Partner Communications Q2 net drops 42% on subscriber exodus


Israeli operator hit by tougher competition; warns of workforce ‘adjustment’. Partner Communications Co.’s second-quarter earnings dropped 42% on increased competition in the Israeli cellular market, a drop in subscribers and lower equipment sales.

“The multiplicity of mobile operators that are operating in the market today created a new reality that requires the company to make changes and adjustments both to its marketing and business operations and to its cost structure,” said Chief Executive Haim Romano.

Partner’s bottom line has struggled of late with lower interconnect tariffs and other new consumer regulations that intensified competition in the cellular market. The company has said it would adjust its work force to prepare for the changes in the telecommunication market.

Partner reported a profit of 120 million Israeli new shekels ($31 million), or NIS0.77 a share (21 cents), down from NIS205 million ($50.8 million), or NIS1.32 a share (33 cents) a year earlier.

Revenue fell 24% to NIS1.43 billion ($364 million) amid increased competition in handset sales, increasingly stringent customer payment terms, a general decrease in market demand, and the termination of granting special benefits for customers who purchase new handsets.

Gross margin narrowed to 30% from 31.1%. It ended the quarter with 3.1 million cellular subscribers, a 2.4% drop from a year earlier.

Monthly average revenue per user, a key telecom gauge, fell 10% while churn–or customer turnover rate–rose to 8.9% from 6.5% a year earlier.

Also Tuesday, Cellcom Israel Ltd.’s second-quarter earnings fell 50% as the Israeli cellular provider faced increased competition and higher expenses.

Partner’s American depositary shares closed Monday at $3.36 and were inactive premarket. The stock is down 62% since the beginning of the year.