Partner Communications Company Ltd. ("Partner" or the
"Company") (Nasdaq:PTNR)(TASE:PTNR), a leading Israeli
communications operator, announces today its results for the third
quarter of 2010. Partner reported total revenues of NIS 1.650
billion (US$ 450 million) in Q3 2010, EBITDA of
NIS 641 million (US$ 175 million) and net income of
NIS 309 million (US$ 84 million).
Commenting on the results, Partner's CEO, Mr. Yacov Gelbard
said:
"Partner continues to achieve excellent financial results.
However, we are not taking our achievements for granted and that is
why we took two significant steps this quarter to ensure that our
profitability continues to grow in the coming years: first, by
signing an agreement with Ericsson for the upgrade of our network,
and second, by entering into an agreement for the purchase of 012
Smile, a leading Israeli operator of international
telecommunication services, internet services and local fixed line
telecommunication services.
Since Partner was founded, it has led the communications market
in Israel in establishing the first GSM network in Israel as well
as establishing the first third generation network that was
launched in Israel. The network upgrade agreement signed with
Ericsson will enable Partner to upgrade its technological abilities
and to establish the first fourth generation network in Israel. The
new network is intended to meet Partner's needs with respect to its
cellular and fixed line networks and will bring a significant
improvement and enhancement in the level of Partner's network
performances and the services that Partner provides today and in
the coming years.
The purchase of 012 Smile is yet another important step in
Partner’s strategy to focus on its core cellular business while 012
Smile will continue to focus on its current core businesses. 012
Smile's operational and financial performances have demonstrated
impressive improvements. We are convinced that this transaction
will increase competition in the market for the benefit of the
consumers. As a result of the purchase, Partner’s mid-term
consolidated EBITDA is expected to increase annually by
approximately NIS 350 million.
In our core cellular business, we are currently formulating a
strategic plan to mitigate the impact of the reduction of
interconnect tariffs. The measures Partner may take include, among
others: cost cutting, operational efficiency improvements and
repackaging of our product offerings."
Key Financial and Operational Parameters
Q3 2010 Q3
2009
Q3'10
vs. Q3'09
Revenues (NIS millions) 1,650 1,575 +4.8% Operating Profit (NIS
millions) 476 401 +18.7% Net Income (NIS millions) 309 263 +17.5%
Cash flow from operating activities net of
investing
activities (NIS millions)
487 301 +61.8% EBITDA
(NIS millions) 641 570 +12.5% Subscribers (end of period, in
thousands) 3,133 3,008 +4.2% Quarterly Churn Rate (%) 5.0 4.2 +0.8
Average Monthly Usage per Subscriber (minutes) 361 369 -2.2%
Average Monthly Revenue per Subscriber (NIS) 151
153 -1.3%
Financial Review
Net revenues totaled NIS 1,650 million (US$ 450 million)
in Q3 2010, increasing by 4.8% compared with NIS 1,575 million in
Q3 2009.
Service revenues in Q3 2010 reached NIS 1,447 million
(US$ 395 million), compared with NIS 1,389 million in Q3 2009, an
increase of 4.2%. The increase mainly reflected an approximate 4.2%
growth in the cellular subscriber base and the growth in the use of
data and content services, as well as an increase in roaming
activity. The 80% increase in fixed line segment service
revenues also contributed to the higher service revenues, from
NIS 15 million in Q3 2009 to NIS 27 million (US$ 7 million) in Q3
2010, primarily attributable to the growth of the ISP and fixed
line telephony services.
These increases occurred despite the impact of the ongoing
tariff erosion due to the highly competitive cellular market and
also despite the lower airtime usage resulting from the shifting of
part of the Jewish holiday season from the fourth quarter in 2009
to the third quarter in 2010.
Revenues in Q3 2010 from data and content services excluding
SMS totaled NIS 160 million (US$ 44 million) or 11.1% of
service revenues, increasing by 25.0% compared with NIS 128 million
or 9.2% of service revenues in Q3 2009. SMS service revenues
reached NIS 130 million (US$ 35 million) in Q3 2010, an increase of
36.8% compared with Q3 2009, and the equivalent of 9.0% of service
revenues, compared with 6.8% in Q3 2009. The growth in content and
data services (including SMS) partially reflected the continued
growth in sales of bundled voice, SMS and data packages whereby the
revenues are allocated according to the quantities offered in the
packages.
