future.
At a time when future challenges in the market are great due to increased competition, I think we can see that our consistent strategy of focusing on mobile communications - along with our development of unique management processes and professional staff of employees and managers with the motivation to win - is the right strategy and one that positioned us as market leaders. I believe that our entry into the land line market through the acquisition of Netvision will only further strengthen our position. The changes expected in the coming year are not the first challenges to our market and I believe that just as we emerged stronger from previous challenges (such as number portability in 2008 and the significant regulatory changes at the beginning of 2011), the Company has the management team, employees and strength to continue doing so in the future.
We are in the midst of the merger process. The main strategic decisions related to the merged Group's future characteristics have been decided upon and we now have several teams in place led by an outstanding professional, Netvision's CEO and designated Cellcom Israel's CEO, Mr. Nir Sztern, along with the assistance of McKinsey, to plan the integration of the companies' units in more details. We are very pleased with the progress of the process and with the fertile involvement of tens of our managers in this process. I believe a merger between companies is first and foremost a merger of people, and we have the best people in both companies. We are executing this process transparently and professionally and making an effort to shorten it as much as possible, so that we can start harvesting the fruits of the merger as soon as possible. I believe that the main changes resulting from the merger may be completed by early 2012, and that we start to enjoy the fruits of the synergy during the first half of 2012.
Mr. Shapira added: "Recently, I announced my retirement after six years in office. I had both the privilege and an obligation to lead this wonderful organization through an exciting and incredibly challenging time. The cellular market today is completely different from what it was six years ago, both from the technological perspective as well as the customer usage perspective. Mobile devices are no longer just for, but rather also for, phone calls. The slogan "mobile is everything" is true now more than ever. Likewise, the level of competition is not like it used to be in the past. With all this, we have dealt successfully and improved our position, moving from second to the leading position in the industry. The smiles of Cellcom Israel employees and managers along with the Board of directors' trust, gave me the energy required for this position and I thank them for this as I know this is not something to take for granted.
Although I will continue in my post until the end of 2011, this will be the last quarter I report our results to you. Starting next quarter, Mr. Nir Sztern, current CEO of Netvision, and appointed by the Board of directors to be the next CEO of Cellcom Israel, will be reporting the results. Nir began his career in the communications market at Cellcom Israel seventeen years ago and he has since performed successfully several roles in the communications industry. He has extensive experience in both mobile and landline communications, and this will serve as an important asset to his ability to lead the merged group to manage future market challenges. In the last two months I have worked with Nir closely, in leading the teams of the merger and was introduced to his great abilities. I have no doubt that Nir, together with the management team and employees of Cellcom Israel and Netvision, will successfully continue to lead the industry in the future".
Yaacov Heen, Chief Financial Officer, commented: "As we previously expected and reported, the reduction of interconnect fees and the continued price erosion had an adverse effect on our service revenues and profitability and we estimate that they will continue to affect our results for the fourth quarter as well. In the third quarter we consolidated Netvision's results for the month of September, which contributed NIS 98 million to total revenues and NIS 20 million to EBITDA. Turning to our results excluding Netvision: our total revenues decreased by 9.4% and service revenues decreased by 27% as compared with the third quarter last year, mostly due to the reduction of interconnect fees, but also due to the intensified competition. Revenues from content and value added services increased by 2.4% and EBITDA decreased by approximately 28.2% compared with the third quarter last year. As in the first half of the year, regulatory changes and accelerated competition led to a material increase in the Company's gross recruitment of subscribers, as well as to a 112% increase in revenues from handsets and accessories compared with the third quarter last year, most of which resulted from an increased sale of smartphones and advanced 3G handsets. In addition, the increased sale of handsets continue to cause a decrease in our free cash flow compared with the third quarter last year, due to an increase in the immediate payment to vendors for handset purchases, as opposed to spreading the proceeds from those sales, which are paid in installments by our customers (generally in 36 installments), although we can see an improvement in our free cash flow this quarter compared with the previous quarter.
During the quarter, we successfully raised approximately NIS 1.1 billion debt, through the expansion of existing series of debentures in a public tender, and for which we received demands of approximately NIS 2 billion. Overall, we have raised debt of approximately NIS 2.16 billion this year. The success of our latest debt raising, in a time of market turmoil, expresses the confidence of the investor community in our company.
For the third quarter of 2011, the Company will distribute a dividend of approximately NIS 189 million, representing approximately 95% of the third quarter net income to our shareholders."
