BMI's Executive Summary

[TOP]

The Sector At A Glance

Key Insights On The Telecomunications sector of Israel

Stronger than expected growth occurred across Israel’s mobile market, on the back of subscriber acceptance of next generation network (NGN) services, leading us to revise our mobile forecasts. While BMI had expected the mobile market to perform at a slower pace, there were some 254,000 net additions to the market for the first nine months of the year, bringing the total number of subscribers to 8.125mn. Having said that, this represented growth of just 3.2%, against FY05 growth of 8.4%.

It had been assumed that the Israeli mobile market would continue to struggle in the face of penetration rates in excess of 100%, while 3G take-up was a little slow. The number of 3G users as of end-2005 stood at 203,000, representing 138,000 net additions over H205, compared to the more technologically advanced countries of South Korea and Japan, which reported subscriber bases of 4.369mn and 3.887mn 3G users respectively in the first year of their operations. As a percentage of total mobile subscribers, this was 13% for South Korea and 4.9% for Japan, much higher than Israel at 1.3%.

However, increasing efforts by mobile operators and in particular those of Partner have seen a change in attitude by Israelis over 3G services. The No2 operator reported a 3G subscriber base of 219,000, some 116,000 net additional users, representing an increase of 112.6% over the first nine months. This has been aided by greater 3G handset availability, with the operator stating that its equipment revenues had risen over the year to ILS145.6mn as of Q306. This it acknowledged was primarily as a result of the increase in the proportion of 3G sales to new subscribers, as well as upgrading subscribers from its 2G services. Furthermore, an increase to its 3G subscriber base was also reflected in Partner’s content and data revenues accounting for 9.5% of total revenues, up from 8% of total revenues in the previous year. In light of this, and latest available data on 3G subscriber figures as of June 2006, which saw Partner claim a 46.2% share of the 3G market, we now expect some 485,000 3G users as of YE06.

Furthermore, while the implementation of mobile number portability (MNP) has been postponed once again, having been due to begin on September 1, 2006, once introduced, operators will begin to see their profit margins squeezed further. With MNP will come the need to offer greater discounted tariffs to retain and attract subscribers, while those requiring NGN services will want more sophisticated content applications. This will put pressure on operators, which have already had to suffer from a fall in interconnection rates, introduced in March 2006, making dents in their revenues.

Contents

[TOP]

Chapter 1 - Executive Summary

Chapter 2 - Business Environment Rankings

Middle East & Africa

Israel

Chapter 3 - SWOT Analysis

Israel Telecommunications Sector - SWOT

Chapter 4 - Industry Forecast Scenario

Fixed-Line

Table – Israel Telecoms Sector – Fixed-line – Historical Data & Forecasts

Internet

Table - Israel Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table - Israel Telecoms Sector – Mobile – Historical Data & Forecasts

Chapter 5 - Macroeconomic Climate

Improving Forecast

Table: Israel – Economic Activity

Chapter 6 - Country Snapshot: Israel Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 7 - Competitive Landscape

Market Structure

Competitor Analysis

Table: Key Players: Israel Telecommunications Sector

Table: Telecoms Operator Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data

Fixed-Line

Internet

Mobile

Table - Israeli Wireless Market, Q206

Table - Israeli Wireless Market, Net Additions 6M

3G

Table: 3G Mobile Subscriber Base

Industry Developments

Chapter 8 - Company Profiles

Regional Case Study: Ericsson

Table: Ericsson: Key Statistics 1

Table: Ericsson: Key Statistics 2

Table: Ericsson: Latest Contract Wins

Operators

Bezeq / Pelephone

Cellcom

Partner Communications

ECI Telecom

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Chapter 10 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Middle East & Africa Telecommunications Reports: Sample of Companies Ranked

[TOP]

Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Middle Eastern and African Telecommunications Sources

[TOP]

BMI's Middle Eastern and African Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: