ROSH HA'AYIN, Israel,
Nov. 25, 2020 /PRNewswire/ --
Third quarter 2020 highlights (compared with third quarter
2019)
- Total Revenues: NIS 800
million (US$ 232 million), a
decrease of 3%
- Service Revenues: NIS
631 million (US$ 183 million),
a decrease of 4%
- Equipment Revenues: NIS
169 million (US$ 49 million),
an increase of 1%
- Total Operating Expenses (OPEX)2:
NIS 475 million (US$ 138 million), approx. unchanged
- Adjusted EBITDA2: NIS 204 million (US$ 59
million), a decrease of 9%
- Adjusted EBITDA Margin2: 26% of
total revenues compared with 27%
- Loss for the Period: NIS 5 million (US$ 1
million), a decrease in profit of NIS
12 million
- Net Debt: NIS 646
million (US$ 188 million), a
decrease of NIS 310 million
- Adjusted Free Cash Flow (before
interest)2: NIS 21
million (US$ 6 million), an
increase of NIS 8 million
- Cellular ARPU: NIS
51 (US$ 15), a decrease of
14%
- Cellular Subscriber Base:
approximately 2.76 million at quarter-end, an
increase of 4%
- TV Subscriber Base: 224 thousand subscribers
at quarter-end, an increase of 48 thousand subscribers since Q3
2019, and an increase of 9 thousand in the quarter
Partner Communications Company Ltd. ("Partner" or
the "Company") (NASDAQ: PTNR) (TASE: PTNR), a leading
Israeli communications provider, announced today its results for
the quarter ended September 30,
2020.
Commenting on the results for the third quarter 2020, Mr.
Isaac Benbenisti, CEO of Partner
noted:
"Despite the effects of the coronavirus crisis, Partner's
results exhibit stability and resilience in the third quarter due
to the consistent growth in the fixed-line segment, which
contributes to a revenue mix that establishes long-term financial
strength.
In the cellular segment, we added 54,000 subscribers, net, in
the third quarter, and continued to strengthen customer loyalty.
Since the beginning of the year we have added 105,000
subscribers, net, to Partner's cellular services.
In addition, we launched the 5G network and met the
coverage goals that entitle us to a grant of tens of millions
of shekels that is expected to be received from the Ministry of
Communications.
The coronavirus crisis has heightened the awareness of the
importance of quality communication services, with an emphasis on
stable and fast internet services. In recent months, there has been
a significant increase in demand for the Partner Fiber service that
provides an ultra-fast internet service over Partner's independent
fiber optic network, which already reaches approximately 700
thousand households in 50 cities across the country.
Partner's TV service has approximately 229 thousand subscribers
as of today, an addition of over 40 thousand subscribers since the
beginning of the year. Most of our TV subscribers subscribe
to packages offering a combination of services, thus strengthening
Partner's standing as a communications group which offers a variety
of communications services among the most advanced in Israel."
Mr. Tamir Amar, Partner's
Chief Financial Officer, commented on the results:
"As expected, the continuation of the significant decline in
international travel into the third quarter resulted in a
material negative impact on the Company's results of operations for
the quarter, compared with the Company's normal seasonal trends.
And whilst the Company succeeded in substantially mitigating the
aforementioned effects through proactive cost cutting measures in a
number of areas and also through making adjustments in a variety of
business areas, including capitalizing on the increase in demand
for some of the Company's services as a result of the crisis and
shifting our focus towards alternative sales channels, the overall
net impact remained materially negative.
Our cellular subscriber base increased by 54 thousand
subscribers, net, during the quarter, including an increase of
33 thousand Post-Paid subscribers, in conjunction with a
further decrease in the quarterly churn rate to 7.3% compared with
7.5% in the previous quarter. Since the beginning of the
year the cellular subscriber base has increased by 105
thousand subscribers, net. ARPU this quarter totaled NIS 51, unchanged from the previous quarter, and
a decrease of NIS 8 compared with the
third quarter of 2019, largely reflecting the negative impact
of the decrease in roaming revenues due to the coronavirus crisis
which significantly reduced international travel. The Company's TV
subscriber base increased by 9 thousand during the quarter, the
majority of whom also subscribe to the Company's internet
services.
Adjusted EBITDA this quarter totaled NIS
204 million, compared with NIS 200
million in the previous quarter, the increase reflecting,
among other factors, an increase in service revenues and in gross
profit from equipment sales, which were partially offset by the
larger reduction of expenses in the second quarter.