Gross profit from services in Q3 2010 reached NIS 589
million (US$ 161 million), increasing by 8.5% from NIS 543 million
in Q3 2009. The increase resulted from the higher service revenues
partially offset by an increase in the cost of service revenues.
Cost of service revenues increased primarily due to higher
interconnect and roaming costs, as well an increase in amortization
expenses of capitalized handsets from NIS 27 million in Q3 2009 to
NIS 35 million in Q3 2010.
Equipment revenues totaled NIS 203 million (US$ 55
million) in Q3 2010, increasing by 9.1% from NIS 186 million in Q3
2009. The increase resulted from an increase in the average revenue
per device sold, in part attributable to an increase in the
proportion of smartphones and 3G devices sold, and was despite the
decrease in the total number of devices sold. As a result of the
increase, there was a significant reduction in the number of
devices capitalized which in turn led to a reduction in the level
of equipment revenues that were capitalized from NIS 58 million in
Q3 2009 to NIS 17 million in Q3 2010.
The gross profit from equipment sales that were
not capitalized was NIS 66 million (US$ 18 million) in Q3 2010,
increasing by 127.6% from NIS 29 million in Q3 2009. The increase
was attributable to a reduction in average device subsidies,
reflecting both the increase in the average revenue per device sold
and a decrease in the average cost per device sold.
NIS 11 million of equipment subsidies were capitalized in
Q3 2010, a decrease from NIS 36 million in Q3 2009.
Gross profit reached NIS 655 million (US$ 178 million) in
Q3 2010, a 14.5% increase compared with NIS 572 million in Q3 2009.
Gross profit for the fixed line business
segment increased significantly from a gross loss of NIS 22 million in Q3 2009 to a gross
profit of NIS 2 million (US$ 0.5
million) in Q3 2010.
Selling, marketing, general and administration expenses
for Q3 2010 increased marginally by 1.1% to NIS 189 million (US$ 51
million), compared to NIS 187 million in Q3 2009. The increase
largely reflected increases in selling costs and salary expenses,
partially offset by a reduction in bad debts and doubtful accounts
expenses. The total amount of selling expenses capitalized in Q3
2010 was NIS 6 million, unchanged from Q3 2009.
Other income, net, totaled NIS 10 million (US$ 3 million)
in Q3 2010, a 37.5% decrease from NIS 16 million in Q3 2009. The
decrease reflected a one time provision in the amount of
approximately NIS 6 million made with respect to a lawsuit and a
motion for the recognition of this lawsuit as a class action, filed
against the Company.
Operating profit for Q3 2010 reached NIS 476 million (US$
130 million), compared with NIS 401 million in Q3 2009, an increase
of 18.7%. The fixed line segment contributed an operating loss of
NIS 3 million (US$ 0.8 million) in Q3 2010, decreasing by 92.3%
from an operating loss of NIS 39 million in Q3 2009.
EBITDA for Q3 2010 increased by 12.5% to NIS 641 million
(US$ 175 million) from NIS 570 million in Q3 2009. As a percent of
total revenues, EBITDA in Q3 2010 totaled 38.8%, compared with
36.2% in Q3 2009.
The fixed line segment contributed positive EBITDA for
the first time in Q3 2010, of NIS 5 million (US$ 1.4 million),
compared with a LBITDA3 (Loss before financial interest, taxes,
depreciation, amortization and exceptional items) of NIS 32 million
in Q3 2009.
Financial expenses, net in Q3 2010 were NIS 62 million
(US$ 17 million), a marginal increase of 1.6% from NIS 61 million
in Q3 2009. This reflected an increase in interest expenses
resulting from the higher debt level which was partially offset by
the lower linkage expenses due to both the decrease in CPI to a
level of 1.2% in Q3 2010 compared with 2.4% in Q3 2009, and the
reduction in the remaining amount of CPI-linked notes.
Q3 2010 net profit totaled NIS 309 million (US$ 84
million), increasing by 17.5% from NIS 263 million in Q3
2009.
Based on the average number of shares outstanding during Q3
2010, basic earnings per share or ADS, was NIS 1.99 (54 US
cents) in Q3 2010, an increase of 16.4% from NIS 1.71 in
Q3 2009.
