[March 30, 2017] |
|
Partner Communications Reports Fourth Quarter and Annual 2016 Results1
Partner
Communications Company Ltd. ("Partner" or the "Company")
(NASDAQ:PTNR) (TASE:PTNR), a leading Israeli communications operator,
announced today its results for the quarter and year ended December 31,
2016.
Commenting on the fourth quarter and annual 2016 results, Mr. Isaac
Benbenisti, CEO of Partner noted:
"In 2016, the Post-Paid cellular subscriber base increased by 85
thousand subscribers compared with an increase of 24 thousand
subscribers in 2015, and the churn rate continued to decline. At the end
of 2016, Post-Paid subscribers accounted for 83% of the Company's
cellular subscriber base.
During the last year, we embarked on a new path as a comprehensive
communications group with the launch of the Company's new brand, we
strengthened the working relationship with our employees with the
signing of a collective employment agreement which includes improved
terms for the employees, we expanded our service platforms, and added
digital solutions to improve transparency and information availability
for the customer.
In the cellular segment, Partner continues to lead in the Israeli market
with an advanced network and the widest 4G coverage. We continue to
implement advanced technologies in our core network which offers
differentiation, such as Wifi Calling technology, which enables cellular
calls over the wireless internet, thus further increasing our coverage.
In February 2017, we launched the first "Internet of Things" (IoT)
network in Israel, "IoT Pro", which provides real value to the Israeli
consumer, both private and business, in the ability to adopt advanced
technologies in a more secure, quick and efficient manner. Worldwide,
only a handful of companies have launched a dedicated advanced IoT
network, and we are proud to be one of them. The regulator needs to
understand that we are at the beginning of a global revolution in this
field, in particular due to the future adoption of fifth generation
technologies (5G).
In addition, in the past year we created a technological and operational
base for two strategic Company projects for the coming years; Partner's
TV project and the deployment of an independent fiber-optic based
fixed-line infrastructure. These projects are expected to create new
growth engines for the Company, diversify our revenue streams, and
enable us to offer a full communications offerings over our own
independent and advanced infrastructure.
The TV project, which will be launched in the coming months, will be
based on the Android TV operating system, which has been chosen by
leading content suppliers worldwide. Partner's operating system will
allow our TV customers to enjoy the benefits of a wide range of content
with an advanced interface adapted for the Israeli viewer.
In fixed-line services, we continued to proceed with the deployment of
our fiber-optic based fixed-line infrastructure and to work with the
various planning authorities. This network will enables us to supply
private customers with internet speeds of up to 1Gb using the most
advanced technologies. The future progress of the project will depend,
among other things, on the regulator's assistance and the steps that it
will take to ensure we will not be blocked in establishing a new and
advanced infrastructure.
Creating an alternative to the monopoly and duopolies that currently
dominate the fixed-line and multi-channel TV markets in Israel will
benefit consumers. In addition, advances in areas such as IoT, connected
cars, advanced health technologies, security, finance, transportation
and more, depend on the development of communication infrastructures.
Therefore it is in the interest of the regulator, the consumer and the
entire communications market to support and enable the entry of new
players to these areas through the development of advanced
infrastructures, thereby creating real, improved and more advanced
alternatives."
Mr. Ziv Leitman, Partner's Chief Financial Officer, commented on
the fourth quarter results of 2016 as compared to the third quarter
results of 2016:
"During the fourth quarter of 2016, cellular service revenues decreased
by 6%, mainly reflecting a decrease in seasonal roaming revenues, as
well as the continued price erosion of cellular service revenues at a
rate similar to that in the previous two quarters, as a result of the
ongoing strong competition. As a result, cellular ARPU totaled NIS 62 in
the fourth quarter 2016 compared with NIS 66 in the previous quarter.
The churn rate for cellular subscribers was 9.4% in the fourth quarter
of 2016 compared to 9.7% in the previous quarter and 11.1% in the fourth
quarter of 2015, with the decrease being fully explained by the decrease
in the Post-Paid subscriber churn.
Revenues from equipment sales in the fourth quarter of 2016 increased by
NIS 18 million compared with the previous quarter, while gross profit
from equipment sales decreased by NIS 10 million. The decrease in
profitability was mainly related to the tightening of the Company's
customer credit policy, and a change in the product mix.
Total operating expenses (OPEX) were unchanged from the third quarter of
2016, totaling NIS 570 million, including the one-time expense of the
employee retirement plan in an amount of approximately NIS 12 million as
well as a one-time expense of approximately NIS 7 million relating to
the early termination of an operating lease, being offset by a decrease
in network-related operating expenses, international telephony and
interconnect expenses.
Adjusted EBITDA in the fourth quarter of 2016 decreased by NIS 56
million, or 25%, compared with the previous quarter, mainly reflecting
the decrease in service revenues and in gross profit from equipment
sales.
Finance costs, net, totaled NIS 23 million in the reported quarter, a
decrease of NIS 7 million compared to the previous quarter, reflecting
lower CPI linkage costs resulting from the decrease in the CPI level.
Overall, the Company recorded a loss for the fourth quarter of 2016 of
NIS 7 million compared with a profit of NIS 19 million in the previous
quarter, largely reflecting the reduction in Adjusted EBITDA, partially
offset by a decrease in income tax expenses and finance costs, net.
Cash capital expenditures (CAPEX payments) in the
fourth quarter of 2016 totaled NIS 47 million compared to NIS 44 million
in the previous quarter, an increase of 7%.
Adjusted free cash flow (before interest payments) in the reported
quarter totaled NIS 269 million, compared with NIS 215 million in the
previous quarter. The increase in adjusted free cash flow primarily
reflected the final payment of the NIS 250 million lump sum from HOT
Mobile, in an amount of NIS 180 million, compared with their previous
payment of NIS 35 million in the third quarter of 2016. The impact of
this payment was partially offset primarily by an increase in other
operating working capital items and by the decrease in profit.
In December 2016, following the deferred loan agreement from May 2014,
the Company received a loan from a group of institutional corporations
in the principal amount of NIS 250 million. The loan will bear unlinked
interest and will be paid (principal and interest) in variable quarterly
payments over five years, commencing in March 2017.
As of December 31, 2016, net debt amounted to approximately NIS
1.53 billion (total short and long term debt and current maturities of
NIS 2.70 billion less cash and cash equivalents and short term deposits
of NIS 1.17 billion). In 2016 as a whole, net debt declined by NIS 649
million, largely a result of the positive adjusted free cash flow (after
interest payments)."
