Israeli mobile operator Cellcom profit slides, misses estimates


JERUSALEM, Nov 12 (Reuters) - Cellcom, Israel'slargest mobile phone operator, reported a 58 percent drop inquarterly profit due to higher financing expenses and lowerrevenue stemming from stiff competition that has eroded callingprices.

Net profit slipped to 52 million shekels ($14.7 million) inthe third quarter from 124 million a year earlier. Revenuedipped 15.5 percent to 1.224 billion shekels.

Cellcom was forecast to earn 63 million shekels on revenueof 1.247 billion, according to a Reuters poll.

Israel's mobile phone industry was shaken up last year withthe entry of six new operators, sparking a price war - withunlimited calling plans for $25 a month or lower. That led tosteep drops in subscribers, revenue and profit at Cellcom andtwo incumbent rivals.

Cellcom said on Tuesday it showed improvement in free cashflow over the second quarter partly due to efficiency measures.

As a result, Cellcom declared a quarterly dividend of 85million, or 0.85 shekel (24 cents) a share. Cellcom had not paida dividend for the prior five quarters to strengthen its balancesheet.

"This decision does not indicate on dividend distribution infuture quarters, and any such decision shall be examinedaccording to the future market conditions and the company'sneeds," said Chief Financial Officer Shlomi Fruhling.

Cellcom said it expects growth to come from futurecompetition in the landline market as Israel's telecomsregulator is pushing for more competition in the sector whichcould include TV over Internet.

Cellcom had 3.156 million subscribers at the end ofSeptember, down 5.5 percent a year earlier.

Last week, Bezeq's Pelephone unit, one of itsrivals, reported a 9.1 percent fall in quarterly profit to 140million shekels on a 9.7 percent drop in revenue.

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