Israel’s Largest Mobile Telecom Provider Leaving Wall Street
Costs and challenges of NY listing too much for Cellcom
Israel’s largest mobile telecom provider, Cellcom Israel Ltd. (NYSE:CEL), announced it will be voluntarily delisting its shares from trade on the New York Stock Exchange. The company will maintain its shares on the Tel Aviv Stock Exchange (TASE: CEL) making it the primary and only listing.
The company reported Tuesday that its dual listing was “unnecessary in today’s increasingly globalized trading environment, where equity investors can access any international stock, regardless of where it is listed,” in a board of director’s statement.
Cellcom has approximately 3.6 million mobile subscribers making it the country’s largest cellular services provider. In addition, it has close to 290,000 broadband subscribers and its OTT television service, which provides content over the internet, has 251,000 users for a 14% market share.
The company further noted that whereas most of its business is located in Israel, the delisting will enable it to reduce “the costs and challenges to the company of maintaining a listing in the United States.”
There are currently 53 Israeli companies with shares listed in Tel Aviv and also abroad, known as dual listing. The vast majority of these are in New York, while a number are listed on the London Stock Exchange.
The Tel Aviv Stock Exchange recommends that Israeli companies planning to list abroad also list their shares in Tel Aviv. Many of the dual listed companies are included in the various world stock market indexes, which adds to trading volume.
This is not the first time, and unlikely to be the last, that an Israeli company has delisted from one of the world’s most famous stock exchanges.
Gazit-Globe Ltd., an international retail and mixed-use real-estate company headquartered in Tel Aviv, ended its NYSE relationship in early 2019, while keeping its shares traded in Tel Aviv.
The company found that the benefits of maintaining the NYSE listing were outweighed by the “management time, cost and other inefficiencies associated with dual listing,” it wrote in a statement announcing its exit.
In addition, the statement said that “low trading volume and minimal liquidity in Gazit’s ordinary shares on the NYSE” accounted for “only a small fraction of the overall, worldwide trading volume in the ordinary shares.”
There is certainly a possibility that other Israeli companies will delist trading on Wall Street due to low trade liquidity in comparison to higher trade liquidity in Israel. But we are not talking about a trend, rather it would be isolated cases
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Israeli companies, like their counterparts around the world, need to adhere to US accounting, tax and legal standards as well as observing the formats of filling out specific forms. Adjusting their business practices to those of the US regulatory authorities is not only a large responsibility but also an added financial expense.
These reasons and others, such as base of operations and company culture, make some Israeli companies realize that just staying in Tel Aviv can reduce their bureaucratic workflow.
For Cellcom, the decision could very have been related to a low trade volume in New York. During the past 12 months, the company’s shares were for the most part well under 100,000 shares traded daily.
“Cellcom’s decision most likely is due to the sparse trading of its shares abroad. We are talking about a company whose major activities are in Israel and the majority of its share trades are on the Tel Aviv Stock Exchange. Due to this, it seems the company prefers to give up on the possibility of trading on Wall Street,” Jacob Georgi, CEO of Leumi Partners Research, a branch of the Leumi Partners investment banking group, told The Media Line.
He was sanguine about this happening again.
“There is certainly a possibility that other Israeli companies will delist trading on Wall Street due to low trade liquidity in comparison to higher trade liquidity in Israel. But we are not talking about a trend, rather it would be isolated cases,” Georgi said.
Cellcom reports that its last day of trading in New York to be no earlier than Feb. 8, 2021. The company did not respond to questions from The Media Line.