SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMC NEWS

TMCNET eNEWSLETTER SIGNUP

Cellcom Israel Announces First Quarter 2018 Results
[May 30, 2018]

Cellcom Israel Announces First Quarter 2018 Results


NETANYA, Israel, May 30, 2018 /PRNewswire/ -- Nir Sztern, Cellcom Israel CEO said:

"The strong growth trend of the fixed line segment also continued in this quarter. Fixed line revenues were up approximately 9% compared to the first quarter of 2017 and EBITDA of this segment reached NIS 68 million.

Cellcom Israel is the only Company in Israel that offers the quatro package. This advantage allows us to face the competition in the cellular segment, such that even as cellular prices decrease, we are successful in selling a complete communications package, and through this we increase total income per household."

First Quarter 2018 Highlights (compared to first quarter of 2017):

  • Total Revenues totaled NIS 933 million ($265 million) compared to NIS 959 million ($273 million) in the first quarter last year, a decrease of 2.7%
  • Service revenues totaled NIS 701 million ($199 million) compared to NIS 739 million ($210 million) in the first quarter last year, a decrease of 5.1%
  • Operating income totaled NIS 45 million ($13 million) compared to NIS 67 million ($19 million) in the first quarter last year, a decrease of 32.8%
  • Net income totaled NIS 7 million ($2 million) compared to NIS 26 million ($7 million) in the first quarter last year, a decrease of 73.1%
  • EBITDA1 totaled NIS 180 million ($51 million) compared to NIS 201 million ($57 million) in the first quarter last year, a decrease of 10.4%
  • Net cash flow from operating activities totaled NIS 230 million ($65 million) compared to NIS 77 million ($22 million) in the first quarter last year2, an increase of 198.7%
  • Free cash flow1 totaled NIS 84 million ($24 million) compared to NIS 66 million ($19 million) in the first quarter last year, an increase of 27.3%


[1]

Please see "Use of Non-IFRS financial measures" section in this press release.

[2]

Net cash flow from operating activities for the first quarter of 2017, included a loan in an amount of NIS 130 million, which was provided to Golan Telecom according to the terms of the Network Sharing Agreement with Golan.

Nir Sztern, the Company's Chief Executive Officer, referred to the results of the first quarter of 2018:

"The strong growth trend of the fixed line segment also continued in this quarter. Fixed line segment revenues grew by approximately 9% compared to the first quarter of 2017 and the EBITDA from this segment reached NIS 68 million (61.9% growth from the same quarter last year).

We continued to broaden our TV services, adding 14,000 new subscribers to our service in the first quarter of 2018.

Alongside the continued competition in the cellular segment, we continued to recruit new customers, among others, through a quatro package that offers cellular, television, internet and fixed line home telephony.

Cellcom Israel is the only Company in Israel that offers a quatro package. This advantage allows us to face the competition in the cellular segment, such that even as cellular prices decrease, we are successful in selling a complete communications package, and through this we increase total income per household. In the cellular segment, we finished the first quarter with an addition of 5,000 subscribers, all post-paid subscribers.

In this quarter also, we continued to lay down our fiber-optic infrastructure to the home, in order to make "Super Fiber", our fast and quality internet service, accessible to households, as part of our quatro, triple and bundle offerings.

Further, we continued to advance a possible investment in Israel Broadband Company (IBC) and after we issued a non-binding letter of intent and reached understanding with the Israeli Electric Company (IEC) regarding an update of IEC's services prices to IBC, if we invest in IBC, we conduct negotiations with IBC and its shareholders for investing in IBC. In the last few days, the Ministry of Communications published a hearing as to the reduction of the universal deployment to which IBC is bound by its license, the approval of which shall assist in advancing the negotiations among the parties.  

We recently have been informed that, once again, the IDF (the Israeli Defense Forces) selected Cellcom Israel Group to be the cellular operator for the IDF soldiers for the coming three years. This win reflects, once again, the significant trust in Cellcom Israel's network as well as our high level of service, and we are very proud of it.

We continue to act in order to reduce the Company's expenses and examine various ways to become more efficient, in order to cope with the price erosion in the cellular segment. A few days ago we announced the launch of a voluntary retirement plan that will be another layer of streamlining the Company's expenses."

Shlomi Fruhling, Chief Financial Officer, said:

"During the first quarter of 2018 the erosion in revenues from cellular services continued as a result of the intensified competition in the market, as well as due to the change in the classification of the consideration from Golan as of the coming into force of the sharing agreement with Golan in the second quarter of 2017, compared to national roaming revenues in the same quarter last year. Despite the continued competition, we experienced a decrease in the churn rate of cellular subscribers as compared with the previous quarter and the same quarter last year. After the end of the quarter, Xfone launched its services as the 6th Mobile Network operator (MNO) in Israel, and since its entrance, we are experiencing an additional increase in the competition level in the market, reflected in an increased amount of transfers among the operators and a decrease in the pricing level in the market. The continuation of this trend is expected to negatively impact the Company's cellular segment results. 

Our subscriber base in the TV and internet services continued to grow during the quarter, with most of the subscribers joining these services as part of our triple and quatro offering. Fixed line segment revenues grew by approximately 9% compared with the same quarter last year due to the continued growth in subscriber base and the classification of part of the consideration from the sharing agreement with Golan to the fixed line segment.

The free cash flow in the first quarter of 2018 reached NIS 84 million, a 27.3% increase compared to the same period last year. The increase in the free cash flow was mainly due to a reduction in payments to suppliers and was partially offset by a decrease in receipts from customers for services and end user equipment.

The Board of Directors decided not to distribute a dividend for the first quarter of 2018, in light of the intense competition in the market and its negative impact on the Company's results of operations and in order to continue to strengthen the Company's balance sheet. The board will review its decision in the future, taking into consideration developments in market conditions and the Company's needs."

