PARTNER
COMMUNICATIONS REPORTS
2009
ANNUAL AND Q4 RESULTS
QUARTERLY EBITDA
OF NIS
608
MILLION, AN INCREASE OF
9.2%
144,000
NET SUBSCRIBER ADDITIONS IN 2009
Q4
2009 Highlights (compared with Q4 2008)
|
·
|
Total
Revenues
: NIS 1.6
billion (US$ 418
million), an increase of
1.6%
|
|
·
|
Service
Revenues
: NIS 1.4
billion (US$ 365 million), a decrease of
0.8%
|
|
·
|
Operating
Profit
: NIS 432
million (US$ 114 million), a decrease of
0.2%
|
|
·
|
Net
Income:
NIS 294
million (US$ 78 million), an increase of
1.4%
|
|
·
|
EBITD
A
1
:
NIS 608 million
(US$ 161 million), an increase of
9.2%
|
|
·
|
EBITDA
Margi
n
2
:
38.5% of total
revenues, up from 35.9%
|
|
·
|
Free Cash
Flo
w
3
:
NIS 261 million
(US$ 69 million), a decrease of
16.6%
|
|
·
|
Subscriber
Base:
34,000 net
additions
|
2009
Annual Highlights (compared with 2008)
|
·
|
Total
Revenues
: NIS 6.1
billion (US$ 1.6 billion), a decrease of
3.5%
|
|
·
|
Service
Revenues:
NIS 5.4
billion (US$ 1.4 billion), a decrease of
2.2%
|
|
·
|
Operating
Profit
: NIS 1.7
billion (US$ 451 million), a decrease of
6.8%
|
|
·
|
Net
Income:
NIS 1.1
billion (US$ 302 million), a decrease of
4.8%
|
|
·
|
EBITDA:
NIS 2.3 billion
(US$ 610 million), an increase of
0.3%
|
|
·
|
EBITDA
Margi
n
4
: 37.9
%
of total
revenues, up from 36.5%
|
|
·
|
Free Cash
Flo
w
5
NIS 1.0 billion (US$ 270
million), a decrease of 27.3%
Subscriber
Base:
144,000 net
additions in 2009, subscriber base of 3.0 million, including 1,279,000 3G
subscribers
|
1
See “Use of Non-GAAP Financial
Measures” below.
2
Equivalent to 44.2% of service
revenues in Q4 2009, compared with 40.1% in Q4 2008.
3
Cash flows generated from operating
activities, net of cash flows from investing
activities.
4
Equivalent to 42.5% of service
revenues in 2009, compared with 41.4% in 2008.
5
Cash flows generated from operating
activities, net of cash flows from investing activities.
Key Financial Results:
6
|
|
US
GAAP
|
|
|
IFRS
|
|
NIS
MILLION
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
Revenues
|
|
|
5,123
|
|
|
|
5,607
|
|
|
|
6,114
|
|
|
|
6,302
|
|
|
|
6,302
|
|
|
|
6,079
|
|
Cost
of revenues
|
|
|
3,766
|
|
|
|
3,900
|
|
|
|
4,092
|
|
|
|
4,052
|
|
|
|
3,868
|
|
|
|
3,770
|
|
Gross
profit
|
|
|
1,357
|
|
|
|
1,706
|
|
|
|
2,022
|
|
|
|
2,250
|
|
|
|
2,434
|
|
|
|
2,309
|
|
SG&A
|
|
|
454
|
|
|
|
493
|
|
|
|
623
|
|
|
|
645
|
|
|
|
672
|
|
|
|
677
|
|
Other
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64
|
|
|
|
69
|
|
Operating
profit
|
|
|
903
|
|
|
|
1,214
|
|
|
|
1,399
|
|
|
|
1,605
|
|
|
|
1,826
|
|
|
|
1,701
|
|
Financial
costs, net
|
|
|
345
|
|
|
|
162
|
|
|
|
121
|
|
|
|
158
|
|
|
|
184
|
|
|
|
176
|
|
Income
tax expenses
|
|
|
203
|
|
|
|
371
|
|
|
|
338
|
|
|
|
396
|
|
|
|
444
|
|
|
|
384
|
|
Cumulative
effect of a change in accounting principles