Funding and Investing
Review
Cash flows generated from operating activities, net of cash
flows used for investing activities ('"Free Cash Flow"')
in Q3 2010 reached NIS 487 million (US$ 133 million), compared with
NIS 301 million in Q3 2009, an increase of 61.8%. The increase
reflected an increase in cash generated from operations as well as
a decrease in cash flows used for investing activities.
Cash generated from operations increased by 23.1% or NIS 107
million compared with Q3 2009, largely as a result of the higher
net profit.
The decrease in cash flows used for investing activities mainly
reflected a reduction in investment in fixed assets which decreased
by 45.5% from NIS 112 million in Q3 2009 to NIS 61 million in Q3
2010. The reduction in investment in fixed assets was principally
due to the impending upgrade of the company's networks. In
addition, the decrease reflected the reduction in the amount of
equipment expenses, net, that were capitalized, from NIS 42 million
in Q3 2009 to NIS 17 million (US$ 4.6 million) in Q3 2010.
Dividend
The Board of Directors has approved the distribution of a cash
dividend (paid in NIS) for Q3 2010 in the amount of NIS 1.93
(US 53 cents) per share or ADS (a total of approximately
NIS 300 million or US$ 82 million) to shareholders and ADS
holders of record on December 8, 2010. The dividend is expected to
be paid on December 22, 2010.
Operational Review
During Q3 2010, approximately 37,000 net new cellular
subscribers joined the orange network. At quarter-end, the
cellular subscriber base was approximately 3,133,000. This
included approximately 2,278,000 postpaid subscribers (72.7% of the
base) and 855,000 prepaid subscribers. The quarterly churn
rate for Q3 2010 was 5.0% compared with 4.2% in Q3 2009, with
the vast majority of the increase attributable to the higher churn
of pre-paid subscribers and private post-paid subscribers with
collection problems.
At quarter-end, there were approximately 1,491,000 3G
subscribers. Total market share at the end of the quarter is
estimated to be approximately 32%, no change from the previous
quarter.
The average Minutes Of Use per subscriber ("MOU") was 361
minutes in Q3 2010, a decrease of 2.2% from 369 minutes in Q3 2009.
This decrease reflects the shifting of part of the Jewish holiday
season from the fourth quarter in 2009 to the third quarter in
2010, which had the effect of reducing the number of usage days by
approximately 3% in Q3 2010 compared with Q3 2009. In addition, the
continued growth in mobile data subscribers (data modem users) as a
proportion of the subscriber base continues to reduce MOU since
these subscribers do not use the voice services.
The Average Revenue Per User ("ARPU") was NIS 151 (US$
41) in Q3 2010, compared with NIS 153 in Q3 2009, a decrease of
1.3%4. The decrease mainly reflected the ongoing airtime tariff
erosion resulting from the competitive market conditions, as well
as the lower usage as explained above.
Other
AGREEMENT FOR THE ACQUISITION OF 012
SMILE
On October 13, 2010, the Company entered into a share purchase
agreement with Merhav-Ampal Energy Ltd. (the "Seller") and
012 Smile Telecom Ltd., an Israeli private company, wholly-owned by
the Seller ("012 Smile"), according to which the Company
shall acquire all of the outstanding shares of 012 Smile and shall
assume certain loans from the Seller to 012 Smile for a purchase
price of NIS 650 million (approximately $177 million) (the "012
Agreement"). As part of the 012 Agreement, Partner also agreed
to guarantee long term bank loans of 012 Smile of approximately NIS
800 million (approximately $218 million).
The 012 Agreement includes an assignment by 012 Smile to the
Seller of the right to receive payments due from a third party in
the amount of NIS 42 million (approximately $11.5
million).
012 Smile is an Israeli operator of international
telecommunication services and local telecommunication fixed
services (including telephony services using VoB access) and is a
provider of internet services.
The transaction is expected to be completed (closing date)
within two to three months and is subject to customary closing
conditions, including the regulatory approvals of the Israeli
Ministry of Communications and the Israeli Antitrust
Commissioner.
AGREEMENT FOR THE UPGRADE OF PARTNER'S
EXISTING NETWORKS AND THE DEPLOYMENT OF FOURTH GENERATION NETWORK
IN ISRAEL
On October 25, 2010, the Company entered into an agreement with
LM Ericsson Israel Ltd. ("Ericsson") for the upgrade of its
existing networks and the deployment of fourth generation network
in Israel (the "Network Upgrade Agreement"). The Network
Upgrade Agreement includes the upgrade, replacement and the
expansion of certain parts of the Company's existing cellular and
fixed line networks and the maintenance of the networks, including
enhancement of Partner's abilities with respect to the cellular and
fixed line ISP services it provides. The commercial operation of
the fourth generation network by Partner is subject to the
allocation of the relevant frequencies by the Ministry of
Communications.