Key Financial Results
NIS MILLION (except EPS)
|
|
2012
|
|
2013
|
|
2014
|
|
20153
|
|
2016
|
Revenues
|
|
5,572
|
|
4,519
|
|
4,400
|
|
4,111
|
|
3,544
|
Cost of revenues
|
|
4,031
|
|
3,510
|
|
3,419
|
|
3,472
|
|
2,924
|
Gross profit
|
|
1,541
|
|
1,009
|
|
981
|
|
639
|
|
620
|
S,G&A
|
|
787
|
|
679
|
|
631
|
|
640
|
|
689
|
Income with respect to settlement
|
|
|
|
|
|
|
|
|
|
|
agreement with Orange
|
|
|
|
|
|
|
|
61
|
|
217
|
Other income
|
|
111
|
|
79
|
|
50
|
|
47
|
|
45
|
Operating profit
|
|
865
|
|
409
|
|
400
|
|
107
|
|
193
|
Finance costs, net
|
|
234
|
|
211
|
|
159
|
|
143
|
|
105
|
Income tax expenses
|
|
153
|
|
63
|
|
79
|
|
4
|
|
36
|
Profit (loss) for the year
|
|
478
|
|
135
|
|
162
|
|
(40)
|
|
52
|
Earnings (loss) per share (basic, NIS)
|
|
3.07
|
|
0.87
|
|
1.04
|
|
(0.26)
|
|
0.33
|
NIS MILLION (except EPS)
|
|
Q4'153
|
|
Q1'16
|
|
Q2'16
|
|
Q3'16
|
|
Q4'16
|
Revenues
|
|
1,007
|
|
977
|
|
897
|
|
849
|
|
821
|
Cost of revenues
|
|
928
|
|
797
|
|
730
|
|
691
|
|
706
|
Gross profit
|
|
79
|
|
180
|
|
167
|
|
158
|
|
115
|
S,G&A
|
|
175
|
|
194
|
|
166
|
|
158
|
|
171
|
Income with respect to settlement
|
|
|
|
|
|
|
|
|
|
|
agreement with Orange
|
|
38
|
|
54
|
|
54
|
|
55
|
|
54
|
Other income
|
|
10
|
|
14
|
|
12
|
|
9
|
|
10
|
Operating profit (loss)
|
|
(48)
|
|
54
|
|
67
|
|
64
|
|
8
|
Finance costs, net
|
|
39
|
|
24
|
|
28
|
|
30
|
|
23
|
Income tax expenses (income)
|
|
(22)
|
|
16
|
|
13
|
|
15
|
|
(8)
|
Profit (loss) for the period
|
|
(65)
|
|
14
|
|
26
|
|
19
|
|
(7)
|
Earnings (loss) per share (basic, NIS)
|
|
(0.42)
|
|
0.09
|
|
0.17
|
|
0.12
|
|
(0.04)
|
NIS MILLION (except EPS)
|
|
Q4'16
|
|
Q4'153
|
|
% Change
|
Revenues
|
|
821
|
|
1,007
|
|
-18%
|
Cost of revenues
|
|
706
|
|
928
|
|
-24%
|
Gross profit
|
|
115
|
|
79
|
|
+46%
|
Operating profit (loss)
|
|
8
|
|
(48)
|
|
N/A
|
Profit (loss) for the period
|
|
(7)
|
|
(65)
|
|
-89%
|
Earnings (loss) per share (basic, NIS)
|
|
(0.04)
|
|
(0.42)
|
|
-90%
|
Adjusted Free cash flow (before interest)
|
|
269
|
|
230
|
|
+17%
|
Key Operating Indicators
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
Adjusted EBITDA (NIS million)
|
|
1,602
|
|
1,114
|
|
1,096
|
|
876
|
|
834
|
Adjusted EBITDA (as a % of total revenues)
|
|
29%
|
|
25%
|
|
25%
|
|
21%
|
|
24%
|
Adjusted Free Cash Flow (NIS millions)
|
|
1,234
|
|
1,041
|
|
520
|
|
566
|
|
758
|
Cellular Subscribers (end of period, thousands)
|
|
2,976
|
|
2,956
|
|
2,837
|
|
2,718
|
|
2,686
|
Estimated Cellular Market Share (%)
|
|
29%
|
|
29%
|
|
28%
|
|
27%
|
|
26%
|
Annual Cellular Churn Rate (%)
|
|
38%
|
|
39%
|
|
47%
|
|
46%
|
|
40%
|
Average Monthly Revenue per Cellular Subscriber (ARPU) (NIS)
|
|
97
|
|
83
|
|
75
|
|
69
|
|
65
|
|
|
Q4'16
|
|
Q4'15
|
|
Change
|
Adjusted EBITDA (NIS million)
|
|
164
|
|
217
|
|
-24%
|
Adjusted EBITDA (as a % of total revenues)
|
|
20%
|
|
22%
|
|
-2
|
Cellular Subscribers (end of period, thousands)
|
|
2,686
|
|
2,718
|
|
-32
|
Quarterly Cellular Churn Rate (%)
|
|
9.4%
|
|
11.1%
|
|
-1.7
|
Monthly Average Revenue per Cellular User (ARPU) (NIS)
|
|
62
|
|
67
|
|
-5
|
Partner Consolidated Results (excluding
impact of impairment charges*)
|
|
Cellular Segment
|
|
Fixed-Line Segment
|
|
Elimination
|
|
Consolidated
|
NIS Million
|
|
2016
|
|
2015
|
|
Change %
|
|
2016
|
|
2015
|
|
Change %
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Change %
|
Total Revenues
|
|
2,828
|
|
3,348
|
|
-16%
|
|
929
|
|
974
|
|
-5%
|
|
(213)
|
|
(211)
|
|
3,544
|
|
4,111
|
|
-14%
|
Service Revenues
|
|
2,099
|
|
2,297
|
|
-9%
|
|
866
|
|
906
|
|
-4%
|
|
(213)
|
|
(211)
|
|
2,752
|
|
2,992
|
|
-8%
|
Equipment Revenues
|
|
729
|
|
1,051
|
|
-31%
|
|
63
|
|
68
|
|
-7%
|
|
-
|
|
-
|
|
792
|
|
1,119
|
|
-29%
|
Operating Profit
|
|
68
|
|
72
|
|
-6%
|
|
125
|
|
133
|
|
-6%
|
|
-
|
|
-
|
|
193
|
|
205
|
|
-6%
|
Adjusted EBITDA
|
|
562
|
|
597
|
|
-6%
|
|
272
|
|
279
|
|
-3%
|
|
-
|
|
-
|
|
834
|
|
876
|
|
-5%
|
|
|
Cellular Segment
|
|
Fixed-Line Segment
|
|
Elimination
|
|
Consolidated
|
NIS Million
|
|
Q4'16
|
|
Q4'15
|
|
Change %
|
|
Q4'16
|
|
Q4'15
|
|
Change %
|
|
Q4'16
|
|
Q4'15
|
|
Q4'16
|
|
Q4'15
|
|
Change %
|
Total Revenues
|
|
656
|
|
819
|
|
-20%
|
|
216
|
|
245
|
|
-12%
|
|
(51)
|
|
(57)
|
|
821
|
|
1,007
|
|
-18%
|
Service Revenues
|
|
498
|
|
550
|
|
-9%
|
|
205
|
|
223
|
|
-8%
|
|
(51)
|
|
(57)
|
|
652
|
|
716
|
|
-9%
|
Equipment Revenues
|
|
158
|
|
269
|
|
-41%
|
|
11
|
|
22
|
|
-50%
|
|
-
|
|
-
|
|
169
|
|
291
|
|
-42%
|
Operating Profit (loss)
|
|
(10)
|
|
22
|
|
N/A
|
|
18
|
|
28
|
|
-36%
|
|
-
|
|
-
|
|
8
|
|
50
|
|
-84%
|
Adjusted EBITDA
|
|
109
|
|
152
|
|
-28%
|
|
55
|
|
65
|
|
-15%
|
|
-
|
|
-
|
|
164
|
|
217
|
|
-24%
|
* Exclude impact of impairment charges of NIS 98 million on fixed line
segment operating profit in Q4 2015.
Financial Review
In 2016, total revenues were NIS 3,544 million (US$ 922 million),
a decrease of 14% from NIS 4,111 million in 2015.
Annual service revenues in 2016 totaled NIS 2,752 million (US$
716 million), a decrease of 8% from NIS 2,992 million in 2015.
Service revenues for the cellular segment in 2016 totaled NIS
2,099 million (US$ 546 million), a decrease of 9% from NIS 2,297 million
in 2015. The decrease was mainly a result of the continued downward
pressures on the prices of post-paid and pre-paid cellular services as a
result of the continued competition in the cellular market. As an
illustration of the continued fierce competition in the cellular market,
approximately 2.3 million cellular subscribers are estimated to have
switched operators within the Israeli market (with number porting) in
2016, only slightly fewer than the estimated 2.5 million switchers in
2014 and 2015. Price erosion was also caused by the significant
amount of cellular subscribers who moved between different rate plans or
packages (generally with a lower monthly fee) within the Company.
In addition, cellular segment service revenues were negatively affected
by a decrease in revenues from wholesale services provided to other
operators hosted on the Company's network, and in particular as a result
of termination of the Right of Use Agreement with HOT Mobile from the
second quarter of 2016, as a result of which revenues recorded related
to the Right of Use Agreement decreased from approximately NIS 120
million in 2015 to approximately NIS 51 million in 2016. This decrease
was partially offset by the revenue recognition of the Lump Sum payment
from HOT Mobile under the Network Sharing Agreement in an amount of
approximately NIS 23 million in 2016.
Pre-Paid cellular subscribers contributed service revenues in a total
amount of approximately NIS 180 million (US$ 47 million) in 2016, a
decrease of 22% from approximately NIS 230 million in 2015, as a result
of the price erosion in pre-paid services and the decrease in the number
of Pre-Paid subscribers, which was largely attributed to Pre-Paid
subscribers moving to Post-Paid subscriber packages as a result of the
significant price difference of these products, as well as to increased
competition for Pre-Paid subscribers.
