To millions, their cell phones are indispensable items.

That also applies in Israel, where Cellcom Israel CEL is the largest mobile phone operator. It had 3.1 million subscribers at the end of June, up 5% from a year ago.

The company's market share has been growing despite intense competition. Revenues from content and value-added services rose 36% in Q2 as the company pushes music offerings.

Last month, Cellcom launched a program that gives subscribers free airtime in exchange for watching commercials on their handsets.

Viewers will have to answer one or two advertiser questions to prove they watched. Big advertisers such as Coca-Cola KO, Nokia NOK and Sony SNE have already signed on.

The company's earnings grew 37% in the second quarter, moderately lower than in the past several quarters. Cellcom's three-year EPS growth rate is 29%.

But sales growth accelerated from 10% to 15%, 21%, 31% and 40% the past four quarters.

Pretax margin in 2007 was 19.5%, the highest in at least six years. After-tax margins generally have trended higher, but have been uneven in the past several quarters. Debt as a percentage of equity is a hefty 401%, however.

Source: Investor's Business Daily