Cellcom Energy: Commitments Are Scaling Faster Than Profit
Cellcom's electricity segment grew sharply in 2025, yet on Cellcom's share it ended the year with ILS 195 million of revenue and only ILS 1 million of adjusted EBITDA. Against that, the notes expose a multi-billion-shekel payment stack and guarantee exposure already sitting at the parent-company level.
The contracts now look like a platform. Profit still does not.
The main article argued that Cellcom's real test starts in 2026, after the IBC gain and with more demands on cash. This follow-up isolates the electricity activity because the gap here is unusually sharp: Cellcom Energy is already building a real contractual platform around power purchases, availability certificates, and additional household-facing arrangements, but the profit line that Cellcom shows for the segment is still barely above zero.
That is the part a reader can miss if they stop at the headline of "growth in electricity". In note 6, the electricity segment is presented on Cellcom's proportionate 50% share in the partnership. On that basis, revenue rose from ILS 33 million in 2023 to ILS 77 million in 2024 and to ILS 195 million in 2025. That is real growth. But segment adjusted EBITDA, which is a non-IFRS metric, moved from negative ILS 5 million in 2023 to negative ILS 6 million in 2024 and to only positive ILS 1 million in 2025. Segment operating profit also remained effectively at zero.
That is the core of this continuation. The activity no longer looks like an experiment. It also does not yet look like a profit engine. The contracts, pricing mechanics, and guarantee layer are moving faster than the bottom line.
The numbers also need to be framed correctly. The expected payments disclosed in note 30 are not a 2025 balance-sheet debt figure, and they are not an immediate 2026 cash outflow. They are spread over 10 to 20 years, and in some household-related arrangements over periods ranging from one month to 15 years. But they are still a very clear proxy for the scale of the execution burden being built here, the dependency on project timelines, and the support layer Cellcom is already providing through parent-level guarantees.
What improved, and what still did not
The improvement in 2025 is easy to see: electricity-segment revenue jumped 153.2% versus 2024, and adjusted EBITDA moved into positive territory. But even after that improvement, the segment generated only ILS 1 million of adjusted EBITDA on ILS 195 million of revenue, an adjusted EBITDA margin of roughly 0.5%. At this stage, profitability is still too thin relative to the complexity that already sits around the activity.
That matters precisely because Cellcom is no longer presenting electricity as a small side project. If this were still a pilot, almost-zero profitability would be easier to excuse. But by 2025 the activity already sits on long-term power-purchase agreements, availability-certificate contracts, household-facing arrangements, and a parent-company guarantee layer. At that point the question is no longer whether the segment can grow. The question is whether it can convert growth into economics.
The more interesting point is not simply that the segment is still small. It is that profitability is scaling much more slowly than the contractual load being built around it. That is a very different reading from a superficial conclusion that "revenue is up, therefore the model is starting to work". Revenue is up. The model has not yet shown that it can leave enough money behind after procurement, pricing, and service costs.
There is also an important reading gap between two notes. Note 6 shows the segment on Cellcom's 50% share. Note 30 discloses contracts and expected payments at the Cellcom Energy partnership level. Those are not the same unit of account, so they should not be compared as though they were one line item. Even after putting that distinction on the table, however, the conclusion is unchanged: the contractual platform is being built much faster than profit is being created.
The payment stack that was built in 2025
Note 30 reveals something that the income statement still does not: by 2025 Cellcom Energy is already carrying a real stack of agreements across several layers, each with a different risk profile.
| Layer | Expected payments | Status | Key timing and conditions | Why it matters |
|---|---|---|---|---|
| 6 power-purchase agreements from 2023 and 2024 | About ILS 750 million | Signed | 20 years from the allocation date of each facility, across 6 sites with about 61 MW DC of solar capacity and about 155 MWh of storage | This is the original supply base of the activity |
| Additional September 2025 agreement | About ILS 400 million | Signed | 20 years, a project of about 18 MW DC and about 68.5 MWh, expected commercial operation in Q3 2026, with a cancellation right if the delay exceeds 12 months and is not due to force majeure | This is a nearer-term supply layer and therefore a nearer-term execution test |
| Memorandum of understanding for 3 future projects | About ILS 780 million | Conditional | Subject to conditions precedent, timelines, and execution of binding power-sale agreements, with expected combined scale of about 30 MW DC and about 123.5 MWh | This is already a growth pipeline, but not yet proven contribution |
| December 2025 availability-certificate agreement | About ILS 350 million | Signed | 50 MW, 10 years from the start of certificate supply, project expected in the second half of 2027 | This is a different procurement layer tied to the SMP mechanism |
| Household-related arrangements | About ILS 1.2 billion | Signed | Contract duration ranges from one month to 15 years, with extension options in some cases | This adds scale, but also a broad payment base tied to consumer-tariff dynamics |
Looking only at signed layers, the expected payment stack reaches about ILS 2.7 billion over the life of the arrangements. Adding the conditional memorandum raises that figure to about ILS 3.48 billion. Again, these are not debt figures and they are not one-year cash-use figures. But they do tell the reader that the activity has already moved from a small commercial experiment to a supply platform with real execution weight.
