www.bethelfinance.com
In its survey released today, Psagot Investment House Ltd., the largest in Israel, advised owners of Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) shares to sell. Psagot set its target price for Partner's shares at NIS 36, 14% below today's price (NIS 41).
Psagot noted the structural and regulatory changes in the telecommunications industry that, "have brought the companies to new and unchartered territory, where they go from being leaders to being led, offering generic products lacking any competitive advantage - except price" the survey said.
Psagot is sticking to its "sell" recommendation of Partner shares, based on a number of considerations: the expectation that competition will grow and that profits per subscriber will continue to erode; the saturated telecommunications industry in Israel which limits growth potential; the move to smartphones which enables use of services from competitors, as well as cost-free services; changes in the company's leadership; and the entry of future competition.
Psagot believes that Partner's acquisition of 012 Smile Telecom Ltd. will benefit the company, "if a wholesale market is established in line with the Hayek committee recommendations, that will assist Partner in raising profits in the future from fixed-line telephony and Internet service, thereby somewhat offsetting the damage to the mobile industry."
The bottom line is that Psagot predicts the continued erosion of Partner's revenue and profitability over the next few years, which will also damage its market cap.
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