Cellcom Israel Ltd. (NYSE: CEL) (TASE: CEL) ("Cellcom Israel" or the "Company" or the "Group") announced today its financial results for the first quarter of 2018.
The Company reported that revenues for the first quarter of 2018 totaled NIS 933 million ($265 million); EBITDA for the first quarter of 2018 totaled NIS 180 million ($51 million), or 19.3% of total revenues; net income for the first quarter of 2018 totaled NIS 7 million ($2 million). Basic earnings per share for the first quarter of 2018 totaled NIS 0.08 ($0.02).

Main Consolidated Financial Results:


Q1/2018

Q1/2017

Change %

Q1/2018

Q1/2017


NIS million

US$ million
 (convenience translation)

Total revenues

933

959

(2.7)%

265

273

Operating Income

45

67

(32.8)%

13

19

Net Income

7

26

(73.1)%

2

7

Free cash flow

84

66

27.3%

24

19

EBITDA

180

201

(10.4)%

51

57

EBITDA, as percent of total revenues

19.3%

21.0%

(8.1)%



 

Main Financial Data by Operating Segments:



Cellular (*)

Fixed-line (**)

Consolidation adjustments

(***)

Consolidated results

NIS million

Q1'18

Q1'17

Change

%

Q1'18

Q1'17

Change

%

Q1'18

Q1'17

Q1'18

Q1'17

Change

%

Total revenues

630

692

(9.0)%

343

316

8.5%

(40)

(49)

933

959

(2.7)%

Service revenues

437

509

(14.1)%

304

279

9.0%

(40)

(49)

701

739

(5.1)%

Equipment revenues

193

183

5.5%

39

37

5.4%

-

-

232

220

5.5%

EBITDA

112

159

(29.6)%

68

42

61.9%

-

-

180

201

(10.4)%

EBITDA, as percent of
  total revenues

17.8%

23.0%

(22.6)%

19.8%

13.3%

48.9%



19.3%

21.0%

(8.1)%

(*)      The segment includes the cellular communications services, end user cellular equipment and supplemental services.

(**)     The segment includes landline telephony services, internet infrastructure and connectivity services, television services, transmission services, end user fixed-line equipment and supplemental services.

(***)  Include cancellation of inter-segment revenues between "Cellular" and "Fixed-line" segments.

 

Financial Review (first quarter of 2018 compared to first quarter of 2017):

Revenues for the first quarter of 2018 decreased 2.7% totaling NIS 933 million ($265 million), compared to NIS 959 million ($273 million) in the first quarter last year. The decrease in revenues is attributed to a 5.1% decrease in service revenues, which was partially offset by a 5.5% increase in equipment revenues.

Service revenues totaled NIS 701 million ($199 million) in the first quarter of 2018, a 5.1% decrease compared to NIS 739 million ($210 million) in the first quarter last year.

Service revenues in the cellular segment totaled NIS 437 million ($124 million) in the first quarter of 2018, a 14.1% decrease compared to NIS 509 million ($145 million) in the first quarter last year. This decrease resulted mainly from the ongoing erosion in the price of these services as a result of the competition in the cellular market and from the difference between the national roaming services revenues in the first quarter of 2017 and the revenues for rights of use in cellular networks according to the network sharing agreement with Golan Telecom Ltd. ("Golan", the "Network Sharing Agreement with Golan")3, which came into force as of the beginning of the second quarter of 2017.

Service revenues in the fixed-line segment totaled NIS 304 million ($87 million) in the first quarter of 2018, a 9.0% increase compared to NIS 279 million ($79 million) in the first quarter last year. This increase resulted mainly from fixed-line communications services provided according to the Network Sharing Agreement with Golan, as well as from an increase in revenues from TV and internet services.

Equipment revenues totaled NIS 232 million ($66 million) in the first quarter of 2018, a 5.5% increase compared to NIS 220 million ($63 million) in the first quarter last year. This increase resulted mainly from an increase in the amount of end user equipment sold in the cellular segment.

Cost of revenues for the first quarter of 2018 were similar to the first quarter of 2017 and totaled NIS 665 million ($189 million). In the first quarter of 2018, there was an increase in cost of equipment, which resulted mainly from an increase in the quantity of end user equipment sold in the cellular segment and an increase in costs of TV services content and in costs related to internet services in the fixed-line segment, which were fully offset, mainly from Golan's participation in operating costs according to the Network Sharing Agreement with Golan, a decrease in depreciation expenses and a decrease in costs of extended warranty services for end user equipment.

Gross profit for the first quarter of 2018 totaled NIS 268 million ($76 million), an 8.8% decrease compared to NIS 294 million ($84 million) in the first quarter of 2017. Gross profit margin for the first quarter of 2018 amounted to 28.7%, down from 30.7% in the first quarter of 2017.

[3] According to the terms of the Network Sharing Agreement with Golan, part of the consideration is recognized as revenues and part is recognized as a reduction of operation costs. In addition, revenues from the Network Sharing Agreement are divided between the cellular and fixed-line segments.

Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for the first quarter of 2018 decreased 1.8% to NIS 223 million ($63 million), compared to NIS 227 million ($65 million) in the first quarter of 2017. This decrease is primarily a result of a decrease in doubtful accounts expenses. This decrease was partially offset by an increase in amortization expenses of salaries and commissions expenses which were capitalized as part of the customer acquisition costs, as a result of early adoption of a new International Financial Reporting Standard (IFRS 15) as of the first quarter of 2017 (the "Adoption of IFRS15").

Operating income for the first quarter of 2018 decreased by 32.8% to NIS 45 million ($13 million) from NIS 67 million ($19 million) in the first quarter of 2017.

