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Israel's Partner Comms Q3 profit drops less than expected

TEL AVIV, Nov 19 (Reuters) - Partner Communications , Israel's second-largest mobile phone operator, posted a 65 percent drop in third-quarter net profit as the company faces increased competition and an erosion in prices.

Net profit fell to 38 million shekels ($11 million) from 110 million a year earlier as revenue decreased 15 percent to 1.12 billion shekels, Partner said on Tuesday. Net profit was up from 20 million shekels in the second quarter.

The company was forecast in a Reuters poll of analysts to earn 30.8 million shekels on revenue of 1.13 billion.

Israel's mobile phone industry was shaken up last year with the entry of six new operators, sparking a price war - with unlimited calling plans for $25 a month or lower.

"I am encouraged by the initial signs of improvement in the business environment," Partner Chief Executive Haim Romano said in a statement.

The results for the third quarter reflect Partner's investments in customer service and infrastructure as well as the adjustment of its cost structure to one appropriate for market conditions, he said.

The company reduced operating expenses by 97 million shekels in the quarter and invested 116 million shekels mainly in improving its network and information technology systems.

Its subscriber base fell 3 percent from a year earlier to 2.95 million.

Cellcom, Israel's biggest mobile phone operator, posted a 58 percent drop in third quarter net profit to 52 million shekels and a 15.5 percent decline in revenue.

Pelephone, a unit of Bezeq Israel Telecom, reported a 9.1 percent drop in quarterly profit and a 9.7 percent fall in revenue.