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Profit
for the period
|
|
|
355
|
|
|
|
682
|
|
|
|
940
|
|
|
|
1,051
|
|
|
|
1,198
|
|
|
|
1,141
|
|
Earnings
per share (basic, NIS)
|
|
|
2.19
|
|
|
|
4.44
|
|
|
|
6.01
|
|
|
|
6.77
|
|
|
|
7.71
|
|
|
|
7.42
|
|
Cash
flow from operating activities net of investing activities
|
|
|
460
|
|
|
|
775
|
|
|
|
916
|
|
|
|
1,308
|
|
|
|
1,401
|
|
|
|
1,021
|
|
|
|
IFRS
|
|
NIS
MILLION
|
|
|
Q4
2008
|
|
|
|
Q1
2009
|
|
|
|
Q2
2009
|
|
|
|
Q3
2009
|
|
|
|
Q4
2009
|
|
Revenues
|
|
|
1,553
|
|
|
|
1,412
|
|
|
|
1,514
|
|
|
|
1,575
|
|
|
|
1,578
|
|
Cost
of revenues
|
|
|
960
|
|
|
|
846
|
|
|
|
924
|
|
|
|
1,003
|
|
|
|
997
|
|
Gross
profit
|
|
|
593
|
|
|
|
566
|
|
|
|
590
|
|
|
|
572
|
|
|
|
581
|
|
SG&A
|
|
|
173
|
|
|
|
156
|
|
|
|
171
|
|
|
|
187
|
|
|
|
163
|
|
Other
income
|
|
|
13
|
|
|
|
24
|
|
|
|
15
|
|
|
|
16
|
|
|
|
14
|
|
Operating
profit
|
|
|
433
|
|
|
|
434
|
|
|
|
434
|
|
|
|
401
|
|
|
|
432
|
|
Financial
costs, net
|
|
|
37
|
|
|
|
26
|
|
|
|
48
|
|
|
|
61
|
|
|
|
41
|
|
Income
tax expenses
|
|
|
106
|
|
|
|
112
|
|
|
|
98
|
|
|
|
77
|
|
|
|
97
|
|
Profit
for the period
|
|
|
290
|
|
|
|
296
|
|
|
|
288
|
|
|
|
263
|
|
|
|
294
|
|
Earnings
per share (basic, NIS)
|
|
|
1.89
|
|
|
|
1.93
|
|
|
|
1.87
|
|
|
|
1.71
|
|
|
|
1.90
|
|
Cash
flow from operating activities net of investing activities
|
|
|
313
|
|
|
|
226
|
|
|
|
233
|
|
|
|
301
|
|
|
|
261
|
|
Key Operating
Indicators
7
:
|
|
US
GAAP
|
|
|
IFRS
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
EBITDA
8
(NIS millions)
|
|
|
1,569
|
|
|
|
1,846
|
|
|
|
2,009
|
|
|
|
2,257
|
|
|
|
2,298
|
|
|
|
2,304
|
|
EBITDA
as a percentage of total revenues
|
|
|
30.6
|
%
|
|
|
32.9
|
%
|
|
|
32.9
|
%
|
|
|
35.7
|
%
|
|
|
36.5
|
%
|
|
|
37.9
|
%
|
Subscribers
(thousands)
|
|
|
2,529
|
|
|
|
2,668
|
|
|
|
2,860
|
|
|
|
2,898
|
|
|
|
2,898
|
|
|
|
3,042
|
|
Estimated
Market Share (%)
|
|
|
32
|
%
|
|
|
32
|
%
|
|
|
32
|
%
|
|
|
32
|
%
|
|
|
32
|
%
|
|
|
32
|
%
|
Annual
Churn Rate (%)
|
|
|
13.6
|
%
|
|
|
15.6
|
%
|
|
|
15.0
|
%
|
|
|
17.8
|
%
|
|
|
17.8
|
%
|
|
|
17.7
|
%
|
Average
Monthly Usage per Subscriber (minutes)
|
|
|
294
|
|
|
|
311
|
|
|
|
336
|
|
|
|
365
|
|
|
|
365
|
|
|
|
364
|
|
Average
Monthly Revenue per Subscriber
9
(NIS)
|
|
|
156
|
|
|
|
158
|
|
|
|
158
|
|
|
|
161
|
|
|
|
161
|
|
|
|
151
|
|
6
On January 1, 2009, the Company
adopted the International Financial Reporting Standards ("IFRS"), replacing the
previous reporting standard of US GAAP
.
Comparative data for
2008 have been restated to retrospectively reflect the application of IFRS as
from January 1, 2008. See further explanations in the Q1 2009 press
release of May 21, 2009. US GAAP data should not be compared with
IFRS data.