EBITDA for the first quarter of 2018 decreased by 10.4% to NIS 180 million ($51 million), compared to NIS 201 million ($57 million) in the first quarter of 2017. EBITDA as a percent of revenues for the first quarter of 2018 totaled 19.3%, down from 21.0% in the first quarter of 2017. The decrease in EBITDA is attributed to a 29.6% decrease in the cellular segment EBITDA, which was partially offset by a 61.9% increase in the fixed line segment EBITDA.

Cellular segment EBITDA for the first quarter of 2018 totaled NIS 112 million ($32 million), compared to NIS 159 million ($45 million) in the first quarter last year, a decrease of 29.6%, which resulted mainly from a decrease in service revenues as mentioned above, and from the difference between national roaming services revenues in the first quarter of 2017 and the revenues for rights of use in cellular networks according to the Network Sharing Agreement with Golan in the first quarter of 2018.

Fixed-line segment EBITDA for the first quarter of 2018 totaled NIS 68 million ($19 million), compared to NIS 42 million ($12 million) in the first quarter last year, a 61.9% increase, mainly as a result of an increase in revenues from fixed-line communications services provided according to the Network Sharing Agreement with Golan, and from an increase in activity in the internet and TV fields.

Financing expenses, net for the first quarter of 2018 increased by 6.5% and totaled NIS 33 million ($10 million), compared to NIS 31 million ($9 million) in the first quarter of 2017.

Net Income for the first quarter of 2018 totaled NIS 7 million ($2 million), compared to NIS 26 million ($7 million) in the first quarter of 2017, a 73.1% decrease.

Basic earnings per share for the first quarter of 2018 totaled NIS 0.08 ($0.02), compared to NIS 0.25 ($0.07) in the first quarter last year.

 

Operating Review

Main Performance Indicators - Cellular segment:


Q1/2018

Q1/2017

Change (%)

Cellular subscribers at the end of period (in thousands)

2,822

2,792

1.1%

Churn Rate for cellular subscribers (in %)

9.5%

12.0%

(20.8)%

Monthly cellular ARPU (in NIS)

51.8

60.2

(14.0)%

 

Cellular subscriber base - at the end of the first quarter of 2018 the Company had approximately 2.822 million cellular subscribers. During the first quarter of 2018 the Company's cellular subscriber base increased by approximately 5,000 net cellular subscribers.

Cellular Churn Rate for the first quarter of 2018 totaled to 9.5%, compared to 12.0% in the first quarter last year.

The monthly cellular Average Revenue per User ("ARPU") for the first quarter of 2018 totaled NIS 51.8 ($14.7), compared to NIS 60.2 ($17.1) in the first quarter last year. The decrease in ARPU resulted mainly from the ongoing erosion in the prices of cellular services, resulting from the intensified competition in the cellular market and from the difference between national roaming services revenues in the first quarter of 2017 and the revenues for rights of use in cellular networks according to the Network Sharing Agreement with Golan in the first quarter of 2018.

Main Performance Indicators - Fixed-line segment:


Q1/2018

Q1/2017

Change (%)

Internet infrastructure field subscribers
-
(households) at the end of period  (in thousands)

235

173

35.8%

TV field subscribers -  (households) at the
end of period  (in thousands)

184

124

48.4%

 

In the first quarter of 2018, the Company's subscriber base in the internet infrastructure field increased by approximately 13,000 net households, and the Company's subscriber base in the TV field increased by 14,000 net households.

Financing and Investment Review

The Company's liquidity requirements relate primarily to working capital requirements, debt service, capital expenditures for the expansion and enhancement of its networks, end user equipment and payment of dividends, to the extent declared. The Company has historically funded these requirements through cash flows from operations and raising new debt. Going forward, the Company may also seek to fund these requirements through issuances of equity securities, including ordinary shares.

Cash Flow

Free cash flow for the first quarter of 2018, totaled NIS 84 million ($24 million), compared to NIS 66 million ($19 million) in the first quarter of 2017 (after elimination of a loan provided to Golan Telecom in the amount of NIS 130 million, as previously reported), a 27.3% increase. The increase in free cash flow, resulted mainly from decrease in payments to suppliers and was partially offset by a decrease in receipts from customers for services and end user equipment.

Total Equity

Total Equity as of March 31, 2018 amounted to NIS 1,414 million ($402 million) primarily consisting of undistributed accumulated retained earnings of the Company.

Cash Capital Expenditures in Fixed Assets and Intangible Assets and others

During the first quarter of 2018, the Company invested NIS 146 million ($42 million) in fixed assets and intangible assets and others (including, among others, investments in the Company's communications networks, information systems, software and TV set-top boxes and capitalization of part of the customer acquisition costs as a result of the adoption of IFRS 15), compared to NIS 140 million ($40 million) in the first quarter 2017.

Dividend

On May 29, 2018, the Company's Board of Directors decided not to declare a cash dividend for the first quarter of 2018. In making its decision, the board of directors considered the Company's dividend policy and business status and decided not to distribute a dividend at this time, given the intensified competition and its adverse effect on the Company's results of operations, and in order to strengthen the Company's balance sheet. The board of directors will re-evaluate its decision in future quarters.   No future dividend declaration is guaranteed and is subject to the Company's board of directors' sole discretion, as detailed in the Company's annual report for the year ended December 31, 2017 on Form 20-F dated March 26, 2018, or the 2017 Annual Report, under "Item 8 - Financial Information – A. Consolidated Statements and Other Financial Information - Dividend Policy".

Debentures, Material Loans and Financial Liabilities

For information regarding the Company's outstanding debentures as of March 31, 2018, see "Disclosure for Debenture Holders" section in this press release.

For information regarding the Company's material loans as of March 31, 2018, see "Aggregation of the Information regarding the Company's Material Loans" section in this press release.

For a summary of the Company's financial liabilities as of March 31, 2018, see "Disclosure for Debenture Holders" section in this press release.

