Cellcom is showing a sixth consecutive quarter of losses. The company released its Q1 reports, which show that it lost NIS 43 million. It turns out that Cellcom's problems are bigger than its CEO and the arrival of Avi Gabay has not yet solved the company's problems.
In the same quarter, the company posted a loss of NIS 16 million.
Operating profit amounted to NIS 18 million, compared with NIS 9 million in the corresponding quarter - an increase of 100%. EBITDA amounted to NIS 244 million, an increase of 9% compared to the same period last year.
EBITDA was favorably impacted by NIS 28 million following a retroactive update of the wholesale market rates for Bezeq Services by the Ministry of Communications, which was partially offset by the impact of the Corona crisis.
The company's revenues in the quarter fell by about 4% compared to the same period and amounted to NIS 892 million. The decrease is attributed to a 16% decrease in end-of-year revenue from the Corona crisis, which amounted to NIS 210 million. The decrease was partly offset by a 0.6% increase in service revenues, which amounted to NIS 682 million.
Cellular revenues in the first quarter decreased by 1.8% to NIS 552 million. Stationary revenues (TV, telephony and Internet) fell 6.8% to NIS 381 million, compared to NIS 409 million in the same quarter last year.
Net cash flow from operating activities decreased by 21% compared to the corresponding period and amounted to NIS 240 million. Free cash flow amounted to NIS 57 million, a 24% increase. The increase in cash flow was mainly due to a decrease in payments to end-equipment suppliers and a decrease in investments totaling NIS 118 million, compared with NIS 184 million in the corresponding period. The company's capital at the end of the quarter amounted to NIS 1.867 billion, compared with NIS 1.67 billion at the end of the corresponding quarter.
In the cellular sector, the company recruited 3,000 subscribers in the quarter, reaching a total of 2.747 million, placing Cellcom on as the largest cellular company in Israel, with a market share of 28%. Subscription recruitment rate is unstable - in the previous quarter the company lost 23,000 subscribers and in the quarter before it raised 22,000. The abandonment rate was 8.8% at the end of the quarter, compared with 11% in the corresponding quarter last year. Average monthly income per subscriber (ARPU) was NIS 48.1, compared with the corresponding quarter then NIS 47.2.
In the area of television, the company lost 12,000 net subscribers, so their number was 246,000 at the end of the quarter. From the beginning of this quarter, the company has changed the way television counts are counted in a way that subscribers holding the cellcom tv light app will only be counted after they turn on the service. The company applied the change retroactively, and consequently deleted from its active customer base about 14,000 subscribers, while raising 2,000 subscribers. This is a slowdown in the rate of subscription subscription, as in the previous quarter, Cellcom TV joined eleven thousand subscribers and in the quarter before it 8,000.
In the Internet sector, Cellcom has recruited a thousand subscribers, so the number was 279,000. This is an instability in the rate of subscription subscription, as in the previous quarter, Cellcom raised two thousand subscribers and in the quarter before it lost two thousand. Cellcom is no longer deploying fiber optics, having sold its fiber infrastructure to IBC, which is currently accessible to some 350,000 households.
This is the first quarter that Gabay signed as CEO of the company, after taking office on January 19, following the retirement of Nir Stern. Upon his entry, Gabay signed a new collective agreement with the committee that included voluntary retirement of about 450 employees, but the provisions for the agreement were recorded in the reports. In the fourth quarter, Gabay also signed a memorandum of understanding for the acquisition of the Golan Telecom company worth NIS 737 million in February - a proposal that awaits approval from the Competition Authority and the Ministry of Communications. In late March, Doron Cohen was appointed Cellcom chairman, following the retirement of Ami Arel. . At the beginning of the Corona crisis, Cellcom brought about 1,200 employees to the USSR, out of about 3,500 employees, and in recent days began gradually returning to full-time work.
In the first quarter, Gabbai said: "In the first quarter, we put the crisis in the relationship with the employee representative, enabling us to take steps to improve our service to customers, operational excellence and quickly take steps to offset some of the corona crisis damages. We also signed a binding agreement to acquire Golan Telecom And we are working hard to obtain the required regulatory approvals. I believe that the active steps we are taking will enable the company to deal with the Corona crisis and enter 2021 a more focused and better society. "
CFO Shlomi Freeling, who resigned this week, said: "The first quarter was characterized by continued fierce competition in the mobile sector and against continued growth in the stationary sector. Quarterly results were partially impacted by the Corona crisis, we expect greater impact in the second quarter and that crisis will continue to adversely affect the company's results throughout the year. The crisis adversely affected revenues from roaming services of overseas customers and roaming services of tourists arriving in Israel. In addition, there was a decrease in the contribution of sales of end equipment to customers as a result of the closing of service centers and points of sale during March. The company's management has taken steps to reduce operating expenses during this period. To mitigate the impact of the decline in revenue. "
Net financing expenses increased by 137% compared to the corresponding quarter, amounting to NIS 64 million. The increase in expenses is mainly due to losses in the company's negotiable investment portfolio, which amounted to NIS 37 million, as a result of market declines in the quarter due to the Corona crisis. In April, some of these losses were offset by increases in securities prices in the capital market.
At the end of the quarter, the company's gross debt stood at NIS 3.1 billion, in parallel to the balance of cash and cash equivalents of NIS 1.2 billion, so that the net debt amounted to NIS 1.9 billion. Last week, the company successfully raised NIS 200 million in debt. At the end of the corresponding quarter, net debt stood at NIS 2.27 billion and at the end of 2019 NIS 1.9 billion.