Service revenues for the fixed line segment in 2016 totaled NIS
866 million (US$ 225 million), a decrease of 4% from NIS 906 million in
2015. The decrease mainly reflected a decrease in revenues from
international calls (including in the market for wholesale international
traffic) as well as decreases in revenues from other fixed line services
including local lines and ISP services.
For Q4 2016, total revenues were NIS 821 million (US$ 214
million), a decrease of 18% from NIS 1,007 million in Q4 2015. Service
revenues in Q4 2016 totaled NIS 652 million (US$ 170 million), a
decrease of 9% from NIS 716 million in Q4 2015. Service revenues for
the cellular segment in Q4 2016 totaled NIS 498 million (US$ 130
million), a decrease of 9% from NIS 550 million in Q4 2015. The decrease
resulted from the same reasons as described with respect to the annual
decrease. Service revenues for the fixed-line segment in Q4 2016
totaled NIS 205 million (US$ 53 million), a decrease of 8% from NIS 223
million in Q4 2015, the decrease reflecting lower revenues in a number
of different fixed-line services.
Equipment revenues in 2016 totaled NIS 792 million (US$ 206
million), a decrease of 29% from NIS 1,119 million in 2015, largely
reflecting a decrease in the volume of equipment sales, mainly related
to the tightening of the Company's customer credit policy.
Gross profit from equipment sales in 2016 was NIS 144
million (US$ 37 million), compared with NIS 239 million in 2015, a
decrease of 40%, reflecting both the decrease in the volume of equipment
sales, as described above, and lower profit margins from sales which was
also largely due to the tightening of the Company's customer credit
policy, as well as to a change in product mix towards products with
lower profit margins.
Equipment revenues in Q4 2016 totaled NIS 169 million (US$ 44
million), a decrease of 42% from NIS 291 million in Q4 2015, again
largely reflecting a decrease in the volume of equipment sales.
Gross profit from equipment sales in Q4 2016 was NIS 18 million
(US$ 5 million), compared with NIS 61 million in Q4 2015, a decrease of
70%, again reflecting both the decrease in the volume of equipment sales
and lower profit margins from sales.
Total operating expenses ('OPEX') totaled NIS 2,324 million (US$
604 million) in 2016, a decrease of 6% or NIS 139 million from 2015. The
decrease mainly reflected decreases in expenses related to the cellular
network following the implementation of the cost sharing mechanism under
the Network Sharing Agreement with HOT Mobile, in expenses related to
payments to communication and content providers, and in other expense
items reflecting the impact of various efficiency measures undertaken,
including a reduction in payroll and related expenses resulting from the
reduction in the size of the Company workforce by approximately 14% on
an average basis (average of workforce at beginning and end of year).
These decreases were partially offset by increases in expenses related
to the rebranding of the Company, as well as an increase in bad debts
and allowance for doubtful accounts expenses.
Including depreciation and amortization expenses and other expenses
(mainly amortization of employee share based compensation), OPEX in 2016
decreased by 8% compared with 2015, mainly for the same reasons as
explained above, in addition to the impact of the impairment charges of
NIS 98 million which were recorded in 2015.
For Q4 2016, OPEX totaled NIS 570 million (US$ 148 million), a decrease
of 6% or NIS 38 million from Q4 2015. The decrease mainly reflected a
decrease in expenses related to the cellular network following the
implementation of the cost sharing mechanism under the Network Sharing
Agreement with HOT Mobile and in expenses related to payments to
communication and content providers. These decreases were partially
offset by the one-time expense of the new collective employment
agreement in an amount of approximately NIS 12 million and a one-time
expense of approximately NIS 7 million relating to the early termination
of an operating lease. Including depreciation and amortization expenses
and impairment charges and other expenses (mainly amortization of
employee share based compensation), OPEX in Q4 2016 decreased by 17%
compared with Q4 2015, mainly reflecting the impact of the impairment
charges totaling NIS 98 million which were recorded in Q4 2015.
In 2016, the Company recorded income with respect to the settlement
agreement of the Orange brand agreement in an amount of NIS 217
million (US$ 56 million) compared with NIS 61 million recorded in 2015.
The recognition of the advance payments received from Orange will cease
from the third quarter of 2017. Therefore the recognition of the advance
payments in 2017 will be limited to an amount of NIS 108 million.
Other income, net, totaled NIS 45 million (US$ 12 million) in
2016, compared to NIS 47 million in 2015, a decrease of 4%, mainly
reflecting a decrease in income from the unwinding of trade receivables.
Operating profit for 2016 was NIS 193 million (US$ 50 million),
an increase of 80% compared with NIS 107 million in 2015. Compared with
operating profit before the impact of the impairment charges in 2015,
operating profit in 2016 decreased by 6%.
For Q4 2016, operating profit was NIS 8 million (US$ 2 million),
compared with operating loss of NIS 48 million in Q4 2015. Compared
with operating profit before the impact of the impairment charges in Q4
2015, operating profit in Q4 2016 decreased by 84%.
Adjusted EBITDA in 2016 totaled NIS 834 million (US$ 217
million), a decrease of 5% from NIS 876 million in 2015. As a percentage
of total revenues, Adjusted EBITDA in 2016 was 24% compared with 21% in
2015.
Adjusted EBITDA for the cellular segment was NIS 562 million (US$
146 million), in 2016, a decrease of 6% from NIS 597 million in 2015, reflecting
the impact of the decreases in service revenues and in gross profit from
equipment sales, partially offset by a reduction in total operating
expenses and the increase in income with respect to the settlement
agreement with Orange. As a percentage of total cellular segment
revenues, Adjusted EBITDA for the cellular segment in 2016 was 20%
compared with 18% in 2015.
Adjusted EBITDA for the fixed line segment was NIS 272 million
(US$ 71 million) in 2016, a decrease of 3% from NIS 279 million in 2015,
mainly reflecting the impact of the decreases in service revenues and in
gross profit from equipment sales, partially offset by a reduction in
total operating expenses. As a percentage of total fixed line segment
revenues, Adjusted EBITDA for the fixed line segment in 2016 was 29%,
unchanged from 2015.
For Q4 2016, Adjusted EBITDA totaled NIS 164 million (US$ 43
million), a decrease of 24% from NIS 217 million in Q4 2015. Adjusted
EBITDA for the cellular segment was NIS 109 million (US$ 28 million) in
Q4 2016, a decrease of 28% from NIS 152 million in Q4 2015. As a
percentage of total cellular segment revenues, Adjusted EBITDA for the
cellular segment in Q4 2016 was 17% compared with 19% in Q4 2015.
Adjusted EBITDA for the fixed line segment was NIS 55 million (US$ 14
million) in Q4 2016, a decrease of 15% from NIS 65 million in Q4 2015.
As a percentage of total fixed line segment revenues, Adjusted
EBITDA for the fixed line segment in Q4 2016 was 25% compared with 27%
in Q4 2015.
Finance costs, net in 2016 were NIS 105 million (US$ 27 million),
a decrease of 27% compared with NIS 143 million in 2015. The decrease
reflected lower interest payment expenses due to the lower average level
of debt, as well as gains from foreign exchange movements in 2016
compared with losses from foreign exchange movements in 2015 and lower
early debt repayment expenses, which were partially offset by higher
linkage expenses due to the higher CPI level.
For Q4 2016, finance costs, net were NIS 23 million (US$ 6 million), a
decrease of 41% compared with NIS 39 million in Q4 2015. The decrease
mainly reflected the early repayment fees for loans which were recorded
in Q4 2015 in an amount of NIS 13 million, as well as lower interest
expenses as a result of the lower average level of debt, partially
offset by higher CPI linkage expenses.
Income taxes for 2016 were NIS 36 million (US$ 9 million), compared
with NIS 4 million in 2015. In January 2016, the Law for the
Amendment of the Income Tax Ordinance (No. 216) was published, enacting
a reduction of corporate tax rate, from 26.5% to 25%, for the years 2016
and thereafter. In addition, in December 2016, the Economic Efficiency
Law (Legislative Amendments for Implementing the Economic Policy for the
2017 and 2018 Budget Year) 2016 was published, enacting that the
corporate tax rate will be 24% in 2017 and 23% in 2018 and thereafter.