Other developments during the first quarter of 2018 and subsequent to the end of the reporting period

Network Sharing Agreement

In April 2018, Marathon 018 Xfone Ltd., with which the Company entered a network sharing agreement, commenced operating in the Israeli cellular market.

For additional details, see the Company's 2017 Annual Report under "Item 3. Key Information – D. Risk Factors – Risks Related to our Business – We face intense competition in all aspects of our business" and "Item 4. Information on the Company – B. Business Overview - Networks and Infrastructure - Cellular Segment- Network Sharing Agreements" and "- Competition – Cellular Segment".

Negotiations regarding Collective Employment Agreement and Voluntary Retirement Plan

The Company is in advanced stages of negotiations with its employees' representatives and the Histadrut (an Israeli union labor) regarding a new collective employment agreement, which the Company anticipates will be similar to the Company's previous collective employment agreement (which expired at the end of 2017) and will include certain nonmaterial additions.

In addition, in May 2018, the Group, in collaboration with the employees representatives, launched a new voluntary retirement plan for employees. As of the date of this report, the number of employees who will join the plan and the expense the Company will record with respect to this plan, are unknown.

For additional details including regarding the Company's previous collective employment agreement see the Company's 2017 Annual Report under "Item 3. Key Information – D. Risk Factors – Risks Related to our Business – The unionizing of our employees may prevent us from executing necessary organizational and personnel changes, result in increased costs or disruption to our operation" and "Item 6. Directors, senior management and employees – D. Employees."

Regulation

In May 2018, the Ministry of Communications amended the Group's licenses to regulate the manner of response of call centers, including measurable parameters for response times. The amendment shall come into force in March 2019. The Company is studying the amendment and at this stage cannot estimate the amendment's effect on its results of operations.

For additional details see the Company's 2017 Annual Report under "Item 3. Key Information – D. Risk Factors – Risks Related to our Business – We operate in a heavily regulated industry, which can harm our results of operations. Regulation in Israel has materially adversely affected our results" and under "Item 4. Information on The Company – B. Business Overview – Government Regulations – Cellular Segment - Our Cellular License."

Conference Call Details

The Company will be hosting a conference call regarding its results for the first quarter of 2018 on Wednesday, May 30, 2018 at 10:00 am ET, 07:00 am PT, 15:00 UK time, 17:00 Israel time. On the call, management will review and discuss the results, and will be available to answer questions. To participate, please either access the live webcast on the Company's website, or call one of the following teleconferencing numbers below. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number: 1 888 668 9141             

UK Dial-in Number: 0 800 917 5108

Israel Dial-in Number: 03 918 0644              

International Dial-in Number:  +972 3 918 0644

at: 10:00 am Eastern Time; 07:00 am Pacific Time; 15:00 UK Time; 17:00 Israel Time

 

To access the live webcast of the conference call, please access the investor relations section of Cellcom Israel's website: www.cellcom.co.il. After the call, a replay of the call will be available under the same investor relations section.

About Cellcom Israel

Cellcom Israel Ltd., established in 1994, is a leading Israeli communications group, providing a wide range of communications services. Cellcom Israel is the largest Israeli cellular provider, providing its approximately 2.822 million cellular subscribers (as at March 31, 2018) with a broad range of services including cellular telephony, roaming services for tourists in Israel and for its subscribers abroad, text and multimedia messaging, advanced cellular content and data services and other value-added services in the areas of music, video, mobile office etc., based on Cellcom Israel's technologically advanced infrastructure. The Company operates an LTE 4 generation network and an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Cellcom Israel further provides OTT TV services (as of December 2014), internet infrastructure (as of February 2015) and connectivity services and international calling services, as well as landline telephone services in Israel. Cellcom Israel's shares are traded both on the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please visit the Company's website http://investors.cellcom.co.il.

Forward-Looking Statements

The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about the Company, may include projections of the Company's future financial results, its anticipated growth strategies and anticipated trends in its business. These statements are only predictions based on the Company's current expectations and projections about future events. There are important factors that could cause the Company's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: changes to the terms of the Company's license, new legislation or decisions by the regulator affecting the Company's operations, new competition and changes in the competitive environment, the outcome of legal proceedings to which the Company is a party, particularly class action lawsuits, the Company's ability to maintain or obtain permits to construct and operate cell sites, and other risks and uncertainties detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission, including under the caption "Risk Factors" in its Annual Report for the year ended December 31, 2017. 

Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company assumes no duty to update any of these forward-looking statements after the date hereof to conform its prior statements to actual results or revised expectations, except as otherwise required by law.

The Company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). Unless noted specifically otherwise, the dollar denominated figures were converted to US$ using a convenience translation based on the New Israeli Shekel (NIS)/US$ exchange rate of NIS 3.514 = US$ 1 as published by the Bank of Israel for March 31, 2018.

 

Use of non-IFRS financial measures

EBITDA is a non-IFRS measure and is defined as income before financing income (expenses), net; other income (expenses), net (excluding expenses related to employee voluntary retirement plans and gain (loss) due to sale of subsidiaries); income tax; depreciation and amortization and share based payments. This is an accepted measure in the communications industry. The Company presents this measure as an additional performance measure as the Company believes that it enables us to compare operating performance between periods and companies, net of any potential differences which may result from differences in capital structure, taxes, age of fixed assets and related depreciation expenses. EBITDA should not be considered in isolation, or as a substitute for operating income, any other performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as measures of profitability or liquidity. EBITDA does not take into account debt service requirements, or other commitments, including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company's use. In addition, EBITDA as presented by the Company may not be comparable to similarly titled measures reported by other companies, due to differences in the way these measures are calculated. See the reconciliation of net income to EBITDA under "Reconciliation of Non-IFRS Measures" in the press release.