The term of the Network Upgrade Agreement will be effective from
the date of signature and until December 31, 2014, whereas the
replacement of the Company's switches and radio equipment is
scheduled to be carried out by the end of the year 2012.
The transaction will result in accelerated depreciation of the
replaced equipment, throughout the replacement period, whereas the
main impact of the accelerated depreciation will occur during the
years 2011 and 2012. As of September 30, 2010, the fixed assets,
which the Company intends to replace, minus the accumulated
depreciation, are approximately US$ 40 million. The transaction
will facilitate in the preplanning of the multi year budget.
The total net amount, following all discounts and settlements,
some of which are conditioned, that Partner will be required to
pay, in quarterly installments throughout the term of the Network
Upgrade Agreement, for the capital expenditure and maintenance
services is approximately US$ 100 million.
Outlook and Guidance
Commenting on the Company's results, Mr. Emanuel Avner,
Partner's Chief Financial Officer said: "We are very pleased with
the results of the third quarter of 2010, and in particular with
the growth in service revenues including content services, despite
the competitive market. The fixed line segment continues to make
good progress, achieving positive EBITDA for the first time this
quarter in line with our plans. Looking ahead, we reiterate our
annual guidance for 2010.”
Conference Call Details
Partner will hold a conference call to discuss the Company’s
third quarter results on Tuesday, November 9, 2010, at 17:00 Israel
time (10AM EST). Please call the following numbers (at least 10
minutes prior to the scheduled time) in order to
participate:
North America toll-free: +1.888.407.2553, International:
+972.3.918.0609
This conference call will also be broadcasted 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 scheduled time to register, download and
install any necessary audio software.
If you are unavailable to join live, the replay numbers
are:International: +972.3.925.5928North America:
+1.888.295.2634
Both the replay of the call and the webcast will be available
from November 09, 2010 until November 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 Company's 2009
Annual Report (20-F) filed with the SEC. 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 September 30, 2010: US $1.00 equals NIS 3.665. The
translations were made purely for the convenience of the
reader.
Use of Non-GAAP Financial
Measures:
Earnings before financial interest, taxes, depreciation,
amortization and exceptional items ('EBITDA') and Loss before
financial interest, taxes, depreciation, amortization and
exceptional items ('LBITDA') are presented because they are
measures commonly used in the telecommunications industry and are
presented solely to enhance the understanding of our operating
results. These measures, however, should not be considered as an
alternative to operating income or income for the year as
indicators of our operating performance. Similarly, these measures
should not be considered as alternatives to cash flow from
operating activities as a measure of liquidity. EBITDA and LBITDA
are not measures of financial performance under generally accepted
accounting principles and may not be comparable to other similarly
titled measures for other companies. EBITDA and LBITDA may not be
indicative of our historic operating results nor are they meant to
be predictive of potential future results.
Reconciliation between our net cash flow from operating
activities and EBITDA on a consolidated basis 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 two major domains of activity in addition to its holding in
Partner: (1) the sole import, distribution and maintenance of
Samsung mobile handset and accessories products primarily to the
major cellular operators in Israel (2) 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.
1 For definition of EBITDA measure, see “Use of Non-GAAP
Financial Measures” below
2 Cash flows generated from operating activities, net of cash
flows used for investing activities
3 For definition of LBITDA measure, see “Use of Non-GAAP
Financial Measures” below
4 The calculation of ARPU was modified in Q4 2009 to include
revenues from sales of extended handset warranties, in line with
the industry standard. This had the effect of increasing ARPU for
Q3 2009 by approximately NIS 2.