These reductions of the corporate tax rate resulted in a reduction of
NIS 7 million in the Group's deferred tax assets in 2016, which was
recognized as an income tax expense.
The Company's effective tax rate is expected to continue to be higher
than the corporate tax rate mainly due to nondeductible expenses.
Overall, the company's profit in 2016 was NIS 52 million (US$ 14
million), compared with a loss of NIS 40 million in 2015. Compared with
profit excluding the impact of the impairment charges in 2015, profit
in 2016 increased by 62%.
For Q4 2016, reported loss was NIS 7 million (US$ 2 million), a decrease
of 89% compared with a loss of NIS 65 million in Q4 2015 and a decrease
in profit of NIS 14 million compared with profit before the impact of
the impairment charges, of NIS 7 million in Q4 2015.
Based on the weighted average number of shares outstanding during 2016, basic
earnings per share or ADS, was NIS 0.33 (US$ 0.09), compared to
basic loss per share of NIS 0.26 in 2015.
For Q4 2016, based on the weighted average number of shares
outstanding during Q4 2016, basic loss per share or ADS, was NIS 0.04
(US$ 0.01), compared to basic loss per share of NIS 0.42 in Q4 2015.
Cellular Segment Operational Review
At the end of 2016, the Company's cellular subscriber base
(including mobile data and 012 Mobile subscribers) was approximately
2.69 million including approximately 2.24 million Post-Paid subscribers
or 83% of the base, and approximately 445,000 Pre-Paid subscribers, or
17% of the subscriber base.
Over 2016, the cellular subscriber base declined by approximately
32,000. The Pre-Paid subscriber base decreased by approximately 117,000,
while the Post-Paid subscriber base increased by approximately 85,000.
The decrease in the Pre-Paid subscriber base was largely attributed to
the Pre-Paid subscribers moving to Post-Paid subscriber packages as a
result of the significant price difference of these products, as well as
to increased competition for Pre-Paid subscribers.
The annual churn rate for cellular subscribers in 2016 was 40%, a
decrease of 6 percentage points compared with 46% in 2015, and 47% in
2014.
Total cellular market share (based on the number of subscribers)
at the end of 2016 was estimated to be approximately 26%, similar to
2015 year-end.
During Q4 2016, the cellular subscriber base declined by approximately
7,000 subscribers, with the Post-Paid subscriber base increasing by
approximately 26,000 subscribers and the Pre-Paid subscriber base
declining by approximately 33,000 subscribers.
The monthly Average Revenue per User ("ARPU") for cellular
subscribers in 2016 was NIS 65 (US$ 17), a decrease of 6% from NIS 69 in
2015. The decrease mainly reflected the continued price erosion in the
key cellular services including airtime, content, data and browsing, due
to the persistent competition in the cellular market, as well as a
decrease in revenues from wholesale services provided to other operators
hosted on the Company's network and in particular as a result of
termination of the Right of Use Agreement with HOT Mobile from the
second quarter of 2016.
For Q4 2016, ARPU for cellular subscribers was NIS 62 (US$ 16), a
decrease of 7% from NIS 67 in Q4 2015, largely for the same reasons as
the annual decrease in ARPU.
Funding and Investing Review
In 2016, Adjusted Free Cash Flow totaled NIS 758 million (US$ 197
million), an increase of 34% from NIS 566 million in 2015.
Cash generated from operations increased by 2% to NIS 945 million
(US$ 245 million) in 2016 from NIS 922 million in 2015. The increase
mainly reflected the significant decrease in operating assets, which was
mainly explained by the significant decrease in the volume of equipment
sales under long-term payment plans in 2016 compared with in 2015. In
addition, the increase reflected the payment by HOT Mobile in 2016 of
the lump sum of NIS 250 million under the Network Sharing Agreement.
These two factors were partially offset by the payment in 2015 of €90
million received from Orange as part of the settlement agreement of the
Orange brand agreement, and by the decrease in Adjusted EBITDA excluding
the recorded income with respect to the settlement agreement of the
Orange brand agreement.
Cash capital expenditures (CAPEX payments), as represented by
cash flows used for the acquisition of property and equipment and
intangible assets, were NIS 196 million (US$ 51 million) in 2016, a
decrease of 45% from NIS 359 million in 2015. On an accrual basis,
additions to property and equipment and to intangible assets totaled NIS
202 million (US$ 53 million), a decrease of 25% compared with NIS 271
million in 2015, which included a one-time payment to the Ministry of
Communications for the 4G frequencies in the amount of NIS 34 million.
For Q4 2016, Adjusted Free Cash Flow, totaled NIS 269 million
(US$ 70 million), an increase of 17% from NIS 230 million in Q4 2015. Cash
generated from operations increased by 10% to NIS 313 million (US$
81 million) in Q4 2016 from NIS 285 million in Q4 2015. The increase
mainly reflected the decrease in operating assets and the final payment
of NIS 180 million by HOT Mobile as part of the lump sum under the
Network Sharing Agreement. These two factors were partially offset by
the payment in Q4 2015 of €50 million received from Orange as part of
the settlement agreement of the Orange brand agreement, and by the
decrease in Adjusted EBITDA excluding the recorded income with respect
to the settlement agreement of the Orange brand agreement. Cash
capital expenditures (CAPEX payments) were NIS 47 million (US$ 12
million) in Q4 2016, a decrease of 16% from NIS 56 million in Q4 2015.
The level of net debt at the end of 2016 amounted to NIS 1,526
million (US$ 397 million), compared with NIS 2,175 million at the end of
2015.
Conference Call Details
Partner will hold a conference call on Thursday, March 30, 2017 at
10.00AM Eastern Time / 5.00PM Israel Time. To join the call,
please dial the following numbers (at least 10 minutes before the
scheduled time): International: +972.3.918.0610 North America
toll-free: +1.888.668.9141 A live webcast of the call will also be
available on Partner's Investors Relations website at: www.partner.co.il/en/Investors-Relations/lobby/ If
you are unavailable to join live, the replay of the call will be
available from March 30, 2017 until April 9, 2017, at the
following numbers: International: +972.3.925.5930 North
America toll-free: +1.888.782.4291 In addition, the archived
webcast of the call will be available on Partner's Investor Relations
website at the above address for approximately three months.
Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of Section 27A of the US Securities Act of 1933, as amended,
Section 21E of the US Securities Exchange Act of 1934, as amended, and
the safe harbor provisions of the US Private Securities Litigation
Reform Act of 1995. Words such as "estimate", "believe", "anticipate",
"expect", "intend", "seek", "will", "plan", "could", "may", "project",
"goal", "target" and similar expressions often identify forward-looking
statements but are not the only way we identify these statements. Specific
statements have been made regarding the future entry of cellular
networks worldwide into fifth generation (5G), the Company's strategic
projects for the coming years, that are intended to diversify our
revenue streams for the Company and to enable us to offer our customers
a full communications offering through an independent and advanced
infrastructure; the operating system that we expect to provide to our
customers in the future TV project; the dependency of the Company's
fiber optic based infrastructure project, among others, on the
regulator's assistance and steps that the regulator will take to ensure
we will not be blocked in establishing our new and advanced network; the
developments in the IoT fields that depend on development of the
communications infrastructures; and the expected decrease of the Israeli
corporate tax rate and its impact on the Company's effective tax rate.
In addition, all statements other than statements of historical fact
included in this press release regarding our future performance are
forward-looking statements. We have based these forward-looking
statements on our current knowledge and our present beliefs and
expectations regarding possible future events. These forward-looking
statements are subject to risks, uncertainties and assumptions,
including (i) technological, technical or other difficulties that might
delay or block the Company from establishing independent communication
infrastructure; (ii) lack of receipt of the regulator's assistance in
developing the infrastructures in the communications market and
assistance in creating a true and better alternative for the consumer in
light of the competitors that currently control the market and (iii)
whether the Company will have the financial resources and commercial
strategies which allow it to successfully achieve its strategic
Company projects The future results may differ materially from those
anticipated herein. For further information regarding risks,
uncertainties and assumptions about Partner, trends in the Israeli
telecommunications industry in general, the impact of current global
economic conditions and possible regulatory and legal developments, and
other risks we face, see "Item 3. Key Information - 3D. Risk Factors",
"Item 4. Information on the Company", "Item 5. Operating
and Financial Review and Prospects",
"Item 8. Financial Information - 8A. Consolidated Financial Statements
and Other Financial Information - 8A.1 Legal and Administrative
Proceedings" and "Item 11. Quantitative and Qualitative Disclosures
about Market Risk" in the Company's Annual Reports on Form 20-F filed
with the SEC, as well as its immediate reports on Form 6-K furnished to
the SEC. We undertake no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise. The quarterly financial results
presented in this press release are unaudited financial results. The
results were prepared in accordance with IFRS, other than the non-GAAP
financial measures presented in the section, "Use of Non-GAAP Financial
Measures".