Looking ahead, the Company expects that for the fourth quarter
of 2020, the near-complete cessation of international travel will
continue to have a negative impact, although smaller in scale than
in the third quarter, and, in addition, the Company will continue
to take proactive cost cutting measures in a number of areas, such
that the overall net impact in the fourth quarter is not expected
to be material.
Adjusted Free Cash Flow (before interest) totaled NIS 21 million in the third quarter. CAPEX
totaled NIS 147 million, with
investments also this quarter reflecting the Company's continued
efforts to expand the deployment of its fiber optic network and to
further penetrate the TV market. These investments continue to be
possible as a result of Partner's financial stability and strong
balance sheet, and are continuing through the challenging period of
the coronavirus crisis.
Net debt stood at NIS 646 million
at the end of the third quarter, compared with NIS 956 million
at the end of the third quarter 2019, a decrease of NIS 310 million mainly due to the Company's
successful equity raise of NIS 276
million, net, in January
2020.
During the third quarter, the Company completed the partial
early repayment of its Notes Series F in a total amount of
NIS 305 million, which led to
one-time expenses of approximately NIS 7
million being recorded under the Company's finance costs,
net. In addition, in the third quarter the Company expanded its
Notes Series G in a total amount of NIS 300
million. These measures lengthened the duration of the
Company's debt.
During the third quarter, we participated in the Ministry of
Communications' tender for 5G frequencies and secured the
frequencies anticipated, at a price which reflects the lowest cost
of all contenders. In addition, in view of the Company's compliance
with the qualifying conditions for 5G, the Company, as a partner in
the shared cellular radio access network, PHI, is expected to share
with another communications group the highest grant among all the
communications groups that competed in the tender. In addition, the
Company is expected to benefit from a significant discount with
respect to the frequency fees, provided that certain conditions are
met in accordance with the terms of the tender.
Following enquiries received from a number of potential
investors, the Company announced that it is considering the
possibility to solicit offers from a potential partner or partners
to acquire up to 20% of the rights to use the Company's existing
and future fiber optic network for services to private
households."
Q3 2020 compared with Q2 2020
NIS
Million
|
Q2'20
|
Q3'20
|
Comments
|
Service
Revenues
|
616
|
631
|
The increase resulted
from increases both in cellular
service revenues and in fixed-line segment service
revenues
|
Equipment
Revenues
|
158
|
169
|
The increase mainly
reflected higher sale volumes due to
the closure of points of sale during the second quarter as
a
result of the coronavirus crisis
|
Total
Revenues
|
774
|
800
|
|
Gross profit from
equipment sales
|
30
|
38
|
|
OPEX
|
456
|
475
|
The increase mainly
reflected the larger reduction of
expenses in the second quarter
|
Adjusted
EBITDA
|
200
|
204
|
|
Profit (Loss) for the
Period
|
7
|
(5)
|
|
Capital Expenditures
(additions)
|
121
|
179
|
|
Adjusted Free Cash
Flow (before
interest payments)
|
44
|
21
|
The decrease resulted
mainly from an increase in cash
used in capital expenditures
|
Net Debt
|
658
|
646
|
|
|
Q2'20
|
Q3'20
|
Comments
|
Cellular Subscribers
(end of
period, thousands)
|
2,708
|
2,762
|
Increase of approx.
