Cellcom Israel Ltd Announces Regulator’s Decision to Reduce Interconnect Tariff
NETANYA,
Israel Ltd. (NYSE: CEL) (the “Company”) announced today that following the
previous reports regarding the possible reduction of interconnect tariffs
payable to cellular operators in
Communications, or MOC, announced its decision to amend the applicable
Israeli regulations as follows:
- to reduce the maximum interconnect tariff payable by a
landline operator or a cellular operator for the completion of a call on
another cellular network from the current tariff of NIS 0.251 per minute
to NIS 0.0687 per minute from January 1, 2011; to 0.0634 per minute from
January 1, 2012; to NIS 0.0591 per minute from January 1, 2013; and to
NIS 0.0555 from January 1, 2014.
- to reduce the maximum interconnect tariff payable by a
cellular operator for sending an SMS message to another cellular network
from the current tariff of NIS 0.0285 to NIS 0.0016 from January 1,
2011; to NIS 0.0015 from January 1, 2012; to NIS 0.0014 from January 1,
2013; and to NIS 0.0013 from January 1, 2014.
- the tariffs do not include VAT and will be updated annually
from January 1, 2011, based on the change in the Israeli CPI published
in November of the preceding year against the Israeli CPI published in
January 2009.
The reduction is expected to have a material adverse effect on the
Company’s results. As previously reported, such adverse effects include both
the direct effect of the reduction and indirect effects.
Absent any efforts to mitigate the expected loss of revenues, these
changes are expected to have an annual direct adverse effect (based on the
Company’s current calls and SMS data) of approximately
Company’s EBITDA and approximately
income, for the first reduction.
The Company cannot predict the actual indirect adverse effects the
reduction would have on the Company’s results, including from fewer calls
being made as subscribers switch to landline and callback services. Any usage
of the interconnect tariff as the basis for other tariffs, if regulated, such
as for the provision of services to MVNO or the provision of national roaming
services (if such services are allowed), may have additional material adverse
effect on the Company’s results.
The Company intends to take measures to mitigate as much as possible the
expected adverse effects of such reduction, through revenue enhancement as
well as cost reduction, but cannot assure that these will be successful.
The Company will study the MOC’s detailed decision, once received, and
will then determine its steps against the decision, such as filing a petition
with the Israeli Supreme Court of Justice. The Company cannot predict the
ultimate outcome of such petition, if filed.
For additional details see the Company’s most recent annual report for
the year ended
- D. Risk Factors – Risks related to our business – We operate in a heavily
regulated industry, which can harm our results of operations” and “We face
intense competition in all aspects of our business”, as well as under “Item
4. Information on the Company – B. Business Overview – Competition” and
“Government Regulations -Tariff Supervision”, the Company’s immediate report
regarding its results of operations in the first quarter of 2010 on form 6-K
dated
2010 and subsequent to the end of the reporting period – Regulation – Tariff
Supervision” and the Company’s immediate report regarding its results of
operations in the second quarter of 2010 on form 6-K dated
under “Other developments during the second quarter of 2010 and subsequent to
the end of the reporting period – Regulation “.
Forward Looking Statement – The information contained in this press
release contains, or may be deemed to contain, forward-looking statements (as
defined in the U.S. Private Securities Litigation Reform Act of 1995 and the
Israeli Securities Law, 1968). Said forward-looking statements, relating to
the impact of the reduction of interconnect tariffs on the Company’s results
of operations, are subject to uncertainties and assumptions about the outcome
of the aforesaid petition, if filed; the actual effects of the reduction
(including customer reaction and substitution of other products, as well as
general trends in the Company’s business that could change the number of
subscribers, minutes of use and pricing); the entry of MVNOs or new operators
to the market and their actual effect on the market and the Company’s
results; the existence of national roaming services and the regulator’s
intervention in setting tariffs for MVNO and national roaming services, the
tariffs actually set and the effects of such services and tariffs on the
market and the Company’s results; and the Company’s ability to mitigate the
expected lost revenues. The actual effect of the reduction and other
regulatory changes, as well as the Company’s ability to mitigate the expected
lost revenues, could lead to materially different outcome than that set forth
above.
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the leading Israeli cellular
provider; Cellcom Israel provides its approximately 3.341 million subscribers
(as at
cellular and landline telephony, roaming services for tourists in
for its subscribers abroad and additional services in the areas of music,
video, mobile office etc., based on Cellcom Israel’s technologically advanced
infrastructure. The Company operates an HSPA 3.5 Generation network enabling
advanced high speed broadband multimedia services, in addition to
GSM/GPRS/EDGE and TDMA networks. Cellcom Israel offers
largest customer service infrastructure including telephone customer service
centers, retail stores, and service and sale centers, distributed nationwide.
Through its broad customer service network Cellcom Israel offers its
customers technical support, account information, direct to the door parcel
services, internet and fax services, dedicated centers for the hearing
impaired, etc. As of 2006, Cellcom Israel, through its wholly owned
subsidiary Cellcom Fixed Line Communications L.P., provides landline
telephone communication services in
services. Cellcom Israel’s shares are traded both on the New York Stock
Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional
information please visit the Company’s website http://www.cellcom.co.il
Company Contact Investor Relations Contact
Yaacov Heen Porat Saar & Kristin Knies
Chief Financial Officer CCG Investor Relations Israel & US
investors@cellcom.co.il cellcom@ccgisrael.com
Tel: +972-52-998-9755 Tel: +1-646-233-2161
SOURCE Cellcom Israel Ltd.