The financial information is presented in NIS millions (unless
otherwise stated) and the figures presented are rounded accordingly.
The convenience translations of the New Israeli Shekel (NIS) figures
into US Dollars were made at the rate of exchange prevailing at December
31, 2016: US $1.00 equals NIS 3.845. The translations were made purely
for the convenience of the reader.
Use of Non-GAAP Financial Measures The
following non-GAAP measures are used in this report. These measures are
not financial measures under IFRS and may not be comparable to other
similarly titled measures for other companies. Further, the measures may
not be indicative of the Company's historic operating results nor are
meant to be predictive of potential future results.
Non-GAAP Measure
|
|
Calculation
|
|
Most Comparable IFRS Financial Measure
|
Adjusted EBITDA*
|
|
Adjusted EBITDA: Profit (Loss) add Income tax
expenses, Finance costs, net, Depreciation and
amortization expenses (including amortization of intangible
assets, deferred expenses-right of use and impairment
charges), Other expenses (mainly amortization of share based
compensation)
|
|
Profit (Loss)
|
|
|
|
|
|
Adjusted EBITDA
margin (%)
|
|
Adjusted EBITDA margin (%): Adjusted EBITDA divided by Total
revenues
|
|
|
Adjusted Free Cash Flow**
|
|
Adjusted Free Cash Flow:
Cash flows from operating activities
deduct
Cash flows from investing activities
add
Short-term investment in deposits
|
|
Cash flows from operating activities
deduct
Cash flows from investing activities
|
Total Operating Expenses (OPEX)
|
|
Total Operating Expenses:
Cost of service revenues
add
Selling and marketing expenses
add
General and administrative expenses
deduct
Depreciation and amortization expenses,
Other expenses (mainly amortization of employee share based
compensation)
|
|
Sum of:
Cost of service revenues,
Selling and marketing expenses,
General and administrative expenses
|
Net Debt
|
|
Net Debt:
Current maturities of notes payable and borrowings
add
Notes payable
add
Borrowings from banks and others
deduct
Cash and cash equivalents
deduct
Short-term deposits
|
|
Sum of:
Current maturities of notes payable and borrowings,
Notes payable,
Borrowings from banks and others
|
* Adjusted EBITDA is fully comparable with EBITDA measure which was
provided in reports for prior periods. ** Adjusted Free Cash Flow
measure is fully comparable to Free Cash Flow measure which was provided
in reports for prior periods.
About Partner Communications
Partner Communications Company Ltd. is a leading Israeli provider of
telecommunications services (cellular, fixed-line telephony and internet
services). Partner's ADSs are quoted on the NASDAQ Global Select Market™
and its shares are traded on the Tel Aviv Stock Exchange (NASDAQ and
TASE: PTNR). For more information about Partner, see: http://www.partner.co.il/en/Investors-Relations/lobby
1 The quarterly financial results are unaudited. See also
the Company's 2016 audited annual report which will be attached to the
Company's 2016 Annual Report (20-F) to be filed with the SEC. 2
For the definition of this and other Non-GAAP financial measures, see
"Use of Non-GAAP Financial Measures" in this press release. 3
In Q4 2015, the Company recorded an impairment charge on its
fixed line assets which reduced operating profit by NIS 98 million and
profit by NIS 72 million in 2015.
PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
New Israeli Shekels
|
|
Convenience translation into U.S.
dollars
|
|
|
December 31,
|
|
|
2015
|
|
2016
|
|
2016
|
|
|
In millions
|
CURRENT ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
926
|
|
716
|
|
186
|
Short-term deposits
|
|
|
|
452
|
|
118
|
Trade receivables
|
|
1,057
|
|
990
|
|
257
|
Other receivables and prepaid expenses
|
|
47
|
|
57
|
|
15
|
Deferred expenses - right of use
|
|
33
|
|
28
|
|
7
|
Inventories
|
|
120
|
|
96
|
|
25
|
Income tax receivable
|
|
2
|
|
|
|
|
|
|
2,185
|
|
2,339
|
|
608
|
|
|
|
|
|
|
|
NON CURRENT ASSETS
|
|
|
|
|
|
|
Trade receivables
|
|
492
|
|
333
|
|
87
|
Deferred expenses - right of use
|
|
20
|
|
75
|
|
20
|
Property and equipment
|
|
1,414
|
|
1,207
|
|
314
|
Licenses and other intangible assets
|
|
956
|
|
793
|
|
206
|
Goodwill
|
|
407
|
|
407
|
|
106
|
Deferred income tax asset
|
|
49
|
|
41
|
|
10
|
Prepaid expenses and other
|
|
3
|
|
2
|
|
1
|
|
|
3,341
|
|
2,858
|
|
744
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
5,526
|
|
5,197
|
|
1,352
|
PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
New Israeli Shekels
|
|
Convenience translation into U.S.
dollars
|
|
|
December 31,
|
|
|
2015
|
|
2016
|
|
2016
|
|
|
In millions
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
Current maturities of notes payable and borrowings
|
|
554
|
|
498
|
|
130
|
Trade payables
|
|
715
|
|
681
|
|
177
|
Payables in respect of employees
|
|
77
|
|
101
|
|
26
|
Other payables (mainly institutions)
|
|
45
|
|
28
|
|
7
|
Income tax payable
|
|
52
|
|
45
|
|
12
|
Deferred income with respect to settlement
|
|
|
|
|
|
|
agreement with Orange
|
|
217
|
|
108
|
|
28
|
Deferred revenues from HOT mobile
|
|
|
|
31
|
|
8
|
Other deferred revenues
|
|
28
|
|
38
|
|
10
|
Provisions
|
|
77
|
|
77
|
|
20
|
|
|
1,765
|
|
1,607
|
|
418
|
|
|
|
|
|
|
|
NON CURRENT LIABILITIES
|
|
|
|
|
|
|
Notes payable
|
|
1,190
|
|
646
|
|
168
|
Borrowings from banks and others
|
|
1,357
|
|
1,550
|
|
403
|
Liability for employee rights upon retirement, net
|
|
34
|
|
39
|
|
10
|
Dismantling and restoring sites obligation
|
|
36
|
|
35
|
|
9
|
Deferred income with respect to settlement
|
|
|
|
|
|
|
agreement with Orange
|
|
108
|
|
|
|
|
Deferred revenues from HOT mobile
|
|
|
|
195
|
|
51
|
Other non-current liabilities
|
|
16
|
|
14
|
|
4
|
|
|
2,741
|
|
2,479
|
|
645
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
4,506
|
|
4,086
|
|
1,063
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
Share capital - ordinary shares of NIS 0.01
par value: authorized - December 31, 2015
and 2016 - 235,000,000 shares;
issued and outstanding -
|
2
|
|
2
|
|
1
|
December 31, 2015 - *156,087,456 shares
|
|
|
|
|
|
December 31, 2016 - *156,993,337 shares
|
|
|
|
|
|
Capital surplus
|
|
1,102
|
|
1,034
|
|
269
|
Accumulated retained earnings
|
|
267
|
|
358
|
|
93
|
Treasury shares, at cost -
December 31, 2015 - **4,461,975 shares
December 31, 2016 - **3,603,578 shares
|
(351)
|
|
(283)
|
|
(74)
|
TOTAL EQUITY
|
|
1,020
|
|
1,111
|
|
289
|
TOTAL LIABILITIES AND EQUITY
|
|
5,526
|
|
5,197
|
|
1,352
|
* Net of treasury shares. ** Including restricted shares in
amount of 2,061,201 and 2,911,806 as of December 31, 2016 and December
31, 2015, respectively, held by trustee under the Company's Equity
Incentive Plan, such shares will become outstanding upon completion of
vesting conditions.
PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
Convenience
translation
into U.S. dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Israeli Shekels
|
|
|
|
Year ended December 31
|
|
|
2014
|
|
2015
|
|
2016
|
|
2016
|
|
|
In millions (except earnings per share)
|
Revenues, net
|
|
4,400
|
|
4,111
|
|
3,544
|
|
922
|
Cost of revenues
|
|
3,419
|
|
3,472
|
|
2,924
|
|
760
|
Gross profit
|
|
981
|
|
639
|
|
620
|
|
162
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
438
|
|
417
|
|
426
|
|
111
|
General and administrative expenses
|
|
193
|
|
223
|
|
263
|
|
68
|
Income with respect to settlement
|
|
|
|
|
|
|
|
|
agreement with Orange
|
|
|
|
61
|
|
217
|
|
56
|
Other income, net
|
|
50
|
|
47
|
|
45
|
|
12
|
Operating profit
|
|
400
|
|
107
|
|
193
|
|
51
|
Finance income
|
|
3
|
|
13
|
|
13
|
|
3
|
Finance expenses
|
|
162
|
|
156
|
|
118
|
|
31
|
Finance costs, net
|
|
159
|
|
143
|
|
105
|
|
28
|
Profit (loss) before income tax
|
|
241
|
|
(36)
|
|
88
|
|
23
|
Income tax expenses
|
|
79
|
|
4
|
|
36
|
|
9
|
Profit (loss) for the year
|
|
162
|
|
(40)
|
|
52
|
|
14
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
Basic
|
|
1.04
|
|
(0.26)
|
|
0.33
|
|
0.09
|
Diluted
|
|
1.04
|
|
(0.26)
|
|
0.33
|
|
0.09
|
PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
New Israeli Shekels
|
|
Convenience translation into U.S.
dollars
|
|
|
Year ended December 31
|
|
|
2014
|
|
2015
|
|
2016
|
|
2016
|
|
|
In millions
|
Profit (loss) for the year
|
|
162
|
|
(40)
|
|
52
|
|
14
|
Other comprehensive income (loss), items
|
|
|
|
|
|
|
|
|
that will not be reclassified to profit or loss
|
|
|
|
|
|
|
|
|
Remeasurements of post-employment benefit
|
|
|
|
|
|
|
|
|
obligations
|
|
(9)
|
|
5
|
|
(8)
|
|
(2)
|
Income taxes relating to remeasurements of post-employment
benefit obligations
|
|
2
|
|
(1)
|
|
2
|
|
*
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
for the year, net of income taxes
|
|
(7)
|
|
4
|
|
(6)
|
|
(2)
|
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
(LOSS) FOR THE YEAR
|
|
155
|
|
(36)
|
|
46
|
|
12
|
* Representing an amount of less than 1 million.
PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) SEGMENT
INFORMATION
|
|
New Israeli Shekels
|
|
|
Year ended December 31, 2016
|
|
|
In millions
|
|
|
Cellular segment
|
|
Fixed-line segment
|
|
Elimination
|
|
Consolidated
|
Segment revenue - Services
|
|
2,080
|
|
672
|
|
|
|
2,752
|
Inter-segment revenue - Services
|
|
19
|
|
194
|
|
(213)
|
|
|
Segment revenue - Equipment
|
|
729
|
|
63
|
|
|
|
792
|
Total revenues
|
|
2,828
|
|
929
|
|
(213)
|
|
3,544
|
|
|
|
|
|
|
|
|
|
Segment cost of revenues - Services
|
|
1,659
|
|
617
|
|
|
|
2,276
|
Inter-segment cost of revenues- Services
|
|
192
|
|
21
|
|
(213)
|
|
|
Segment cost of revenues - Equipment
|
|
596
|
|
52
|
|
|
|
648
|
Cost of revenues
|
|
2,447
|
|
690
|
|
(213)
|
|
2,924
|
Gross profit
|
|
381
|
|
239
|
|
|
|
620
|
|
|
|
|
|
|
|
|
|
Operating expenses (3)
|
|
571
|
|
118
|
|
|
|
689
|
Income with respect to settlement agreement with Orange
|
|
217
|
|
|
|
|
|
217
|
Other income, net
|
|
41
|
|
4
|
|
|
|
45
|
Operating profit
|
|
68
|
|
125
|
|
|
|
193
|
Adjustments to presentation of Segment Adjusted EBITDA
|
|
|
|
|
|
|
|
|
-Depreciation and amortization
|
|
447
|
|
148
|
|
|
|
595
|
-Other (1)
|
|
47
|
|
(1)
|
|
|
|
46
|
Segment Adjusted EBITDA (2)
|
|
562
|
|
272
|
|
|
|
834
|
Reconciliation of profit for the year to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
|
|
|
|
|
52
|
- Depreciation and amortization
|
|
|
|
|
|
|
|
595
|
- Finance costs, net
|
|
|
|
|
|
|
|
105
|
- Income tax expenses
|
|
|
|
|
|
|
|
36
|
- Other (1)
|
|
|
|
|
|
|
|
46
|
Adjusted EBITDA (2)
|
|
|
|
|
|
|
|
834
|
PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) SEGMENT
INFORMATION
|
|
New Israeli Shekels
|
|
|
Year ended December 31, 2015
|
|
|
In millions
|
|
|
Cellular segment
|
|
Fixed-line segment
|
|
Elimination
|
|
Consolidated
|
Segment revenue - Services
|
|
2,275
|
|
717
|
|
|
|
2,992
|
Inter-segment revenue - Services
|
|
22
|
|
189
|
|
(211)
|
|
|
Segment revenue - Equipment
|
|
1,051
|
|
68
|
|
|
|
1,119
|
Total revenues
|
|
3,348
|
|
974
|
|
(211)
|
|
4,111
|
|
|
|
|
|
|
|
|
|
Segment cost of revenues - Services
|
|
1,856
|
|
736
|
|
|
|
2,592
|
Inter-segment cost of revenues- Services
|
|
187
|
|
24
|
|
(211)
|
|
|
Segment cost of revenues - Equipment
|
|
832
|
|
48
|
|
|
|
880
|
Cost of revenues
|
|
2,875
|
|
808
|
|
(211)
|
|
3,472
|
Gross profit
|
|
473
|
|
166
|
|
|
|
639
|
|
|
|
|
|
|
|
|
|
Operating expenses (3)
|
|
506
|
|
134
|
|
|
|
640
|
Income with respect to settlement agreement with Orange
|
|
61
|
|
|
|
|
|
61
|
Other income, net
|
|
44
|
|
3
|
|
|
|
47
|
Operating profit
|
|
72
|
|
35
|
|
|
|
107
|
Adjustments to presentation of Segment Adjusted EBITDA
|
|
|
|
|
|
|
|
|
-Depreciation and amortization
|
|
|
|
|
|
|
|
|
(including impairment charges)
|
|
510
|
|
243
|
|
|
|
753
|
-Other (1)
|
|
15
|
|
1
|
|
|
|
16
|
Segment Adjusted EBITDA (2)
|
|
597
|
|
279
|
|
|
|
876
|
Reconciliation of loss for the year to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
|
|
|
|
|
|
(40)
|
- Depreciation and amortization
(including impairment charges)
|
|
|
|
|
|
|
|
753
|
- Finance costs, net
|
|
|
|
|
|
|
|
143
|
- Income tax expenses
|
|
|
|
|
|
|
|
4
|
- Other (1)
|
|
|
|
|
|
|
|
16
|
Adjusted EBITDA (2)
|
|
|
|
|
|
|
|
876
|
(1) Mainly amortization of employee share based compensation. (2)
Adjusted EBITDA as reviewed by the CODM represents Earnings Before
Interest (finance costs, net), Taxes, Depreciation and Amortization
(including amortization of intangible assets, deferred expenses-right of
use and impairment charges) and Other expenses (mainly amortization of
share based compensation). Adjusted EBITDA is not a financial measure
under IFRS and may not be comparable to other similarly titled measures
for other companies. Adjusted EBITDA may not be indicative of the
Group's historic operating results nor is it meant to be predictive of
potential future results. The usage of the term "Adjusted EBITDA" is to
highlight the fact that the Amortization includes amortization of
deferred expenses - right of use and amortization of employee share
based compensation and impairment charges; it is fully comparable to
EBITDA information which has been previously provided for prior periods. (3)
Operating expenses include selling and marketing expenses and general
and administrative expenses.
PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
New Israeli shekels
|
|
Convenience translation into U.S. dollars
|
|
|
12 month period ended December 31,
|
|
3 month period ended December 31
|
|
12 month period ended December 31,
|
|
3 month period ended December 31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2016
|
|
|
(Audited)
|
|
(Audited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Audited)
|
|
(Unaudited)
|
|
|
In millions
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations (Appendix)
|
|
955
|
|
975
|
|
287
|
|
323
|
|
253
|
|
84
|
Income tax paid
|
|
(33)
|
|
(30)
|
|
(2)
|
|
(10)
|
|
(8)
|
|
(3)
|
Net cash provided by operating activities
|
|
922
|
|
945
|
|
285
|
|
313
|
|
245
|
|
81
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
(216)
|
|
(127)
|
|
(37)
|
|
(30)
|
|
(33)
|
|
(8)
|
Acquisition of intangible assets
|
|
(143)
|
|
(69)
|
|
(19)
|
|
(17)
|
|
(18)
|
|
(4)
|
Short-term investment in deposits
|
|
|
|
(452)
|
|
|
|
(452)
|
|
(118)
|
|
(118)
|
Interest received
|
|
3
|
|
2
|
|
1
|
|
|
|
1
|
|
|
Proceeds from sale of property and equipment
|
|
1
|
|
7
|
|
1
|
|
3
|
|
2
|
|
1
|
Investment in PHI
|
|
(1)
|
|
|
|
(1)
|
|
|
|
|
|
|
Proceeds from (repayment of) derivative financial instruments, net
|
|
*
|
|
*
|
|
*
|
|
|
|
*
|
|
|
Net cash used in investing activities
|
|
(356)
|
|
(639)
|
|
(55)
|
|
(496)
|
|
(166)
|
|
(129)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options granted to employees
|
|
*
|
|
*
|
|
*
|
|
|
|
*
|
|
|
Interest paid
|
|
(137)
|
|
(108)
|
|
(58)
|
|
(28)
|
|
(28)
|
|
(7)
|
Repayment of current borrowings
|
|
|
|
|
|
|
|
(52)
|
|
|
|
(14)
|
Non-current borrowings received
|
|
675
|
|
250
|
|
|
|
250
|
|
65
|
|
65
|
Repayment of non-current borrowings
|
|
(533)
|
|
(15)
|
|
(356)
|
|
(4)
|
|
(4)
|
|
(1)
|
Repayment of notes payables
|
|
(308)
|
|
(643)
|
|
(308)
|
|
(408)
|
|
(167)
|
|
(106)
|
Net cash used in financing activities
|
|
(303)
|
|
(516)
|
|
(722)
|
|
(242)
|
|
(134)
|
|
(63)
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
263
|
|
(210)
|
|
(492)
|
|
(425)
|
|
(55)
|
|
(111)
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
663
|
|
926
|
|
1,418
|
|
1,141
|
|
241
|
|
297
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
926
|
|
716
|
|
926
|
|
716
|
|
186
|
|
186
|
* Representing an amount of less than 1 million.
PARTNER COMMUNICATIONS COMPANY LTD. (An Israeli Corporation) INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Appendix - Cash generated from operations and supplemental information
|
|
New Israeli shekels
|
|
Convenience translation into U.S. dollars
|
|
|
12 month period ended December 31,
|
|
3 month period ended December 31,
|
|
12 month period ended December 31,
|
|
3 month period ended December 31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2016
|
|
|
(Audited)
|
|
(Audited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Audited)
|
|
(Unaudited)
|
|
|
In millions
|
Cash generated from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) for the period
|
|
(40)
|
|
52
|
|
(65)
|
|
(7)
|
|
14
|
|
(2)
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (including impairment)
|
|
641
|
|
565
|
|
174
|
|
138
|
|
147
|
|
36
|
Amortization (including impairment) of deferred expenses - Right of
use
|
|
112
|
|
30
|
|
85
|
|
9
|
|
8
|
|
2
|
Amortization of employee share based compensation
|
|
17
|
|
45
|
|
7
|
|
9
|
|
12
|
|
2
|
Liability for employee rights upon retirement, net
|
|
(12)
|
|
(3)
|
|
(10)
|
|
|
|
(1)
|
|
|
Finance costs, net
|
|
(8)
|
|
1
|
|
(9)
|
|
(1)
|
|
*
|
|
*
|
Change in fair value of derivative financial instruments
|
|
(2)
|
|
*
|
|
(1)
|
|
*
|
|
*
|
|
*
|
Interest paid
|
|
137
|
|
108
|
|
58
|
|
28
|
|
28
|
|
7
|
Interest received
|
|
(3)
|
|
(2)
|
|
(1)
|
|
*
|
|
(1)
|
|
*
|
Deferred income taxes
|
|
(40)
|
|
10
|
|
(39)
|
|
(2)
|
|
3
|
|
(1)
|
Income tax paid
|
|
33
|
|
30
|
|
2
|
|
10
|
|
8
|
|
3
|
Capital loss (gain) from property and equipment
|
|
*
|
|
*
|
|
*
|
|
(1)
|
|
*
|
|
*
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
|
(183)
|
|
226
|
|
28
|
|
104
|
|
58
|
|
27
|
Other
|
|
(13)
|
|
(9)
|
|
(9)
|
|
(17)
|
|
(2)
|
|
(4)
|
Increase (decrease) in accounts payable and accruals:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
|
(5)
|
|
(38)
|
|
(58)
|
|
(35)
|
|
(10)
|
|
(9)
|
Other payables
|
|
(12)
|
|
*
|
|
(31)
|
|
38
|
|
*
|
|
10
|
Provisions
|
|
19
|
|
*
|
|
11
|
|
6
|
|
*
|
|
2
|
Deferred revenues with respect to settlement agreement with Orange
|
|
325
|
|
(217)
|
|
175
|
|
(54)
|
|
(56)
|
|
(14)
|
Deferred revenues from HOT mobile
|
|
|
|
227
|
|
|
|
173
|
|
59
|
|
45
|
Other deferred revenues
|
|
(6)
|
|
10
|
|
1
|
|
4
|
|
3
|
|
1
|
Increase in deferred expenses - Right of use
|
|
(34)
|
|
(80)
|
|
(12)
|
|
(28)
|
|
(22)
|
|
(8)
|
Current income tax liability
|
|
11
|
|
(4)
|
|
10
|
|
(15)
|
|
(1)
|
|
(4)
|
Decrease (increase) in inventories
|
|
18
|
|
24
|
|
(29)
|
|
(36)
|
|
6
|
|
(9)
|
Cash generated from operations
|
|
955
|
|
975
|
|
287
|
|
323
|
|
253
|
|
84
|
* Representing an amount of less than 1 million.
Reconciliation of Non-GAAP Measures:
Adjusted Free Cash Flow
|
|
New Israeli Shekels
|
|
Convenience translation into U.S.
Dollars
|
|
Convenience translation into U.S.
Dollars
|
|
|
12 month
period ended December 31,
|
|
12 month
period ended December 31,
|
|
3 month
period ended
December 31,
|
|
3 month
period ended December 31,
|
|
12 month
period ended
December 31,
|
|
3 month
period ended
December 31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2016
|
|
|
(Audited)
|
|
(Audited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Audited)
|
|
(Unaudited)
|
|
|
In millions
|
Net cash provided by operating activities
|
|
922
|
|
945
|
|
285
|
|
313
|
|
245
|
|
81
|
Net cash used in investing activities
|
|
(356)
|
|
(639)
|
|
(55)
|
|
(496)
|
|
(166)
|
|
(129)
|
Short-term investment in deposits
|
|
|
|
452
|
|
|
|
452
|
|
118
|
|
118
|
Adjusted Free Cash Flow
|
|
566
|
|
758
|
|
230
|
|
269
|
|
197
|
|
70
|
|
|
|
|
|
|
|
Interest paid
|
|
(137)
|
|
(108)
|
|
(58)
|
|
(28)
|
|
(28)
|
|
(7)
|
Adjusted Free Cash Flow After Interest
|
|
429
|
|
650
|
|
172
|
|
241
|
|
169
|
|
63
|
Total Operating Expenses (OPEX)
|
|
New Israeli Shekels
|
|
Convenience translation into U.S.