 

Free cash flow is a non-IFRS measure and is defined as the net cash provided by operating activities (including the effect of exchange rate fluctuations on cash and cash equivalents) excluding a loan to Golan Telecom, minus the net cash used in investing activities excluding short-term investment in tradable debentures and deposits and proceeds from sales of such debentures (including interest received in relation to such debentures) and deposits. See "Reconciliation of Non-IFRS Measures" below.

 

Company Contact

Shlomi Fruhling

Chief Financial Officer

investors@cellcom.co.il 

Tel: +972-52-998-9735

Investor Relations Contact

Ehud Helft

GK Investor & Public Relations

cellcom@GKIR.com  

Tel: +1-617-418-3096


 

 

Financial Tables Follow

 

Cellcom Israel Ltd.  

(An Israeli Corporation)

 

Condensed Consolidated Interim Statements of Financial Position (Unaudited)

















Convenience









translation









into US dollar





March 31,


March 31,


March 31,


December 31,



2017


2018


2018


2017



NIS millions


US$ millions


NIS millions










Assets









Cash and cash equivalents


589


593


169


527

Current investments, including derivatives


283


361


103


364

Trade receivables


1,293


1,276


363


1,280

Current tax assets


47


3


1


4

Other receivables


71


82


23


89

Inventory


67


69


19


70










Total current assets


2,350


2,384


678


2,334










Trade and other receivables


914


881


251


895

Property, plant and equipment, net


1,628


1,588


452


1,598

Intangible assets and others, net


1,230


1,271


362


1,260

Deferred tax assets


1


1


-


-










Total non- current assets


3,773


3,741


1,065


3,753










Total assets


6,123


6,125


1,743


6,087










Liabilities









Current maturities of debentures and of loans from financial institutions


709


565


161


618

Trade payables and accrued expenses


639


674


192


652

Current tax liabilities


1


-


-


4

Provisions


101


94


27


91

Other payables, including derivatives


243


255


72


277










Total current liabilities


1,693


1,588


452


1,642



















Long-term loans from financial institutions


340


462


132


462

Debentures


2,511


2,487


708


2,360

Provisions


30


21


6


21

Other long-term liabilities


33


18


5


15

Liability for employee rights upon retirement, net


12


15


4


15

Deferred tax liabilities


137


120


34


131










Total non- current liabilities


3,063


3,123


889


3,004










Total liabilities


4,756


4,711


1,341


4,646










Equity attributable to owners of the Company









Share capital


1


1


-


1

Cash flow hedge reserve


(1)


-


-


-

Retained earnings


1,348


1,409


401


1,436










Non-controlling interest


19


4


1


4










Total equity


1,367


1,414


402


1,441










Total liabilities and equity


6,123


6,125


1,743


6,087



















 

 

Cellcom Israel Ltd.

(An Israeli Corporation)


Condensed Consolidated Interim Statements of Income (Unaudited)

















Convenience










translation 










into US dollar






Three-month

 period ended

  March 31,


Three- month

period ended 

March 31,


Year ended

December 31,




2017


2018


2018


2017




NIS millions


US$ millions


NIS millions












Revenues


959


933


265


3,871


Cost of revenues


(665)


(665)


(189)


(2,680)












Gross profit


294


268


76


1,191












Selling and marketing expenses


(114)


(132)


(37)


(479)


General and administrative expenses


(113)


(91)


(26)


(426)


Other income, net


-


-


-


11












Operating profit


67


45


13


297












Financing income


16


11


3


52


Financing expenses


(47)


(44)


(13)


(196)


Financing expenses, net


(31)


(33)


(10)


(144)












Profit before taxes on income


36


12


3


153












Taxes on income


(10)


(5)


(1)


(40)


Profit for the period


26


7


2


113


Attributable to:










Owners of the Company


25


7


2


112


Non-controlling interests


1


-


-


1


Profit for the period


26


7


2


113












Earnings per share










Basic earnings per share (in NIS)


0.25


0.08


0.02


1.11












Diluted earnings per share (in NIS)


0.25


0.08


0.02


1.10












Weighted-average number of shares used in the calculation of
 basic earnings per share (in shares)


100,604,795


101,044,557


101,044,557


100,654,935












Weighted-average number of shares used in the calculation of
 diluted earnings per share (in shares)


101,390,301


101,141,836


101,141,836


100,889,661












 


Cellcom Israel Ltd.

(An Israeli Corporation)


Condensed Consolidated Interim Statements of Cash Flows (Unaudited)

























Convenience









translation









into US dollar





Three-month

 period ended

March 31,


Three- month

 period ended 

 March 31,


Year ended

December 31,







2017


2018


2018


2017



NIS millions


US$ millions


NIS millions










Cash flows from operating activities









Profit for the period


26


7


2


113

Adjustments for: 









Depreciation and amortization


133


133


38


555

Share based payments


1


2


-


2

Gain on sale of property, plant and equipment


-


-


-


(1)

Gain on sale of shares in a consolidated
company


-


-


-


(10)

Income tax expense


10


5


1


40

Financing expenses, net


31


33


10


144










Changes in operating assets and liabilities:









Change in inventory


(3)


1


-


(6)

Change in trade receivables (including long-term amounts)


60


15


5


132

Change in other receivables (including long-term amounts)


(152)


9


3


(191)

Change in trade payables, accrued expenses and provisions


(11)


31


8


(27)

Change in other liabilities (including long-term amounts)


(6)


5


1


28

Payments for derivative hedging contracts, net


-


(2)


-


(3)

Income tax paid


(12)


(9)


(3)


(44)

Income tax received


-


-


-


42

Net cash from operating activities


77


230


65


774










Cash flows from investing activities









Acquisition of property, plant, and equipment


(93)


(99)


(28)


(346)

Additions to intangible assets and others


(47)


(47)


(13)


(237)

Change in current investments, net


1


(1)


-


(77)

Payments for other derivative contracts, net


(1)


-


-


-

Proceeds from sale of property, plant and equipment


-


-


-


1

Interest received 


4


4


1


12

Proceeds from sale of shares in a consolidated
company, net of cash disposed


-


-


-


3

Net cash used in investing activities


(136)


(143)


(40)


(644)



















 

Cellcom Israel Ltd.

