NETANYA, Israel, March 17, 2020 – Cellcom Israel Ltd. (NYSE: CEL) (the “Company”) announced today an update on the impact of the Coronavirus and the related containment measures by the Israeli government on its operations and results of operations:
There has been substantial decrease in international traveling due to the Coronavirus, which has had an adverse effect on the Company’s roaming services (inbound and outbound) and if continues for a long duration, would result in a material adverse effect on the Company’s roaming revenues and results of operations.
In addition, the Israeli government published various regulatory requirements for Coronavirus containment in Israel, including the prohibition on public gathering and any unnecessary outing from one’s home, including the closure of malls and other non-essential leisure establishments and substantial reduction of manpower presence in the workplace. Following such instructions the Company closed its points of sale and walk in centers and substantially reduced its calling centers customer service personnel (excluding technical support) and other personnel not essential for the continued proper operation of its networks and provision of the Company’s services. During this period of containment, the Company intends to focus its efforts in providing quality dependable service to its existing customers. Such measures, if continue for a long duration, would have a material adverse effect on the Company’s sales of services and handsets and results of operations.
Further regulatory requirements for Coronavirus potential patients and Corona patients to enter quarantine may result in material adverse effects to the Company’s operations, including customer service, sales, installation of its landline services, deployment, operation and maintenance of its networks, if multiple employees and outsource personnel shall be prohibited from attending their positions.
The effects of the Coronavirus, if continue for a long duration, may also result in shortage of equipment and suppliers failing to supply the Company with handsets, set-top boxes, network elements, spare parts or other equipment required for the Company’s networks operation and upgrade or sale and repair of handsets, all of which may have an adverse effect on the Company’s results of operations.
As part of the global effects of the Coronavirus on the capital markets, the Company debentures yield have increased substantially and general capital markets activities have significantly slowed or halted. If such effects continue and for the duration they so continue, it would adversely affect the Company’s access to additional debt or capital.
The Company is taking measures in order to mitigate such adverse effects, by reducing its expenses and investments during the Coronavirus pandemic, including by reducing its sales operation and by sending a large quantity of employees on an unpaid leave.
The Coronavirus situation continues to evolve and it is difficult to predict the duration it would affect the Company’s operations and therefore the effect on its operations.
Source: Cellcom Israel