The important point is not only the size of the number. It is the change in the shape of the stack. In 2023 and 2024 the picture was built mainly around classic power-purchase agreements with facilities linked to Meshek Energy. In 2025 the stack added another signed agreement, an MoU for further expansion, a 50 MW availability-certificate deal, and a household-related layer worth about ILS 1.2 billion. This is no longer one commercial product. It is a supply architecture.
And that architecture matters because it also creates managerial load. Projects now have to reach commercial operation, indexation mechanisms have to be managed, floor and cap pricing has to be monitored, and the service layer toward end customers has to hold. As long as adjusted EBITDA stays around breakeven, it is hard to argue that the activity has already proven it earns enough to carry that structure comfortably.
Why availability certificates are no longer a side note
If there is one thread connecting the contracts, the regulation, and the future economics, it runs through availability certificates. In the business description, Cellcom itself says a gap has opened between competitive supply and demand because the pace of new private renewable-plus-storage facilities is still moderate while demand for private power is growing quickly. That is why the Electricity Authority opened competitive procedures that allow virtual suppliers to buy availability directly from the system operator and, against that availability, buy energy at SMP market prices rather than at the suppliers' tariff. On January 7, 2026 Cellcom Energy had already won 25 MW of availability certificates in the first such procedure.
The 50 MW agreement signed at the end of 2025 shows that this is no longer a side issue. Under the agreement, Cellcom Energy will buy 50 MW of availability certificates from a photovoltaic-plus-storage project expected to start operating in the second half of 2027, for a period of 10 years from the beginning of certificate supply. Those certificates are meant to let Cellcom Energy buy a similar amount of energy from Noga at SMP wholesale prices. Cellcom also discloses that the agreement includes payment-adjustment mechanisms tied to changes in SMP and the generation component, minimum and maximum consideration mechanisms, and a termination mechanism in case force majeure lasts beyond the period defined in the agreement.
The parallel filing by the selling side reveals additional detail on the same transaction: an agreed compensation mechanism for delays in the assignment of availability certificates, termination rights in defined cases, and limits on assignment of the agreement to third parties. This is not a headline memo. It is an operating contract with real price, timing, and execution mechanics.
The reasonable inference is that Cellcom Energy is trying to build competitive supply through several procurement routes at once, not only through standard power purchases. That is a logical response to the bottleneck the company itself describes. But as of year-end 2025, the filings still do not show how much margin Cellcom Energy can actually retain after all those mechanisms. The new procurement architecture is already here. The proof that it creates superior economics is not.
The guarantees are already sitting at Cellcom
This is where the gap between contracts and profit moves from thesis to numbers. Note 31 says that as of December 31, 2025 Cellcom's guarantees in favor of an investee included about ILS 74 million of limited guarantees for bank credit and power-purchase agreements. In addition, for other power-purchase agreements that are not limited in amount, the company's estimated potential exposure stood at about ILS 39 million.
These numbers matter precisely because they are not the full economic exposure of the activity. They are only the layer that Cellcom itself has already quantified at the parent-company level. In other words, before the segment shows material profit, the parent is already visibly carrying a support burden to let the activity expand.
This is also where the distinction between agreement types matters. Some guarantees are limited in amount. In other arrangements, the exposure itself is not capped and the company only provides an estimate of potential exposure. That is not the same risk quality. Capital markets can live with guarantees when profitability scales quickly. They are usually much less patient when the support layer grows before the segment shows clear earnings contribution.
What has to happen next
If Cellcom Energy wants the market to read 2025 as a successful build year rather than an early commitment year, it now has to move into proof mode. The first checkpoint sits around Q3 2026, when the project from the September 2025 agreement is expected to reach commercial operation. The second sits in the second half of 2027, when the 50 MW availability-certificate project is expected to come online. In parallel, the 25 MW availability win has to start looking like something that expands competitive supply rather than simply adds another layer of complexity.
The main filter remains simple. In 2025 Cellcom clearly showed it knows how to sign. In 2026 and 2027 it will have to show it knows how to operate, price, and earn. If segment adjusted EBITDA stays around zero while expected payments and guarantee exposure continue to grow, the right reading will be that commitments are scaling faster than profit. If margin starts to widen without another sharp step up in parent-level support, that becomes a very different thesis.
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