33 thousand Post-Paid subscribers and
21 thousand Pre-Paid subscribers
|
Monthly Average
Revenue per
Cellular User (ARPU) (NIS)
|
51
|
51
|
|
Quarterly Cellular
Churn Rate (%)
|
7.5%
|
7.3%
|
|
TV Subscribers (end
of period,
thousands)
|
215
|
224
|
|
Key Financial Results
NIS MILLION
(except EPS)
|
Q3'19
|
Q3'20
|
%
Change
|
Revenues
|
825
|
800
|
-3%
|
Cost of
revenues
|
687
|
677
|
-1%
|
Gross
profit
|
138
|
123
|
-11%
|
Operating
profit
|
26
|
20
|
-23%
|
Profit (Loss) for the
period
|
7
|
(5)
|
|
Earnings (Losses) per
share (basic, NIS)
|
0.04
|
(0.03)
|
|
Adjusted Free Cash
Flow (before interest)
|
13
|
21
|
+62%
|
Key Operating Indicators
|
Q3'19
|
Q3'20
|
Change
|
Adjusted EBITDA (NIS
million)
|
225
|
204
|
-9%
|
Adjusted EBITDA
margin (as a % of total revenues)
|
27%
|
26%
|
-1
|
Cellular Subscribers
(end of period, thousands)
|
2,651
|
2,762
|
+111
|
Quarterly Cellular
Churn Rate (%)
|
7.7%
|
7.3%
|
-0.4
|
Monthly Average
Revenue per Cellular User (ARPU) (NIS)
|
59
|
51
|
-8
|
Partner Consolidated Results
|
Cellular
Segment
|
Fixed-Line
Segment
|
Elimination
|
Consolidated
|
NIS
Million
|
Q3'19
|
Q3'20
|
Change
%
|
Q3'19
|
Q3'20
|
Change
%
|
Q3'19
|
Q3'20
|
Q3'19
|
Q3'20
|
Change
%
|
Total
Revenues
|
608
|
549
|
-10%
|
258
|
287
|
+11%
|
(41)
|
(36)
|
825
|
800
|
-3%
|
Service
Revenues
|
466
|
415
|
-11%
|
233
|
252
|
+8%
|
(41)
|
(36)
|
658
|
631
|
-4%
|
Equipment
Revenues
|
142
|
134
|
-6%
|
25
|
35
|
+40%
|
-
|
-
|
167
|
169
|
+1%
|
Operating
Profit
|
24
|
20
|
-17%
|
2
|
0
|
|
-
|
-
|
26
|
20
|
-23%
|
Adjusted
EBITDA
|
170
|
134
|
-21%
|
55
|
70
|
+27%
|
-
|
-
|
225
|
204
|
-9%
|
Financial Review
In Q3 2020, total revenues were NIS 800 million (US$ 232
million), a decrease of 3% from NIS
825 million in Q3 2019.
Service revenues in Q3 2020 totaled NIS 631 million (US$ 183
million), a decrease of 4% from NIS
658 million in Q3 2019.
Service revenues for the cellular segment in Q3 2020
totaled NIS 415 million (US$ 121 million), a decrease of 11% from
NIS 466 million in Q3 2019. The
decrease was mainly the result of the negative impact of the
coronavirus crisis on roaming service revenues and the continued
price erosion of cellular services due to the continued competitive
market conditions, which were partially offset by an increase in
interconnect revenues.
Service revenues for the fixed-line segment in Q3
2020 totaled NIS 252 million
(US$ 73 million), an increase of 8%
from NIS 233 million in Q3 2019. The
increase mainly reflected higher revenues from the growth in
internet and TV services, which were partially offset by a decline
in revenues from international calling services.
Equipment revenues in Q3 2020 totaled NIS 169 million (US$ 49
million), an increase of 1% from NIS
167 million in Q3 2019, mainly reflecting increased sales of
fixed-line equipment, partially offset by a decrease in equipment
sales in the cellular segment, largely a result of the adverse
impact of the coronavirus crisis on retail customer sales.
Gross profit from equipment sales in Q3 2020
was NIS 38 million (US$ 11 million), compared with NIS 33 million in Q3 2019, an increase of 15%,
reflecting both the higher sales volumes and an increase in profit
margins as a result of a change in the product mix.
Total operating expenses ('OPEX') totaled NIS 475 million (US$ 138
million) in Q3 2020, an increase of NIS 1 million from Q3 2019, largely reflecting an
increase in interconnect expenses and in expenses related to
internet services, partially offset by a decrease in payroll and
related expenses and other expenses. Including depreciation and
amortization expenses and other expenses (mainly amortization of
employee share based compensation), OPEX in Q3 2020 decreased by 2%
compared with Q3 2019.
Operating profit for Q3 2020 was NIS 20 million (US$ 6
million), a decrease of 23% compared with NIS 26 million in Q3 2019. The decrease mainly
resulted from the decrease in Adjusted EBITDA (see Adjusted EBITDA
analysis by segment below), partially offset by a decrease in
depreciation and amortization expenses.
Adjusted EBITDA in Q3 2020 totaled NIS 204 million (US$ 59
million), a decrease of 9% from NIS
225 million in Q3 2019. As a percentage of total revenues,
Adjusted EBITDA in Q3 2020 was 26% compared with 27% in Q3
2019.
