Cellcom Israel Ltd. (NYSE: CEL) has reported 1.7 percent fall in the revenue in the third quarter of FY 17 to totaling NIS 975 million($276 million), as compared to NIS 992 million($281 million) in the third quarter last year. The decrease in revenues is attributed to a 2.8% decrease in service revenues, which was partially offset by a 1.7% increase in equipment revenues. CEL stock has risen 36.99% in the last one year (as of November 22nd, 2017; source: Google Finance) and rose over 8% in the last two days.
Service revenues fell 2.8% to NIS 737 million($209 million) in the third quarter of 2017. Service revenues in the cellular segment fell 8.6% to NIS 488 million($138 million) in the third quarter of 2017. The revenue fell mainly from the ongoing erosion in the prices of these services due to the competition in the cellular market, and from the difference between the national roaming services revenues in the third quarter of 2016 and the revenues for rights of use in cellular networks according to the network sharing agreement with Golan, that came into force as of the beginning of the second quarter of 2017.
Service revenues in the fixed-line segment grew 5.8% to NIS 292 million($83 million) in the third quarter of 2017. This increase is mainly due to the fixed-line communications services provided according to the Network Sharing Agreement with Golan as well as an increase in revenues from TV services. This increase was partially offset as a result of the discontinuance of consolidation of Internet Rimon Israel 2009 Ltd. Equipment revenues grew 1.7% to NIS 238 million($67 million) in the third quarter of 2017, due to an increase in the amount of end-user equipment sold in the fixed-line segment. This increase was partially offset by a decrease in equipment sales in the cellular segment.
Cost of revenues for the third quarter of 2017 increased 1.7% to NIS 670 million($190 million) mainly from an increase in costs of TV services content and in costs related to internet services in the fixed-line segment.
Gross profit for the third quarter of 2017 fell 5.6% to NIS 305 million($86 million) and the gross profit margin for the third quarter of 2017 amounted to 31.3%, down from 32.6% in the third quarter of 2016. The basic earnings per share for the third quarter of 2017 has totaled NIS 0.32($0.09).
Additionally, for the third quarter of 2017, the free cash flow increased 36.4% to NIS 105 million compared to the previous quarter. The increase resulted mainly from lower investments in fixed and intangible assets. CEL has decided not to distribute a dividend for the third quarter of 2017 due to the continued intense competition in the market.