(An Israeli Corporation)


Condensed Consolidated Interim Statements of Cash Flows (Unaudited) (cont`d)

















Convenience









translation









into US dollar





Three-month

 period ended

March 31,


Three- month 

period ended 

 March 31,


Year ended

December 31,







2017


2018


2018


2017



NIS millions


US$ millions


NIS millions










Cash flows from financing activities









Payments for derivative contracts, net


-


-


-


(3)

Receipt of long-term loans from financial institutions


-


-


-


200

Repayment of debentures


(514)


(362)


(103)


(864)

Proceeds from issuance of debentures, net of issuance costs


-


396


113


-

Dividend paid


-


-


-


(1)

Interest paid


(78)


(55)


(16)


(175)










Net cash used in financing activities


(592)


(21)


(6)


(843)










Changes in cash and cash equivalents


(651)


66


19


(713)










Cash and cash equivalents as at the beginning of the period


1,240


527


150


1,240










Cash and cash equivalents as at the end of the period


589


593


169


527

 

 

Cellcom Israel Ltd.

 (An Israeli Corporation)


Reconciliation for Non-IFRS Measures











EBITDA









The following is a reconciliation of net income to EBITDA:












Three-month period ended

Year ended

March 31,

December 31,


2017

2018

Convenience

2017

translation

into US dollar

2018


NIS millions

US$ millions

NIS millions

Profit for the period 

26

7

2

113

Taxes on income 

10

5

1

40

Financing income 

(16)

(11)

(3)

(52)

Financing expenses 

47

44

13

196

Other income 

-

-

-

(1)

Depreciation and amortization 

133

133

38

555

Share based payments 

1

2

-

2

EBITDA 

201

180

51

853






 

 

Free cash flow













The following table shows the calculation of free cash flow:









Three-month period ended

Year ended



March 31,

December 31,




2017

2018

Convenience

2017



translation



into US dollar



2018




NIS millions

US$ millions

NIS millions



Cash flows from operating activities(*) 

77

230

65

774



Loan to Golan Telecom 

130

-

-

130



Cash flows from investing activities 

(136)

(143)

(40)

(644)



Sale of short-term tradable debentures and deposits (**) 

(5)

(3)

(1)

65



Free cash flow 

66

84

24

325

















(*)  Including the effects of exchange rate fluctuations in cash and cash equivalents.

(**) Net of interest received in relation to tradable debentures.

 

 

Cellcom Israel Ltd.

 (An Israeli Corporation)








Key financial and operating indicators










NIS millions unless otherwise stated

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

FY-2017








Cellular service revenues

509

481

488

451

437

1,929

Fixed-line service revenues

279

292

292

303

304

1,166








Cellular equipment revenues

183

192

191

204

193

770

Fixed-line equipment revenues

37

39

47

59

39

182








Consolidation adjustments

(49)

(42)

(43)

(42)

(40)

(176)

Total revenues

959

962

975

975

933

3,871








Cellular EBITDA

159

158

160

118

112

595

Fixed-line EBITDA

42

79

66

71

68

258

Total EBITDA

201

237

226

189

180

853








Operating profit

67

102

83

45

45

297

Financing expenses, net

31

44

39

30

33

144

Profit for the period

26

45

32

10

7

113








Free cash flow

66

77

105

77

84

325








Cellular subscribers at the end of period (in 000's) 

2,792

2,779

2,805

2,817

2,822

2,817

Monthly cellular ARPU (in NIS) 

60.2

57.0

57.8

53.6

51.8

57.1

Churn rate for cellular subscribers (%) 

12.0%

10.8%

11.5%

11.5%

9.5%

45.8%








 

 

Cellcom Israel Ltd.

















Disclosure for debenture holders as of March 31, 2018

























Aggregation of the information regarding the debenture series issued by the Company (1), in million NIS




















Series

Original Issuance Date

Principal on the Date of Issuance

As of 31.03.2018

As of 29.05.2018

Interest Rate (fixed)

Principal Repayment Dates

Interest Repayment Dates(3)

Linkage 

Trustee
Contact Details

Principal Balance on Trade

Linked Principal Balance

Interest Accumulated in Books

Debenture Balance   Value in Books (2)

Market Value

Principal Balance on Trade

Linked Principal Balance

From

To

F(4)(5)(6)**

20/03/12

714.802

428.881

438.142

4.688

442.830

467.995

428.881

441.150

4.60%

05.01.17

05.01.20

January-5 and July-5

Linked to CPI

Strauss Lazar Trust Company (1992)
Ltd. Ori Lazar. 17 Yizhak Sadeh St.,
Tel Aviv. Tel: 03- 6237777.

G (4)(5)(6)

20/03/12

285.198

85.559

85.593

1.393

86.986

90.984

85.559

85.588

6.99%

05.01.17

05.01.19

January-5 and July-5

Not linked

Strauss Lazar Trust Company (1992)
Ltd. Ori Lazar. 17 Yizhak Sadeh St.,
Tel Aviv. Tel: 03- 6237777.

H(4)(5)(7)**

08/07/14
03/02/15*
11/02/15*

949.624

949.624

874.140

4.379

878.519

988.463

949.624

877.565

1.98%

05.07.18

05.07.24

January-5 and July-5

Linked to CPI

Mishmeret Trust Company Ltd. Rami
Sebty. 48 Menachem Begin Rd. Tel
Aviv. Tel: 03-6374355.