7
Apart from EBITDA, the key operating
indicators relate to the Company's cellular services alone.
8
See “Use of Non-GAAP Financial
Measures” below.
9
From 2008 the calculation of ARPU
has been modified to include revenues from sales of extended handset warranties,
in line with the industry standard. This has had the effect of increasing ARPU
for 2008 and 2009 by approximately NIS 2.
Rosh Ha’ayin, Israel, February 09,
2010
– Partner Communications Company Ltd. (“Partner” or "the Company")
(NASDAQ and TASE: PTNR), a leading Israeli mobile communications operator, today
announced its results for the year and quarter ended December 31,
2009.
Commenting
on the 2009 annual results, Partner’s CEO, Mr. David Avner, said:
"I am
satisfied with Partner's financial and operational results for the fourth
quarter and year 2009. I am also encouraged by the early signs for improvement
in the business environment. Our results demonstrate the ability to
simultaneously deliver strong financial results together with investment in our
platform for future growth.
"Partner's
strategic decision to continue and invest in its customer service and its newly
owned distribution channels , despite the demanding regulatory and business
environment, was fruitful and was reflected in net adds of 144 thousands new
cellular subscribers.
"Once
again, this year, orange™ was named by surveys conducted by the major newspapers
in Israel, as the leading telecommunications brand in Israel, the mobile
operator with the best customer service and the most innovative company in the
Israeli telecom market. The trust of our customers and our ability to continue
to attract new high quality customers are two of our key assets.
"Our
decision to expand our product and service portfolio into the fixed line
business is supported by the recent events in the dynamic Israeli telecom
market. In 2010, following the execution of our fixed services ramp-up period,
we will start implementing the second phase and enlist our existing sales
channels to the new fixed services sale efforts. On the product side we intend
to enrich our fixed line portfolio and to offer new broad, cost effective
products and features which address new marketing segments. Partner is
determined to create a new standard in customer services and innovative
products, which will further strengthen its position in the communications
market. "
Mr. Avner
concluded "Partner has always striven to follow the "golden path" of maximizing
the interests of our customers, shareholders and employees. Our success in
combining the best customer service, a wide variety of products and attractive
dividend yield, together with our commitment to employees' welfare, is our major
achievement. 2009 was a landmark year for Partner; in this year we established
the foundation for our future growth engines, strengthened our retail
distribution channels and also supported the successful change in ownership. I
am certain that in the coming years we will harvest the fruits of our investment
for the benefits of our shareholders, customers and employees."
Segmental
Reporting
In
accordance with the decision of the Management of the Company, full year
financial statements for 2009 are to include a note that presents selected
financial data on the basis of two operating segments: the fixed line business
and the cellular business. This is expected to facilitate management’s ability
to allocate resources and assess the performance of each operating segment
separately.
The
following review provides a description of the business at the consolidated
level. A section detailing the results of the fixed line business
separately is provided below.
Financial
Review
Partner
achieved
total net
revenues
of NIS 6,079 million (US$ 1,610 million) in 2009, a decrease of
3.5% from NIS 6,302 million in 2008. For Q4 2009 net revenues were NIS 1,578
million (US$ 418 million), an increase of 1.6% from NIS 1,553 million in Q4
2008.
Annual
service revenues
totaled
NIS 5,424 million (US$ 1,437 million) in 2009, decreasing by 2.2% from NIS 5,546
million in 2008. For Q4 2009, service revenues decreased marginally by 0.8% from
NIS 1,388 million in Q4 2008 to NIS 1,377 million (US$ 365 million).
Both the annual and quarterly decreases were due to lower outgoing voice
revenues reflecting both the competitive market conditions and the reduction in
the billing interval at the beginning of 2009 as mandated by the Ministry of
Communications, as well as the impact of lower roaming activity.
These
decreases were partially mitigated by continued increases in fixed line business
revenues, cellular content and data revenues and by the annual increase in total
network minutes of approximately 3.4%, resulting from the expanding subscriber
base, which grew by approximately 3.5% on an average basis in 2009. In the
comparison of Q4 2009 with Q4 2008, the decrease in service revenues was
partially mitigated by the impact of the shifting of part of the Jewish holiday
season from the fourth quarter in 2008 to the third quarter in
2009.
