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)
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