PARTNER COMMUNICATIONS COMPANY
LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
New Israeli shekels
Conveniencetranslation
intoU.S. dollars
September 30,2010 December
31,2009 September 30,2010
(Unaudited) (Unaudited) (Unaudited) In
millions CURRENT ASSETS Cash and cash equivalents 483
329 132 Trade receivables 1,303 1,275 355 Other receivables 34 31 9
Inventories 115 158 31 Derivative financial instruments 10 14 3
1,945 1,807 530
NON CURRENT ASSETS Trade Receivables
568 474 155 Property and equipment, net 1,969 2,064 537 Licenses
and other intangible assets, net 1,117 1,260 305 Deferred income
taxes
* 14
* Derivative financial instruments - 4 -
3,654 3,816 997
TOTAL ASSETS 5,599 5,623 1,527
* Representing an amount less than 1 million.
New Israeli shekels
Conveniencetranslation
intoU.S. dollars
September 30,2010 December
31,2009 September 30,2010
(Unaudited) (Audited) (Unaudited) In
millions CURRENT LIABILITIES Current maturities of notes
payable, other liabilities and bank borrowings 1,005 752 274 Trade
payables 665 777 181 Parent group - trade 35 34 10 Other payables
246 238 67 Deferred revenue 50 56 14 Dividend payable 290 - 79
Provisions 13 34 4 Derivative financial instruments - 4 - Income
tax liability 23 20 6 2,327 1,915 635
NON CURRENT
LIABILITIES Notes payable 1,829 1,379 499 Bank borrowings 750
300 205 Liability for employee rights upon retirement, net
47 38 13 Dismantling and restoring sites
obligation 23 23 6 Other liabilities 9 6 2 2,658 1,746 725
TOTAL
LIABILITIES 4,985 3,661 1
,360
EQUITY
Share capital - ordinary shares of NIS
0.01 par value: authorized - December 31,2009, and September 30,
2010 – 235,000,000 shares; issued and outstanding -
December 31, 2009 – 154,440
,136 shares September 30, 2010 –
154,942,745 shares 2 2
1 Capital surplus 1,091
2,483
297 Accumulated deficit (128)
(172) (35) Treasury shares, at
cost - December 31, 2009 and September 30, 2010 4,467,990 shares
(351)
(351) (96)
Total Equity 614
1,962 167
TOTAL LIABILITIES AND EQUITY 5,599
5,623 1,527
* Representing an amount less than 1 million.
PARTNER COMMUNICATIONS COMPANY
LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
New Israeli shekels Convenience
translation into U.S. dollars
9 monthperiod ended
September 30
3 monthperiod ended
September 30
9 month period ended
September 30,
3 month period ended September 30,
2010 2009 2010 2009
2010 2010 (Unaudited) (Unaudited)
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) In millions (except per share data)
Revenues 4,913
4,501 1,650
1,575 1,341 450 Cost of
revenues 2,973
2,773 995
1,003 812 272
Gross
profit 1,940
1,728 655
572 529 178 Selling
and marketing expenses 347
292 112
107 95 30 General
and administrative expenses 232
222 77
80 63 21 Other
income 40
55 10
16 11 3 Operating profit 1,401
1,269 476
401 382 130 Finance income 11
22 11
7 3
3 Finance expenses 147
157 7
3
68 40
20 Finance costs, net 136
135 6
2
61 37 17
Profit before income tax 1,265
1,134
414
340 345 113 Income tax expenses 326
287 105
77 89 29
Profit for the period 939
847 309
263 256 84
Earnings per share Basic 6.07
5.51 1.99 1.
71 1.65 0.54 Diluted 6.01
5.48
1.98 1.
70 1.64 0.54
Weighted average number of shares
outstanding (in thousands) Basic 154,802 153,
671 154,902
153,
902 154,802 154,902 Diluted 156,170 154,
525
155,738 154,
827 156,170 155,738
PARTNER COMMUNICATIONS COMPANY
LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
New Israeli shekels
Convenience translationinto U.S.