I (4)(5)(7)**

08/07/14
03/02/15*
11/02/15*
30/03/16*

804.010

804.010

776.532

7.752

784.284

882.803

804.010

777.590

4.14%

05.07.18

05.07.25

January-5 and July-5

Not linked

Mishmeret Trust Company Ltd. Rami
Sebty. 48 Menachem Begin Rd. Tel
Aviv. Tel: 03-6374355.

J (4)(5)

26/09/16

103.267

103.267

102.391

0.589

102.980

111.332

103.267

102.820

2.45%

05.07.21

05.07.26

January-5 and July-5

Linked to CPI

Mishmeret Trust Company Ltd. Rami
Sebty. 48 Menachem Begin Rd. Tel
Aviv. Tel: 03-6374355.

K (4)(5)(8)**

26/09/16

303.971

303.971

301.318

2.513

303.831

327.498

303.971

301.389

3.55%

05.07.21

05.07.26

January-5 and July-5

Not linked

Mishmeret Trust Company Ltd. Rami
Sebty. 48 Menachem Begin Rd. Tel
Aviv. Tel: 03-6374355.

L**

23/01/18

400.600

400.600

396.487

1.811

398.298

398.397

400.600

396.555

2.50%

05.01.23

05.01.28

January-5

Not linked

Strauss Lazar Trust Company (1992)
Ltd. Ori Lazar. 17 Yizhak Sadeh St.,
Tel Aviv. Tel: 03- 6237777.

Total


3,561.472

3,075.912

2,974.603

23.125

2,997.728

3,267.472

3,075.912

2,982.657







 


 

Comments:

(1)

For a summary of the terms of the Company's outstanding debentures see the Company's 2017 Annual Report under "Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources - Debt Service - Public Debentures". In the reporting period, the Company fulfilled all terms of the debentures and Indentures. Debentures financial covenants - as of March 31, 2018 the net leverage (net debt to EBITDA excluding one time events ratio- see definition in the reference above to the Company's 2017 Annual Report) was 3.10. In the reporting period, no cause for early repayment occurred. (2) Including interest accumulated in the books. (3) Semi annual payments. (4) Regarding the debentures, the Company undertook not to create any pledge on its assets, as long as debentures or loans are not fully repaid, subject to certain exclusions. (5) Regarding the debentures - the Company has the right for early redemption under certain terms. (6) Regarding debenture Series F and G - in June 2013, following a second decrease of the Company's debenture rating since their issuance, the annual interest rate has been increased by 0.25% to 4.60% and 6.99%, respectively, beginning July 5, 2013. (7) In February 2015, pursuant to an exchange offer of the Company's Series H and I debentures for a portion of the Company's outstanding Series D and E debentures, respectively, the Company exchanged approximately NIS 555 million principal amount of Series D debentures with approximately NIS 844 million principal amount of Series H debentures, and approximately NIS 272 million principal amount of Series E debentures with approximately NIS 335 million principal amount of Series I debentures. Series D and E debentures were fully repaid in July 2017 and in January 2017, respectively. (8) In June 2017, the Company undertook to issue NIS 220 million principle amount of additional series K debentures in July 1, 2018, under certain terms. See the Company's 2017 Annual Report, under "Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources - Debt Service - Public Debentures".



(*)

On these dates additional debentures of the series were issued, the information in the table refers to the full series.

(**)

As of March 31, 2018, debentures Series F,H, I, K and L are material, which represent 5% or more of the total liabilities of the Company, as presented in the financial statements.

 

 

Cellcom Israel Ltd.









Disclosure for debenture holders as of March 31, 2018 (cont'd)










Debentures Rating Details*  








Series

Rating Company

Rating as of 31.03.18 (1)

Rating as of 29.05.2018

Rating assigned upon issuance of the Series

Recent date of rating as of 29.05.2018

Additional ratings between original issuance and the recent date of rating as of 29.05.2018(2)


Rating

F

S&P Maalot

A+

A+

AA

01/2018

05/2012, 11/2012, 06/2013, 06/2014, 08/2014, 01/2015, 09/2015, 03/2016, 08/2016, 06/2017, 01/2018

AA,AA-,A+ (2)

G

S&P Maalot

A+

A+

AA

01/2018

05/2012, 11/2012, 06/2013, 06/2014, 08/2014, 01/2015, 09/2015, 03/2016, 08/2016, 06/2017, 01/2018

AA,AA-,A+ (2)

H

S&P Maalot

A+

A+

A+

01/2018

06/2014, 08/2014, 01/2015, 09/2015, 03/2016, 08/2016, 06/2017, 01/2018

A+ (2)

I

S&P Maalot

A+

A+

A+

01/2018

06/2014, 08/2014, 01/2015, 09/2015, 03/2016, 08/2016, 06/2017, 01/2018

A+ (2)

J

S&P Maalot

A+

A+

A+

01/2018

08/2016, 06/2017, 01/2018

A+ (2)

K

S&P Maalot

A+

A+

A+

01/2018

08/2016, 06/2017, 01/2018

A+ (2)

L

S&P Maalot

A+

A+

A+

01/2018

01/2018

A+ (2)


(1) In January 2018, S&P Maalot affirmed the Company's rating of "ilA+/stable".

(2) In May 2012, S&P Maalot updated the Company's rating from an "ilAA/negative" to an "ilAA-/negative". In November 2012, S&P Maalot affirmed the Company's rating of "ilAA-/negative". In June 2013, S&P Maalot updated the Company's rating from an "ilAA-/negative" to an "ilA+/stable". In June 2014, August 2014, January 2015, September 2015, March 2016, August 2016, June 2017 and January 2018, S&P Maalot affirmed the Company's rating of "ilA+/stable". For details regarding the rating of the debentures see the S&P Maalot report dated August 22, 2017, included in the Company's Shelf offering Report filled in the Israeli Securities Authority website ('MAGNA") on January 22, 2018.

