South Korea petrochemicals face renewed margin squeeze
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Cellcom reported its most profitable quarter in 11 years in Q2 of 2026, with net profit jumping 44% y/y to ILS92mn ($30.72mn).
While the Israeli telecommunications company lost out on its planned acquisition of rival Hot Mobile to Delek, a surge in terminal equipment sales and continued debt reduction helped the company to achieve its profit boom.
Total reported revenue reached ILS1.1bn, up 1.7% y/y, though Cellcom highlighted 5.5% growth when excluding interconnection fee revenue, which fell sharply following a tariff reduction. Service revenues declined to ILS726mn from ILS758mn a year earlier.
The bottom-line improvement was driven by two factors. Terminal equipment revenues grew 17% y/y to ILS339mn, with gross profit from equipment jumping 40% y/y to ILS63mn, a seven-year high.
Growth was sharpest in the fixed-line segment, where equipment revenues surged 54% y/y to ILS60mn. Net financing expenses fell to ILS17mn from ILS27mn, stemming from a roughly ILS1bn reduction in gross financial debt over the past two years, during which the company also distributed approximately ILS400mn in dividends and cut net financing costs by around 50%.
Operating profit rose 26% y/y to ILS148mn. Free cash flow reached ILS136mn in the quarter, up from ILS103mn, and ILS251mn in H1, a decade-long record. Net profit for H1 reached ILS164mn, up 32% y/y.
Cellular service revenues rose approximately 3% y/y to ILS425mn, with roaming revenue partially offset by the impact of Operation Harry's Roar on Israeli aviation. Mobile ARPU rose to ILS38.6. The company added approximately 70,000 cellular and 22,000 fibre subscribers over the past year.
The results come after Fortissimo Fund, which acquired control of Cellcom from Israel Investment Corporation in May 2024 for ILS 936mn, engaged Citi to identify potential foreign buyers for its approximately 33% stake. Cellcom's market capitalisation stands at ILS5.7bn, with the stock up 15% over the past year.
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