dollars
9 monthperiod
endedSeptember 30
3 monthperiod ended September 30 9
month period ended September 30, 3
month period ended September 30, 2010
2009 2010 2009 2010
2010 (Unaudited) (Unaudited)
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) In millions
Profit for the period
939 847 309 263 256 84
Other comprehensive income (losses)
Actuarial gains (losses) on defined benefit plan - 8 - (1) - -
Income taxes relating to actuarial gains (losses) on defined
benefit plan - (2) - - - -
Other comprehensive income
(losses) for the period, net of income tax - 6 - (1) - -
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 939 853 309 262
256 84
PARTNER COMMUNICATIONS COMPANY
LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
New Israeli shekels
Convenience translation into
U.S.dollars
9 monthperiod ended September 30 3
monthperiod ended September 30 9 month
period ended September 30, 3 month
period ended September 30, 2010
2009 2010 2009 2010 2010
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Unaudited) (Unaudited) In
millions (except per share data) CASH FLOWS FROM OPERATING
ACTIVITIES: Cash generated from operations (Appendix) 1,715
1,615 682 547 468 186 Income tax paid (308) (290) (111) (83) (84)
(30) Net cash provided by operating activities 1,407 1,325 571 464
384 156
CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of
property and equipment (209) (429) (61) (112) (57) (17) Acquisition
of intangible assets (78) (167) (23) (46) (21) (6) Interest
received 3 - 1 * 1 * Proceeds from derivative financial
instruments, net 6 31 (1) (5) 2 * Net cash used in investing
activities (278) (565) (84) (163) (75) (23)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options granted to employees 8 24 1
12 2 * Dividend paid (637) (471) (19) (237) (174) (5) Capital
reduction (1,400) - (382) Repayment of capital lease (2) (6) (1)
(1) (1) * Interest paid (60) (68) (3) (22) (16) (1) Current
borrowing received 988 - 270 Current borrowing repaid (988) (20)
(270) Proceeds from non-current bank borrowing 500 - 136 Proceeds
from issuance of notes payable, net of issuance costs 990 - 270
Repayment of notes payable (374) (370) (187) (102)
Net cash used in financing activities (975) (911) (22) (435) (267)
(6)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
154 (151) 465 (134) 42 127
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 329 184 18 167 90 5
CASH AND CASH
EQUIVALENTS AT END OF PERIOD 483 33 483 33 132 132
* Representing an amount 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
9 monthperiod ended September 30 3
monthperiod ended September 30 9 month
period ended September 30, 3 month
period ended September 30, 2010
2009 2010 2009 2010 2010
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Unaudited) (Unaudited) In
millions (except per share data) Cash generated from
operations: Profit for the period 9
39 847
3
09 263 25
6 8
4 Adjustments for net income for
the period: Depreciation and amortization 489 414 161 163 133 44
Amortization of deferred compensation related to employee stock
option grants, net 17 15 5 5 5 1 Liability for employee rights upon
retirement, net
9 1
6 1
3 2 Finance
costs, net 39 74 27 49 11 7 Gain from change in fair value of
derivative financial instruments (2) (22) (9) (7) (1) (2) Interest
paid 60 68 3 22 16 1 Interest received (3) (1) * (1) * Deferred
income taxes 1
4 42
6 2 5 2 Income tax paid 308 290
111 83 84 30 Capital loss on sale of property and equipment - 2 2 -
Changes in operating assets and liabilities: Decrease (increase) in
accounts receivable:
Trade
(122) (166) 29 (100) (33) 8 Other (3) (11) (2) (12) (1) (1)
Increase (decrease) in accounts payable and accruals: Parent group-
trade 1 (1) 13 (1) * 4 Trade (77) 104 (40) 82 (21) (11) Other
2
7 -
56 37
7 1
5 Provisions (21) 28 7 -
(6) 2 Deferred revenue (6) 3 1 1 (2) * Income tax payable
3
(51) (1
2) (16) 1 (3) Increase in inventories 43 (22) 12 (27)
12 3
Cash generated from operations: 1,715 1,615 682 547 468
186
* Representing an amount less than 1 million
At September 30, 2010 and 2009, trade payables include NIS 144
million ($39 million) (unaudited) and NIS 165 million
(unaudited) in respect of acquisition of fixed assets,
respectively. These balances will be given recognition in these
statements upon payment.
PARTNER COMMUNICATIONS COMPANY
LTD.(An Israeli Corporation)RECONCILIATION BETWEEN OPERATING
CASH FLOWS AND EBITDA
New Israeli shekels
Convenience translation intoU.S.