 

* A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to suspension, revision or withdrawal at any time, and each rating should be evaluated independently of any other rating.

Cellcom Israel Ltd.


Aggregation of the information regarding the Company's Material Loans (1), in million NIS



Loan

Provision Date

Principal Amount as of 31.03.2018

Interest Rate (nominal)

Principal Repayment Dates (annual payments)

Interest Repayment Dates
(semi-annual payments)

Linkage

From

To



Loan from financial
institution

06/2016

200

4.60%

30.06.18

30.06.21

June-30 and December-31,
commencing
December 31,
2016 through
June 30, 2021

Not linked

Loan from bank

12/2016

140

4.90%

30.06.18

30.06.22

June-30 and
December 30,
commencing
June 30, 2017
through June
30, 2022

Not linked

Loan from financial institution

06/2017

200

5.10%

30.06.19

30.06.22

June-30

and
December-31,
commencing
December 31,
2017 through
June 30, 2022

Not linked

Total


540






 

Comments: 

(1)

For a summary of the terms of the Company's loan agreements see the Company's 2017 Annual Report under "Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources - Other Credit Facilities" and the reference therein to "- Debt Service - Public Debentures". (2) In the reporting period, the Company fulfilled all terms of the loan agreements. (3) Loan agreements financial covenants - as of March 31, 2018 the net leverage (net debt to EBITDA excluding one-time events ratio- see definition in the reference above to the Company's 2017 Annual Report) was 3.10. (4) In the reporting period, no cause for early repayment occurred. (5) In the loan agreements, the Company undertook not to create any pledge on its assets, as long as the loans are not fully repaid, subject to certain exclusions. (6) According to the loan agreements the Company may prepay the loans, subject to a prepayment fee. (7) In June 2017, the Company entered into an additional loan agreement with the lender of the Company's existing bank loan for the provision of a deferred loan in a principal amount of NIS 150 million in March 2019. See more information in the reference above to the Company's 2017 Annual Report.

 

Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of March 31, 2018 

a. Debentures issued to the public by the Company and held by the public, excluding such debentures held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data (in thousand NIS).


Principal payments

Gross interest payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

331,819

165,418

-

-

-

97,804

Second year

331,819

80,302

-

-

-

76,751

Third year

113,097

80,302

-

-

-

61,126

Fourth year

166,034

157,334

-

-

-

53,540

Fifth year and on

538,733

1,104,645

-

-

-

117,555

Total

1,481,502

1,588,001

-

-

-

406,776

  

b. Private debentures and other non-bank credit, excluding such debentures held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data (in thousand NIS).


Principal payments

Gross interest payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

-

50,000

-

-

-

18,241

Second year

-

100,000

-

-

-

14,655

Third year

-

100,000

-

-

-

9,812

Fourth year

-

100,000

-

-

-

4,955

Fifth year and on

-

50,000

-

-

-

1,264

Total

-

400,000

-

-

-

48,927

  

c. Credit from banks in Israel based on the Company's "Solo" financial data (in thousand NIS).


Principal payments

Gross interest payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

-

28,000

-

-

-

6,154

Second year

-

28,000

-

-

-

4,800

Third year

-

28,000

-

-

-

3,430

Fourth year

-

28,000

-

-

-

2,056

Fifth year and on

-

28,000

-

-

-

684

Total

-

140,000

-

-

-

17,124

 

d. Credit from banks abroad based on the Company's "Solo" financial data (in thousand NIS) - None.

Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of March 31, 2018 (cont`d)

e. Total of sections a - d above, total credit from banks, non-bank credit and debentures based on the Company's "Solo" financial data (in thousand NIS).


Principal payments

Gross interest payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

331,819

243,418

-

-

-

122,198

Second year

331,819

208,302

-

-

-

96,206

Third year

113,097

208,302

-

-

-

74,367

Fourth year

166,034

285,334

-

-

-

60,551

Fifth year and on

538,733

1,182,645

-

-

-

119,504

Total

1,481,502

2,128,001

-

-

-

472,826

 

f. Out of the balance sheet Credit exposure based on the Company's "Solo" financial data -  None.

g. Out of the balance sheet Credit exposure of all the Company's consolidated companies, excluding companies that are reporting corporations and excluding the Company's data presented in section f above (in thousand NIS) - None.

h. Total balances of the credit from banks, non-bank credit and debentures of all the consolidated companies, excluding companies that are reporting corporations and excluding Company's data presented in sections a - d above (in thousand NIS) - None.

I. Total balances of credit granted to the Company by the parent company or a controlling shareholder and balances of debentures offered by the Company held by the parent company or the controlling shareholder (in thousand NIS) - None.

j. Total balances of credit granted to the Company by companies held by the parent company or the controlling shareholder, which are not controlled by the Company, and balances of debentures offered by the Company held by companies held by the parent company or the controlling shareholder, which are not controlled by the Company (in thousand NIS).


Principal payments

Gross interest payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

955

543

-

-

-

419

Second year

955

99

-

-

-

362

Third year

858

99

-

-

-

337

Fourth year

1,397

823

-

-

-

297

Fifth year and on

4,863

4,576

-

-

-

623

Total

9,028

6,140

-

-

-

2,038

 

k. Total balances of credit granted to the Company by consolidated companies and balances of debentures offered by the Company held by the consolidated companies (in thousand NIS) - None.

 

Cision View original content:http://www.prnewswire.com/news-releases/cellcom-israel-announces-first-quarter-2018-results-300656261.html

SOURCE Cellcom Israel Ltd.


[ Back To TMCnet.com's Homepage ]









Technology Marketing Corporation

35 Nutmeg Drive Suite 340, Trumbull, Connecticut 06611 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2018 Technology Marketing Corporation. All rights reserved | Privacy Policy