Data and content revenues
excluding
SMS
10
increased
by 6.8% in 2009 to NIS 536 million (US$ 142 million), compared with NIS 501
million in 2008. This represents 9.9% of service revenues in 2009 compared with
9.0 % of service revenues in 2008. For Q4 2009, data and content
revenues excluding SMS reached NIS 145 million (US$ 38 million), accounting for
10.5% of service revenues, compared with NIS 142 million or 10.2% of service
revenues in Q4 2008.
Revenues from SMS services
in
2009 totaled NIS 377 million (US$ 100 million), accounting for 7.0% of service
revenues, up by 16.0% from NIS 325 million, or 5.9% of service revenues, in
2008. For Q4 2009, revenues from SMS services were NIS 108 million (US$ 29
million), accounting for 7.8% of service revenues, an increase of 27.1% compared
with NIS 85 million or 6.1% of service revenues in Q4 2008.
The
annual
gross
profit from services
was NIS
2,218 million (US$ 588 million) in 2009, a decrease of 12.0% from NIS 2,521
million in 2008. The gross profit from service revenues in Q4 2009 was NIS 544
million (US$ 144 million), compared with NIS 608 million in Q4 2008, a 10.5%
decrease. The annual decrease reflected the lower service revenues,
as well as an increase of 6.0% in the
cost of service revenues
from
NIS 3,025 million in 2008 to NIS 3,206 million (US$ 849 million) in
2009. The increase in the cost of service revenues primarily
reflected additional expenses associated with the new fixed line services, and
additional amortization expenses in an amount of approximately NIS 88 million of
the handsets subsidies that were capitalized starting in 2009. These
expenses were partially offset by various cost control activities, lower roaming
expenses, the impact of the reduction in the rate of royalty payments and the
impact of the reduction in the interconnect tariff billing
interval.
Similarly,
for Q4 2009, the 6.8% increase in cost of service revenues compared with Q4 2008
is mainly explained by additional expenses associated with the new fixed line
services, and additional amortization expenses in an amount of approximately NIS
36 million of the handsets subsidies that were capitalized starting in
2009.
10
Both data and content revenues and
SMS message services revenues include revenues allocated from service packages
that offer voice, content and SMS services in a bundle for a fixed
fee.
Non-capitalized
equipment revenues
in 2009
were NIS 655 million (US$ 173 million), decreasing by 13.4% from NIS 756 million
in 2008. The decrease in revenues principally reflected the impact of
handset capitalization of those sales where the conditions for capitalization
under IFRS were met
11
. Equipment
revenues were approximately NIS 241 million lower due to the capitalization of
handsets in 2009, of which approximately NIS 54 million relates to handset sales
in Q4 2009.
The
gross profit from non-capitalized
equipment
sales
was NIS 91 million (US$ 24 million) in 2009, compared with a gross
loss
on equipment
sales of NIS 87 million in 2008. This change primarily reflected the
net impact of the capitalization of handset subsidies (handset revenues less
handset costs) under IFRS in 2009 in an amount of approximately NIS 169 million,
in addition to a decrease in the average subsidy per transaction. For
Q4 2009, gross profit from non-capitalized equipment sales was NIS 37 million
(US$ 10 million), compared with a gross loss on equipment sales of NIS 15
million in Q4 2008. This also reflects the capitalization of handset subsidies,
in the amount of NIS 36 million for the quarter, as well as a reduction in the
average subsidy per transaction.
Gross profit
overall in 2009
totaled NIS 2,309 million (US$ 612 million), representing a 5.1% decrease from
NIS 2,434 million in 2008. For Q4 2009, gross profit decreased by
2.0% from NIS 593 million in Q4 2008 to NIS 581 million.
Selling, marketing, general and
administrative expenses
amounted to NIS 677 million (US$ 180 million) in
2009, the equivalent of a slight increase of 0.7% from NIS 672 million in 2008.
The increase mainly reflected the additional marketing, selling and
administration expenses related to the ISP and fixed telephony initiatives,
offset by the net impact of the capitalization of sales costs and commissions
under IFRS which reduced expenses by approximately NIS 29 million in 2009, of
which NIS 10 million was recorded in Q4 2009. In addition, the
Company undertook a number of cost control measures over the year to reduce
sales and marketing expenses. The expense
for doubtful accounts
from receivables on handset sales and service revenues recorded in the quarter
also decreased for the quarter and for the year 2009.
11
Whilst the
financial statements have been prepared on the basis of the application of IFRS
as from January 1 2008, the capitalization of subscriber acquisition and
retention costs (including relevant handset revenues) only began on January 1
2009, the first period in which the conditions for capitalization as described
in the relevant accounting policy were fulfilled.
