Mobile consumers spoke more, paid less in 2012
Despite rising competition, the carriers still managed to post handsome profits in 2012.
Last year’s consumer revolution in the mobile market was reflected in the financial results of the country’s three veteran carriers – Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), and Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) subsidiary Pelephone Communications Ltd.To sum up the year, Israeli consumers spoke more, but paid less – a lot less. Average minutes of use (MOU) per customer per month ranged from 390 minutes at Cellcom to 450 minutes at Orange franchisee Partner, a 12% increase.
In contrast, average revenue per user (ARPU) saw double-digit declines last year, compared with 2011, ranging from NIS 87.50 per month at Cellcom to NIS 97 per month at Partner. Cellcom had the largest drop in ARPU, at 17.5%, and Pelephone had the smallest drop, at 11.2%.
Despite rising competition and the blow to profits, the carriers still managed to post handsome profits in 2012: their aggregate profit was NIS 1.7 billion, albeit almost 30% less than in 2011. Their aggregate revenue fell 27.3% to NIS 13.8 billion.
Following the first blow to the carriers in 2011 in the form of the reduction in inter-network connectivity fees, the knockout came in 2012: two new mobile carriers entered the market which until then was considered a saturated and uncompetitive market, and the struggle for market share resumed, to the benefit of the consumer.
The two new carriers – HOT Mobile Ltd. and Golan Telecom Ltd. – launched operations in May 2012. Under the terms of the tenders they won, they must achieve market share and ARPU targets to receive back the guarantees they deposited. The fierce competition in the market emerged on this basis.
At the same time as the launch of the new carriers, mobile virtual network operators (MVNO) entered the market for the first time, including Rami Levy Communications Ltd. and YouPhone Ltd., owned by Alon Holdings Blue Square – Israel Ltd. (NYSE: BSI; TASE: BSI). They are now competing for the hearts and pockets of the Israeli consumer, and the veteran carriers have been steadily lowering the prices of their plans to stay in the game.
At the same time, the new players have also contributed to the revenue of the veteran carriers, which provide hosting services. Both Rami Levy and Hot Mobile have hosting agreements with Pelephone, paying it NIS 129 million in 2012.
Published by Globes [online], Israel business news – www.globes-online.com – on March 14, 2013