Main Consolidated Financial Indicators (including Netvision's Results for September only):
see celcom's site for full financial report
Don't Diss This High-Yielding Israeli Stock
By Louis Basenese, Chief Investment Strategist/ Wall Street Daily
Nov 9, 2011
When will politicians learn to keep their traps shut when they're mic'd up?
The latest gaffe comes compliments of French President, Nicolas Sarkozy, and our very own President Obama. Turns out that neither man considers Israeli Prime Minister, Benjamin Netanyahu, their BFF.
While they might have a beef with Israel's leader, it doesn't sour my appetite for Israeli stocks one bit. Political tension or not, the country is home to one of the most undervalued dividend-paying stocks I know of - Cellcom Israel (NYSE: CEL).
If your long-term investing goals include generating income and modest capital appreciation, I suggest you consider adding some shares to your portfolio. Here's why...
Dialing Up Dividends in the Middle East
Cellcom is the largest wireless provider in Israel, with 3.4 million subscribers and about 33% marketshare. In other words, it's an international blue-chip stock. And it boasts compelling fundamentals, including:
Steady demand and steady cash flow. To say Israel embraces cellphones is an understatement. Penetration rates top 100%, which means many people own more than one phone. While this limits subscriber growth, it creates an opportunity for a well-managed company like Cellcom to generate fistfuls of cash by providing such a vital service to Israelis. And it does. In the last two quarters, Cellcom generated over $150 million in free cash flow.
Favorable demographics. Israel's overrun with young people, who tend to be more receptive to new technologies. The median age is 29.4 years compared to 36.9 years in the United States. This plays right into the company's growth strategy of providing value-added data services.
Growth opportunities. Revenue from data services - the fastest-growing segment for all wireless providers - should contribute to steady, overall increases in sales. In the most recent quarter, data and service revenue increased a solid 5.2% and now account for 25% of overall sales.
Dollar hedge. By investing in a foreign dividend-paying stock, we get an automatic raise (and potentially a hefty one) should the U.S. dollar really take it on the chin.
The Two Most Compelling Reasons to Buy
An investment in Cellcom does carry some risks, namely regulatory and execution risk. The government is trying to encourage more competition by implementing number portability. And Cellcom is getting a new CEO in January. But I'm convinced the stock's current valuation and yield outweigh these risks.
Right now, Cellcom trades at an extremely undervalued price, with a price-to-earnings ratio of just 6.53. That's equal to about a 50% discount to U.S. telecoms like AT&T (NYSE: T) and Verizon (NYSE: VZ) and British telecom, Vodafone (Nasdaq: VOD).
The upside to the company's depressed stock price is, of course, a higher yield. At current prices, Cellcom sports an attractive 9.9% dividend yield.
It's true that the dividend is subject to a foreign withholding tax of 20%. However, U.S. tax law allows us to take a credit or deduction for such withholdings. (Please, check with your tax advisor to determine which option makes most sense for you.) Even after we factor in the withholding, shares still yield over 7%, more than enough to justify the trip overseas.
Bottom Line: Cellcom reports third-quarter results after the market closes on Tuesday, making now perhaps the last time to pick up shares at these levels. Institutions have been net buyers over the past three months. It might be time for us to join them.
Rami Levy Communications to begin offering mobile services
Rami Levy has promised to charge no more than NIS 0.30 per minute.
27 October 11 10:38, Guy Katsovich/ The Globes- Israel's Business News
Rami Levy Hashikma Marketing Communications CEO has signed a cooperation agreement with Pelephone Communications Ltd., through which Rami Levy Communications will become a mobile virtual network operator (MVNO). Company operations are slated to begin in November.
The agreement stipulates that Pelephone will provide Rami Levi Communications with mobile services, which will be offered to customers at Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) supermarkets. The new Rami Levy mobile service will use the 055-66x-xxxx prefix.
During the initial stage, points of sale will be located nearby or within Rami Levy stores, and additional points will subsequently be added throughout the country. Rami Levy will market its phones under the slogan, "It's cheap to stay in touch" and plans to launch "simple" packages with no "hidden costs" for its customers. In February, Rami Levy promised to charge no more than NIS 0.20-0.30 per minute.
"Rami Levy customers will receive the lowest prices available in the market for phone calls, sms, and Internet services," says Rami Levy Communications. "Only actual air time will be charged, the bills are user friendly and easy to understand, there are no packages, and no minimum terms."