Overall,
the Company recorded an
operating profit
of NIS 1,701
million (US$ 451 million) in 2009, a 6.8% decrease from NIS 1,826 million in
2008. Operating profit in Q4 2009 was NIS 432 million (US$ 114 million),
approximately unchanged from NIS 433 million in Q4 2008.
EBITDA
for 2009 increased by
0.3%, reaching NIS 2,304 million (US$ 610 million), or 42.5% of service revenues
and 37.9% of total revenues, compared with NIS 2,298 million in 2008 (41.4% of
service revenues and 36.5% of total revenues). Excluding the impact of
capitalization of handset sales in 2009, EBITDA would have been NIS 2,106
million in 2009, a decrease of 8.4% or NIS 192 million compared with 2008. The
decrease is mainly attributable to the loss of approximately NIS 119 million in
2009 related to the ISP and fixed telephony initiatives, compared with a loss
from ISP and fixed telephony expenses of approximately NIS 26 million in 2008 as
well as the impact of the economic downturn.
EBITDA
for Q4 2009 increased 9.2% to reach NIS 60
8
million (US$ 161 million)
from NIS 557 million in Q4 2008. The increase is attributable
primarily to the impact of the shifting of the Jewish holiday season from the
fourth quarter in 2008 to the third quarter in 2009, the capitalization of
handset subsidies and sales commissions in the amount of approximately NIS 46
million, and the decrease in expenses for doubtful accounts from receivables on
handset sales and service revenues. The positive effects were partially offset
by the ISP and fixed telephony expenses of approximately NIS 31 million in Q4
2009 compared with approximately NIS 16 million in Q4 2008.
In 2009,
revenues from the Company's
fixed line business segment
totaled NIS 115 million (US$ 30 million), representing an increase of 188% from
NIS 40 million in 2008. These revenues included approximately NIS 33
million of inter-segment revenues in 2009, compared with NIS 15 million in
2008.
The
gross loss
from the fixed
line business segment was NIS 57 million (US$ 15 million) in 2009, compared with
a gross loss of NIS 19 million in 2008, an increase of 200%. The
increase in the gross loss is attributed to introduction of the ISP and fixed
line telephony services in 2009.
The fixed
line segment's selling, marketing, general and administrative expenses amounted
to approximately NIS 51 million (US$ 14 million) in 2009, an increase of 218%
from NIS 16 million in 2008.
Operating loss
from the
segment's activities totaled NIS 108 million (US$ 29 million) in 2009, compared
with a loss of NIS 35 million in 2008, an increase of 208%.
EBITDA
for the segment was a
loss of NIS 83 million (US$ 22 million) in 2009, representing an increase in
loss of 388% from NIS 17 million in 2008. Within the total, the new
ISP and fixed line telephony services contributed a loss of NIS 119 million,
compared with a loss of NIS 26 million from these services in 2008.
Finance costs, net
on a
consolidated basis for 2009 were NIS 176 million (US$ 47 million), representing
a decrease of 4.3% from NIS 184 million in 2008. The annual decrease
is primarily attributable to an increase in gains from currency exchange
movements. For Q4 2009, net financial costs increased from NIS 37
million in Q4 2008 to NIS 41 million (US$ 11 million) in Q4 2009. The
quarterly increase reflected primarily the impact of the increase in expenses
resulting from the increase in CPI level of
0.2
% in Q4 2009 compared with
a decrease of 0.4% in the CPI level in Q4 2008.
Net Profit
totaled NIS 1,141
million (US$ 302 million) in 2009, a decrease of 4.8% from NIS 1,198
million in 2008. The decrease primarily reflected the supplementary
expenses related to ISP and fixed telephony services and impact of the economic
downturn, partially offset by the net impact of handset capitalization under
IFRS in 2009. For Q4 2009, profit increased by 1.4% reaching NIS 294
million (US$ 78 million) from NIS 290 million in Q4 2008. This increase is
attributable primarily to the impact of the shifting of part of the Jewish
holiday season from the fourth quarter in 2008 to the third quarter in 2009 and
the decrease in expenses for doubtful accounts.
Based on
the average number of shares outstanding during 2009,
basic earnings per share
or
ADS, was NIS 7.42 (US$ 1.97) in 2009, a decrease of 3.8% from NIS 7.71 in
2008.