dollars
9 monthperiod ended September 30 3
monthperiod ended September 30 9 month
period ended September 30, 3 month
period ended September 30, 2010
2009 2010 2009 2010 2010
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Unaudited) (Unaudited) In
millions Net cash provided by operating activities 1,407
1,325 571 464 384 156 Liability for employee rights upon
retirement (9) (1) (6) (1) (2) (2) Accrued interest and exchange
and linkage differences on long-term liabilities
(92
)
(141
) (28
) (70
) (25) (7)
Increase (decrease) in accounts receivable: Trade 122 166 (29) 100
33 (8) Other, including derivative financial instruments 5 33 11 19
1 3 Decrease (increase) in accounts payable and accruals: Trade 77
(104) 40 (82) 21 11 Shareholder – current account (1) 1
(13
) 1 (4) Other (26)
(65
)
(32
) (18) Income tax paid 308 290 111 83 84 30
Increase (decrease) in inventories (43) 22 (12) 27 (12) (3)
Increase in Assets Retirement Obligation (1) 1 Financial Expenses
133 130 61 61 36 17
EBITDA 1,906 1,696 641 570 520 175
* The convenience translation of the New Israeli Shekel (NIS)
figures into US dollars was made at the exchange prevailing at
September 30, 2010 : US $1.00 equals 3.665 NIS.
** Financial expenses excluding any charge for the amortization
of pre-launch financial costs.
PARTNER COMMUNICATIONS COMPANY
LTD.(An Israeli Corporation)SEGMENT INFORMATION
New Israeli Shekels New Israeli
Shekels Nine months ended September 30, 2010 (unaudited)
Nine months ended September 30, 2009 (unaudited) In
millions In millions Cellular segment
Fixed line segment Reconciliation
for
consolidation
Consolidated Cellular segment Fixed
line segment Reconciliation
for
consolidation
Consolidated Segment revenue - Services
4,130
76 - 4,206 4,011 36 -
4,047 Inter-segment revenue - Services
14 41
(55) - 6 22 (28) -
Segment revenue - Equipment
688 19 -
707 442 12 - 454 Total
revenues 4,832 136 (55) 4,913
4,459 70 (28) 4,501 Segment cost of
revenues - Services
2,376 98 - 2,474
2,292 81 - 2,373 Inter-segment cost of
revenues- Services
41 14 (55) -
22 6 (28) - Segment cost of revenues -
Equipment
471 28 - 499 372
28 - 400 Cost of revenues 2,888
140 (55) 2,973 2,686 115
(28) 2,773 Gross profit (loss) 1,944
(4) 1,940 1,773 (45) 1,728
Operating expenses
557 22 579 477
37 514 Other income
40 - 40
55 - 55 Operating profit (loss)
1,427 (26) 1,401 1,351 (82)
1,269 Adjustments to presentation of EBITDA –depreciation
and amortization
464 25 489 395
19 414 –other
16 - 16 13
- 13 EBITDA 1,907 (1)
1,906 1,759 (63) 1,696 Reconciliation
of EBITDA to profit before tax - Depreciation and amortization
489 414 - Finance costs, net
136 135 -
Other
16 13 Profit before income tax
1,265 1,134
PARTNER COMMUNICATIONS COMPANY
LTD.(An Israeli Corporation)SEGMENT INFORMATION
New Israeli Shekels New Israeli Shekels
Three months ended September 30, 2010 (unaudited)
Three months ended September 30, 2009
(unaudited)
In millions In millions Cellular segment
Fixed line segment Reconciliation
for
consolidation
Consolidated Cellular segment Fixed
line segment Reconciliation
for
consolidation
Consolidated Segment revenue - Services
1,420
27 - 1,447 1,374 15 -
1,389 Inter-segment revenue - Services
5 16
(21) - 3 9 (12) - Segment
revenue - Equipment
198 5 - 203
178 8 - 186 Total revenues
1,623 48 (21) 1,650 1,555
32 (12) 1,575 Segment cost of revenues –
Services
825 33 - 858 812
34 - 846 Inter-segment cost of revenues-
Services
16 5 (21) - 9 3
(12) - Segment cost of revenues - Equipment
129 8 - 137 140 17
- 157 Cost of revenues 970 46
(21) 995 961 54 (12)
1,003 Gross profit (loss) 653 2
655 594 (22) 572 Operating expenses
184 5 189 170 17 187
Other income
10 - 10 16 -
16 Operating profit (loss) 479 (3)
476 440 (39) 401 Adjustments to
presentation of EBITDA –depreciation and amortization
153
8 161 156 7 163 –other
4
- 4 6 - 6 EBITDA
636 5 641 602 (32) 570
Reconciliation of EBITDA to profit before tax - Depreciation and
amortization
161 163 - Finance costs, net
62
61 - Other
4 6 Profit before income tax
414 340
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