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011
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was brought to my attention by chloe and i have tried to tell folks about it
but most are looking for the quick pop , not the good return
very nice divie- present rate is 16.11% (minus 20% tax to foreigners). It's lost steam in the past year. dropped from 1.10 to .85, to .83, to Oct 17th payout of only .66.
Very good reason to replace the CEO, although shares pps always got icky with news of middle east threats, but an almost 50% cut in divies stunk. Still pays a lot more than most U.S. stocks.
Hopefully with the CEO replacement, it will improve again.
this is a nice divey play though it's gone down i bit last i checked
correct me if i'm wrong chloe
changes in CEOs always takes the stock down a notch....
Cellcom Israel Ltd. Announces Change of Chief Executive Officer
Grupo Iusacell DE Cv (NYSE:CEL)
Today : Wednesday 26 October 2011
Cellcom Israel Ltd. Announces Change of Chief Executive Officer
PR Newswire
NETANYA, Israel, October 26, 2011
NETANYA, Israel, October 26, 2011 /PRNewswire/ --
Cellcom Israel Ltd. (NYSE: CEL) (the "Company") announced today that Mr. Amos Shapira notified the Company of his resignation from office as the Company's CEO after six years of tenure, effective December 31, 2011. The Company's board of directors has nominated Mr. Nir Sztern as the Company's CEO, effective January 1, 2012.
Mr Nochi Dankner, IDB's Chairman thanked Mr. Shapira on behalf of the Company's shareholders, management and employees for his contribution to turning the Company into the leading cellular company in Israel. Mr. Dankner said that "six years ago, when IDB acquired the controlling stake in the Company, it was Mr. Shapira's spirit which turned around the Company's position in the market and today it is the leading company in all parameters, financial and brand wise, with a professional and highly qualified team of employees and managers."
Mr. Ami Erel, the Company's Chairman added that Mr. Shapira has built Israel's leading cellular brand and positioned the Company as the number one company in the Israeli cellular market, through day-to-day efforts, unique management skills, personal charisma and the execution of thousands, big and small, changes which made the difference.
Mr. Erel said he is excited by the nomination of Mr. Nir Sztern as the Company's CEO, "a circle closure for Mr. Sztern who started his career in the Israeli communications market, seventeen years ago, as a member of the Company's founding team and has since then performed a variety of senior positions in the communication market, all with outstanding success. Mr. Erel added that Mr. Sztern's knowledge and accomplishments in the Israeli communication market, his personal and managerial skills, shall be a substantial advantage for the Company in these challenging times and he is confident that Mr. Sztern shall lead the formation of a strong communications group, following the recent Netvision Ltd. merger and lead the merged group to new records.
Mr. Sztern has served as the chief executive officer of Netvision Ltd. (which was recently merged into a wholly owned subsidiary of the Company), since 2010. From 2008 to 2010 he served as deputy CEO of Pelephone Communication Ltd., an Israeli cellular operator and one of the Company's competitors, and from 2002 to 2008 as Pelephone's vice president of marketing. From 2001 to 2002 he served as vice president of marketing and sales of Barak 013, a long distance operator (which was later merged into Netvision Ltd.) and from 1999-2001 as head of Barak's marketing department. From 1994 to 1999 Mr. Sztern served as head of the Company's private sector marketing department. Mr. Sztern holds a B.A. in economics and management from the Tel Aviv University and an M.B.A. in business administration, from the Israeli branch of Manchester University.
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the leading Israeli cellular provider; Cellcom Israel provides its approximately 3.366 million subscribers (as at June 30, 2011) with a broad range of value added services including cellular and landline telephony, roaming services for tourists in Israel and for its subscribers abroad and additional services in the areas of music, video, mobile office etc., based on Cellcom Israel's technologically advanced infrastructure. The Company operates an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE and TDMA networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Through its broad customer service network Cellcom Israel offers its customers technical support, account information, direct to the door parcel services, internet and fax services, dedicated centers for the hearing impaired, etc. As of 2006, Cellcom Israel, through its wholly owned subsidiary Cellcom Fixed Line Communications L.P., provides landline telephone communication services in Israel, in addition to data communication services. Cellcom Israel's shares are traded both on the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please visit the Company's website http://www.cellcom.co.il
Company Contact Yaacov Heen Chief Financial Officer investors@cellcom.co.il Tel: +972-52-998-9755 Investor Relations Contact Porat Saar CCG Investor Relations Israel & US cellcom@ccgisrael.com Tel: +1-646-233-2161
No problem chloe
Like u said
Easy work & I will take a peak
Thanks for being a mod here look at AIVN.....divvy off the chain.
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