The
effective tax rate
for 2009
was 25.2% compared with 27.0% for 2008. The decrease mainly reflected
the impact of the reduction in Israeli corporate tax rate from 27% in 2008 to
26% in 2009. The Israeli corporate tax rate has been reduced further
to 25% for 2010.
Funding and Investing
Review
Free Cash Flow
(cash flow
generated from operating activities, net of cash flow from investing
activities), was NIS 1,021 million (US$ 270 million) in 2009, a
decrease of 27.1% from NIS 1,401 million in 2008. The decrease is principally
explained by the effects of the introduction of factoring future handset
payments in 2008 which provided a one-off boost to operating cash flow of
approximately NIS 200 million and also the increase in working capital which
reduced cash generated from operations in 2009.
In
addition, the cash flow used for investing activities increased by 4
2
.4% from NIS 514 million in
2008 to NIS 732 million (US$ 19
4
million) in 2009, reflecting
the impact of capitalization of subscriber acquisition and retention costs under
IFRS on investments in intangible assets. Net investment
in fixed assets for 2009 was NIS 526 million or 8.7% of total revenues, an
increase of 7.8% from NIS 488 million in 2008.
For Q4
2009, free cash flow decreased by 16.6% from NIS 313 million in Q4 2008 to
NIS 261 million (US$
69
million), reflecting both
a 4.5% decrease in operating cash flow, due primarily to an increase in working
capital, together with the impact of capitalization of subscriber acquisition
and retention costs under IFRS on investments in intangible assets.
Dividend
The board
of directors will decide on the quarterly dividend distribution following the
approval of the audited financial statements for year 2009.
Operational
Review
Approximately
144,000
net active cellular
subscribers
joined the Company in 2009, out of which 34,000 net additions
in Q4 2009, compared with approximately 99,000 net additions in 2008. Postpaid
cellular subscribers accounted for approximately 54% of annual net new active
subscribers. At the end of December 2009, the Company's active
cellular subscriber base was approximately 3,042,000, including approximately
2,231,000 postpaid subscribers or 73.3% of the base (including mobile data
subscribers), and approximately 811,000 prepaid subscribers, or 26.7% of the
base. The annual
churn
rate
for cellular subscribers in 2009 decreased slightly to 17.7%, from
17.8% in 2008. The 2009 year-end market share is estimated to be unchanged at
32%.
The
Company added approximately 328,000 subscribers to its
3G
network in 2009, with its
3G subscriber base reaching approximately 1,279,000 by year-end.
The 2009
average monthly usage per subscriber (
MOU
) for cellular subscribers
was 364 minutes, slightly below the MOU of 365 minutes in 2008. The decrease
derives among other reasons, from a large number of free minutes that were
granted to subscribers as part of special campaigns during 2008. In addition,
the continued growth in mobile data subscribers (data modem users) as a
proportion of the subscriber base has the effect of reducing MOU since these
subscribers do not produce voice minutes. Excluding these two
factors, MOU increased by approximately 2.5% in 2009, mainly influenced by the
growth in incoming traffic.
For Q4
2009 alone, MOU was 366 minutes compared with 357 minutes in Q4 2008, mainly
reflecting the shifting of part of the Jewish holiday season from the fourth
quarter in 2008 to the third quarter in 2009.
Annual
average monthly revenue per cellular subscriber (
ARPU
)
12
in 2009 was NIS 151 (US$ 40), a decrease of approximately 6.2% from NIS 161 in
2008. For Q4 2009, ARPU was NIS 149 (US$ 39), a decrease of
approximately 6.3% from NIS 159 in Q4 2008. The decrease reflects the
increasingly competitive market conditions and the reduction in the billing
interval, as well as lower roaming revenues, offset by the effect of the
shifting of the Jewish holiday season from the fourth quarter in 2008 to the
third quarter in 2009.
Approximately
63,000 fixed line telephony and ISP subscribers joined the company during the
ramp up period in 2009. Early indications show that the Company's fixed line
telephony and ISP subscribers are characterized by relatively high ARPU levels
when compared with the industry average.
12
The calculation of ARPU has been
modified to include revenues from sales of extended handset warranties, in line
with the industry standard. This has had the effect of increasing ARPU for 2008
and 2009 by approximately NIS 2.
Outlook and
Guidance
Commenting
on the Company’s outlook, Mr. Emanuel Avner, Partner's Chief Financial Officer
said: "In recent months, the Company has undertaken a wide-ranging efficiency
and cost review, with the help of external consultants, with the aim of reducing
operating costs. We are also beginning to see some early signs of an economic
recovery. These two factors are mainly the basis for our expectation that
profitability will be higher in 2010 than in 2009, providing that the regulatory
and competitive environment evolve as currently anticipated."