Dollars
|
|
Convenience translation into U.S.
Dollars
|
|
|
12 month
period ended December 31,
|
|
12 month
period ended December 31,
|
|
3 month
period ended
December 31,
|
|
3 month
period ended December 31,
|
|
12 month
period ended
December 31,
|
|
3 month
period ended
December 31,
|
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2016
|
|
|
(Audited)
|
|
(Audited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Audited)
|
|
(Unaudited)
|
|
|
In millions
|
Cost of revenues - Services
|
|
2,592
|
|
2,276
|
|
698
|
|
555
|
|
592
|
|
144
|
Selling and marketing expenses
|
|
417
|
|
426
|
|
122
|
|
96
|
|
111
|
|
25
|
General and administrative expenses
|
|
223
|
|
263
|
|
53
|
|
75
|
|
68
|
|
20
|
Depreciation and amortization (2)
|
|
(753)
|
|
(595)
|
|
(258)
|
|
(147)
|
|
(155)
|
|
(38)
|
Other (1)
|
|
(16)
|
|
(46)
|
|
(7)
|
|
(9)
|
|
(12)
|
|
(3)
|
OPEX
|
|
2,463
|
|
2,324
|
|
608
|
|
570
|
|
604
|
|
148
|
(1) Mainly amortization of employee share based compensation. (2)
Including impairment charges.
Key Financial and Operating Indicators
(unaudited)*
NIS M unless otherwise stated
|
|
Q4' 14
|
|
Q1' 15
|
|
Q2' 15
|
|
Q3' 15
|
|
Q4' 15
|
|
Q1' 16
|
|
Q2' 16
|
|
Q3' 16
|
|
Q4' 16
|
|
|
|
2015
|
|
2016
|
Cellular Segment Service Revenues
|
|
613
|
|
579
|
|
581
|
|
587
|
|
550
|
|
543
|
|
527
|
|
531
|
|
498
|
|
|
|
2,297
|
|
2,099
|
Cellular Segment Equipment Revenues
|
|
282
|
|
277
|
|
271
|
|
234
|
|
269
|
|
244
|
|
188
|
|
139
|
|
158
|
|
|
|
1,051
|
|
729
|
Fixed-Line Segment Service Revenues
|
|
250
|
|
232
|
|
226
|
|
225
|
|
223
|
|
222
|
|
219
|
|
220
|
|
205
|
|
|
|
906
|
|
866
|
Fixed-Line Segment Equipment Revenues
|
|
18
|
|
18
|
|
16
|
|
12
|
|
22
|
|
23
|
|
17
|
|
12
|
|
11
|
|
|
|
68
|
|
63
|
Reconciliation for consolidation
|
|
(55)
|
|
(52)
|
|
(50)
|
|
(52)
|
|
(57)
|
|
(55)
|
|
(54)
|
|
(53)
|
|
(51)
|
|
|
|
(211)
|
|
(213)
|
Total Revenues
|
|
1,108
|
|
1,054
|
|
1,044
|
|
1,006
|
|
1,007
|
|
977
|
|
897
|
|
849
|
|
821
|
|
|
|
4,111
|
|
3,544
|
Gross Profit from Equipment Sales
|
|
61
|
|
59
|
|
67
|
|
52
|
|
61
|
|
56
|
|
42
|
|
28
|
|
18
|
|
|
|
239
|
|
144
|
Operating Profit (Loss)
|
|
73
|
|
56
|
|
67
|
|
32
|
|
(48)
|
|
54
|
|
67
|
|
64
|
|
8
|
|
|
|
107
|
|
193
|
Cellular Segment Adjusted EBITDA
|
|
161
|
|
148
|
|
160
|
|
137
|
|
152
|
|
142
|
|
155
|
|
156
|
|
109
|
|
|
|
597
|
|
562
|
Fixed-Line Segment Adjusted EBITDA
|
|
88
|
|
79
|
|
76
|
|
59
|
|
65
|
|
80
|
|
73
|
|
64
|
|
55
|
|
|
|
279
|
|
272
|
Total Adjusted EBITDA
|
|
249
|
|
227
|
|
236
|
|
196
|
|
217
|
|
222
|
|
228
|
|
220
|
|
164
|
|
|
|
876
|
|
834
|
Adjusted EBITDA Margin (%)
|
|
22%
|
|
22%
|
|
23%
|
|
19%
|
|
22%
|
|
23%
|
|
25%
|
|
26%
|
|
20%
|
|
|
|
21%
|
|
24%
|
OPEX
|
|
630
|
|
604
|
|
601
|
|
650
|
|
608
|
|
612
|
|
572
|
|
570
|
|
570
|
|
|
|
2,463
|
|
2,324
|
Impairment charges on operating profit
|
|
|
|
|
|
|
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
98
|
|
|
Income with respect to settlement agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with Orange
|
|
|
|
|
|
|
|
23
|
|
38
|
|
54
|
|
54
|
|
55
|
|
54
|
|
|
|
61
|
|
217
|
Finance costs, net
|
|
36
|
|
18
|
|
46
|
|
40
|
|
39
|
|
24
|
|
28
|
|
30
|
|
23
|
|
|
|
143
|
|
105
|
Profit (loss)
|
|
24
|
|
25
|
|
9
|
|
(9)
|
|
(65)
|
|
14
|
|
26
|
|
19
|
|
(7)
|
|
|
|
(40)
|
|
52
|
Capital Expenditures (cash)
|
|
90
|
|
128
|
|
111
|
|
64
|
|
56
|
|
48
|
|
57
|
|
44
|
|
47
|
|
|
|
359
|
|
196
|
Capital Expenditures (additions)
|
|
145
|
|
50
|
|
84
|
|
51
|
|
86
|
|
34
|
|
40
|
|
44
|
|
84
|
|
|
|
271
|
|
202
|
Adjusted Free Cash Flow
|
|
71
|
|
21
|
|
24
|
|
291
|
|
230
|
|
114
|
|
160
|
|
215
|
|
269
|
|
|
|
566
|
|
758
|
Adjusted Free Cash Flow After Interest
|
|
21
|
|
8
|
|
(28)
|
|
277
|
|
172
|
|
89
|
|
119
|
|
201
|
|
241
|
|
|
|
429
|
|
650
|
Net Debt
|
|
2,612
|
|
2,581
|
|
2,626
|
|
2,355
|
|
2,175
|
|
2,079
|
|
1,964
|
|
1,768
|
|
1,526
|
|
|
|
2,175
|
|
1,526
|
Cellular Subscriber Base (Thousands)
|
|
2,837
|
|
2,774
|
|
2,747
|
|
2,739
|
|
2,718
|
|
2,692
|
|
2,700
|
|
2,693
|
|
2,686
|
|
|
|
2,718
|
|
2,686
|
Post-Paid Subscriber Base (Thousands)
|
|
2,132
|
|
2,112
|
|
2,112
|
|
2,136
|
|
2,156
|
|
2,174
|
|
2,191
|
|
2,215
|
|
2,241
|
|
|
|
2,156
|
|
2,241
|
Pre-Paid Subscriber Base (Thousands)
|
|
705
|
|
662
|
|
635
|
|
603
|
|
562
|
|
518
|
|
509
|
|
478
|
|
445
|
|
|
|
562
|
|
445
|
Cellular ARPU (NIS)
|
|
71
|
|
69
|
|
70
|
|
71
|
|
67
|
|
67
|
|
65
|
|
66
|
|
62
|
|
|
|
69
|
|
65
|
Cellular Churn Rate (%)
|
|
11.5%
|
|
12.7%
|
|
10.9%
|
|
10.8%
|
|
11.1%
|
|
11.2%
|
|
9.8%
|
|
9.7%
|
|
9.4%
|
|
|
|
46%
|
|
40%
|
Number of Employees (FTE)
|
|
3,575
|
|
3,535
|
|
3,354
|
|
3,017
|
|
2,882
|
|
2,827
|
|
2,740
|
|
2,742
|
|
2,686
|
|
|
|
2,882
|
|
2,686
|
* See footnote 2 regarding use of non-GAAP measures.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170329006335/en/
[ Back To Mobile World Congress's Homepage ]
|