Israel mobile group Partner Communications may launch TV service

Wednesday, May 20, 2015

Mobile phone group Partner Communications, may branch out into television services this year to provide a new source of revenue after "relentless" competition in mobile phones contributed to a 52 percent drop in first-quarter profit.

Partner, Israel's second-largest mobile operator, has said for months it would consider launching internet-based television once there was a wholesale market for landline telecoms, which was fully opened on May 17.

"The company is working to create additional sources of revenue and profit," Haim Romano, Partner's outgoing chief executive, said. "Partner may ... enter the television market in the second half of 2015."

Partner's main competitor, market leader Cellcom, has already launched a TV service in an effort to offset the impact of the fierce competition in the mobile market.

Partner, which operates under the Orange brand name, earned 25 million shekels ($6.4 million) in the first quarter, down from 52 million year earlier but above an estimate of 20 million shekels in a Reuters poll of analysts.

Revenue slipped 4 percent to 1.054 billion shekels, led by a 13 percent drop in service revenue but partly offset by a 30 percent rise in revenue from equipment sales.

Romano said growth in equipment sales revenue was also an important component in finding ways to offset declines in cellular service revenue.

Partner's average revenue per user fell by 10 percent to 69 shekels a month, while it lost 162,000 subscribers over the past year to a total of 2.77 million.

"During the first quarter of 2015, the relentless competition in the cellular market persisted, as reflected mainly by the continued erosion in cellular service revenues and increase in the churn rate," chief financial officer Ziv Leitman said.

Partner said it was considering using some of its nearly $250 million in cash reserves for early repayments of bank loans and/or the buyback of its publicly traded notes.

Romano will step down as of July 1 and will be replaced by Isaac Benbenisti.

Partner's shares were 2.6 percent lower in Tel Aviv.

Last week, rival Cellcom reported a 77 percent drop in quarterly profit.. On Thursday, another competitor Pelephone, which is owned by Bezeq, is slated to report earnings.

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