Conference Call
Details
Partner
Communications will hold a conference call to discuss the company’s 2009
full-year and fourth-quarter results on Tuesday, February 09, 2010, at 17:00
Israel local time (10AM EST).
Please
dial:
Toll free
number (US): +1.888.668.9141
Local
(Israel): +972.3.918.0609 (03.918.0609)
This
conference call will be broadcast live over the Internet and can be accessed by
all interested parties through our investor relations web site at
http://www.orange.co.il/investor_site/
.
To listen
to the broadcast, please go to the web site at least 15 minutes prior to the
start of the call to register, download and install any necessary audio
software. For those unable to listen to the live broadcast, an archive of the
call will be available via the Internet (at the same location as the live
broadcast) shortly after the call ends, and until midnight of February 16,
2010.
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
"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. All statements other than statements of historical fact included in
this press release regarding our future performance, plans to increase revenues
or margins or preserve or expand market share in existing or new markets, reduce
expenses and any statements regarding other future events or our future
prospects, 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 about Partner,
consumer habits and preferences in cellular telephone usage, trends in the
Israeli telecommunications industry in general, the impact of current global
economic conditions and possible regulatory and legal developments. For a
description of some of the risks we face, see "Item 3D. Key Information - Risk
Factors", "Item 4. - Information on the Company", "Item 5. - Operating and
Financial Review and Prospects", "Item 8A. - Consolidated Financial Statements
and Other Financial Information - Legal and Administrative Proceedings" and
"Item 11. Quantitative and Qualitative Disclosures about Market Risk" in the
form 20-F filed with the SEC on April 27, 2009. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
press release might not occur, and actual results may differ materially from the
results anticipated. 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
financial results presented in this press release are preliminary un-audited
financial results.
The
results were prepared in accordance with IFRS, other than EBITDA which is a
non-GAAP financial measure.
The
financial information is presented in NIS millions and the figures
presented are rounded accordingly.
The
convenience translations of the Nominal New Israeli Shekel (NIS) figures into US
Dollars were made at the rate of exchange prevailing at December 31, 2009: US
$1.00 equals NIS 3.775. The translations were made purely for the convenience of
the reader.
Use of Non-GAAP Financial
Measures:
Earnings
before financial interest, taxes, depreciation, amortization, exceptional items
and capitalization of intangible assets ('EBITDA') is presented because it is a
measure commonly used in the telecommunications industry and is presented solely
to enhance the understanding of our operating results. EBITDA, however, should
not be considered as an alternative to operating income or income for the year
as an indicator of our operating performance. Similarly, EBITDA should not be
considered as an alternative to cash flow from operating activities as a measure
of liquidity. EBITDA is not a measure of financial performance under generally
accepted accounting principles and may not be comparable to other similarly
titled measures for other companies. EBITDA may not be indicative of our
historic operating results nor is it meant to be predictive of potential future
results.
Reconciliation
between our net cash flow from operating activities and EBITDA is presented in
the attached summary financial results.
About Partner
Communications
Partner
Communications Company Ltd. ("Partner") is a leading Israeli provider of
telecommunications services (cellular, fixed-line telephony and internet
services) under the orange™ brand. The Company provides mobile communications
services to over 3 million subscribers in Israel. 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).
Partner
is an approximately 45%-owned subsidiary of Scailex Corporation
Ltd. ("Scailex"). Scailex's shares are traded on the Tel Aviv Stock
Exchange under the symbol SCIX and are quoted on "Pink Quote" under the symbol
SCIXF.PK. Scailex currently operates in three major domains of activity: 1) the
sole import, distribution and maintenance of Samsung mobile handset and
accessories products primarily to the three major cellular operators in Israel;
2) distribution and sale of various manufacturers' mobile handsets, accessories
and provision of maintenance services, through a chain of retail stores and
booths ("Dynamic"), to end customers of Cellcom (as part of the acquisition of
the controlling stake in Partner, Scailex announced to Cellcom the termination
of the distribution agreement through Dynamic, effective July 1, 2010 and on Jan
17, 2010 Scailex announced the sale of Dymanic’s activity to Cellcom); (3)
management of its financial assets.
For more
information about Scailex, see
http://www.scailex.com
.
For more
information about Partner, see
http://www.orange.co.il/investor_site/
Contacts:
Mr.
Emanuel Avner
Chief
Financial Officer
Tel: +972-54-7814951
Fax: +972-54-7815961
E-mail:
emanuel.avner@orange.co.il
|
Mr.
Oded Degany
V.
P. Corporate Development, Strategy and IR
Tel: +972-54-7814151
Fax: +972-54
-7814161
E-mail:
oded.degany@orange.co.il
|
PARTNER
COMMUNICATIONS COMPANY LTD.
(An
Israeli Corporation)
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
|
|
|
|
Convenience
translation
into
U.S.
dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
184
|
|
|
|
329
|
|
|
|
87
|
|
Trade
receivables
|
|
|
1,103
|
|
|
|
1,275
|
|
|
|
338
|
|
Other
receivables
|
|
|
33
|
|
|
|
31
|
|
|
|
8
|
|
Inventories
|
|
|
125
|
|
|
|
158
|
|
|
|
42
|
|
Derivative
financial instruments
|
|
|
27
|
|
|
|
14
|
|
|
|
4
|
|
|
|
|
1,472
|
|
|
|
1,807
|
|
|
|
479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
Receivables
|
|
|
417
|
|
|
|
474
|
|
|
|
126
|
|
Property and
equipment
|
|
|
1,935
|
|
|
|
2,064
|
|
|
|
546
|
|
Licenses and
other intangible assets
|
|
|
1,260
|
|
|
|
1,260
|
|
|
|
334
|
|
Deferred income
taxes
|
|
|
81
|
|
|
|
14
|
|
|
|
4
|
|
Derivative
financial instruments
|
|
|
|
|
|
|
4
|
|
|
|
1
|
|
|
|
|
3,693
|
|
|
|
3,816
|
|
|
|
1,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
5,165
|
|
|
|
5,623
|
|
|
|
1,490
|
|
|
|
|
|
|
Convenience
translation
into
U.S.
dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Current
maturities of notes payable and other liabilities and short term
loans
|
|
|
568
|
|
|
|
752
|
|
|
|
199
|
|
Trade
payables
|
|
|
819
|
|
|
|
777
|
|
|
|
206
|
|
Parent
group - trade
|
|
|
4
|
|
|
|
34
|
|
|
|
9
|
|
Other
payables
|
|
|
246
|
|
|
|
238
|
|
|
|
63
|
|
Deferred
revenue
|
|
|
48
|
|
|
|
56
|
|
|
|
15
|
|
Provisions
|
|
|
|
|
|
|
34
|
|
|
|
9
|
|
Derivative
financial instruments
|
|
|
7
|
|
|
|
4
|
|
|
|
1
|
|
Current
income tax liability
|
|
|
42
|
|
|
|
20
|
|
|
|
5
|
|
|
|
|
1,734
|
|
|
|
1,915
|
|
|
|
507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
payable
|
|
|
1,613
|
|
|
|
1,379
|
|
|
|
365
|
|
Long
term bank loans
|
|
|
-
|
|
|
|
300
|
|
|
|
80
|
|
Liability for
employee rights upon retirement, net
|
|
|
53
|
|
|
|
38
|
|
|
|
10
|
|
Dismantling and
restoring sites obligation
|
|
|
23
|
|
|
|
23
|
|
|
|
6
|
|
Other
liabilities
|
|
|
10
|
|
|
|
6
|
|
|
|
2
|
|
|
|
|
1,699
|
|
|
|
1,746
|
|
|
|
463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
3,433
|
|
|
|
3,661
|
|
|
|
970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital - ordinary shares of NIS 0.01
par
value: authorized - December 31, 2008,
and
2009 - 235,000,000 shares;
issued
and outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2008 – 153,419,394 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2009 – 154,440,136 shares
|
|
|
2
|
|
|
|
2
|
|
|
|
1
|
|
Capital
surplus
|
|
|
2,446
|
|
|
|
2,483
|
|
|
|
658
|
|
Accumulated
deficit
|
|
|
(365
|
)
|
|
|
(172
|
)
|
|
|
(46
|
)
|
Treasury
shares, at cost – December 31,
2008 and
2009 - 4,467,990 shares
|
|
|
(351
|
)
|
|
|
(351
|
)
|
|
|
(93
|
)
|
TOTAL
EQUITY
|
|
|
1,732
|
|
|
|
1,962
|
|
|
|
520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND EQUITY
|
|
|
5,165
|
|
|
|
5,623
|
|
|
|
1,490
|
|