Adjusted EBITDA for the cellular segment was
NIS 134 million (US$ 39 million), in Q3 2020, a decrease of 21%
from NIS 170 million in Q3 2019,
largely reflecting the decrease in cellular service revenues mainly
as a result of the coronavirus crisis and the increase in
interconnect expenses, partially offset by a decrease in various
cellular operating expenses including in payroll and related
expenses and other cost cutting measures. As a percentage of total
cellular segment revenues, Adjusted EBITDA for the cellular segment
in Q3 2020 was 24% compared with 28% in Q3 2019.
Adjusted EBITDA for the fixed-line segment was
NIS 70 million (US$ 20 million) in Q3 2020, an increase of 27%
from NIS 55 million in Q3 2019,
mainly reflecting the increase in fixed-line segment service
revenues which was partially offset by an increase in fixed-line
operating expenses. As a percentage of total fixed-line segment
revenues, Adjusted EBITDA for the fixed-line segment in Q3 2020 was
24%, compared with 21% in Q3 2019.
Finance costs, net in Q3 2020 were NIS 24 million (US$ 7
million), an increase of 33% compared with NIS 18 million in Q3 2019. The increase largely
reflected one-time expenses in an amount of approximately
NIS 7 million relating to the partial
early repayment of the Company's Notes Series F during the
quarter.
Income tax expenses for Q3 2020 were NIS 1 million (US$ 0.3
million), unchanged from Q3 2019.
Loss in Q3 2020 was NIS 5
million (US$ 1 million), a
decrease in profit of NIS 12 million
compared with a profit of NIS 7
million in Q3 2019.
Based on the weighted average number of shares outstanding
during Q3 2020, basic losses per share or ADS, was
NIS 0.03 (US$
0.01), compared with basic earnings per share of
NIS 0.04 in Q3 2019.
Cellular Segment Operational Review
At the end of Q3 2020, the Company's cellular subscriber
base (including mobile data, 012 Mobile subscribers
and M2M subscriptions included on an adjusted basis as described in
the Company's annual report) was approximately 2.76 million,
including approximately 2.44 million Post-Paid subscribers or 88%
of the base, and approximately 325 thousand Pre-Paid subscribers,
or 12% of the subscriber base.
During the third quarter of 2020, the cellular subscriber base
increased net by approximately 54 thousand. The Post-Paid
subscriber base increased by approximately 33 thousand, and the
Pre-Paid subscriber base increased by approximately 21
thousand.
Total cellular market share (based on the number of
subscribers) at the end of Q3 2020 was estimated to be
approximately 26%, compared with 25% at the end of Q3 2019.
The quarterly churn rate for cellular subscribers in
Q3 2020 was 7.3%, compared with 7.7% in Q3 2019 and 7.5% in Q2
2020.
The monthly Average Revenue per User ("ARPU") for
cellular subscribers in Q3 2020 was NIS
51 (US$ 15), a decrease of 14%
from NIS 59 in Q3 2019. The decrease
resulted from the impact of the coronavirus crisis on roaming
service revenues and the continued price erosion of cellular
services due to the continued competitive market conditions, which
were partially offset by an increase in interconnect revenues.
Funding and Investing Review
In Q3 2020, Adjusted Free Cash Flow (including lease
payments) totaled NIS 21 million
(US$ 6 million), an increase of 62%
compared with NIS 13 million in Q3
2019.
Cash generated from operating activities totaled
NIS 207 million (US$ 60 million) in Q3 2020, a decrease of 10%
from NIS 230 million in Q3 2019,
mainly reflecting the decrease in Adjusted EBITDA.
Lease payments (principal and interest), recorded in
cash flows from financing activities under IFRS 16, totaled
NIS 39 million (US$ 11 million) in Q3 2020, a decrease of
NIS 3 million from NIS 42 million in Q3 2019.
Cash capital expenditures ('CAPEX payments'), as
represented by cash flows used for the acquisition of property and
equipment and intangible assets, were NIS
147 million (US$ 43 million)
in Q3 2020, a decrease of 16% from NIS 174
million in Q3 2019.
Following the receipt of the new 5G frequencies in the third
quarter, the cost of the new frequencies was recognized as capital
expenditures in intangible assets, to be paid in September 2022 according to the terms of the
frequencies tender.
The level of Net Debt at the end of Q3 2020 amounted
to NIS 646 million (US$ 188 million), compared with NIS 956 million at the end of Q3 2019, a
decrease of NIS 310 million. The
decrease mainly reflected the Company's share issuance in
January 2020 for which the total net
consideration received was approximately NIS
276 million. In addition, during the third quarter, the
Company completed the partial early repayment of its Notes Series F
in a total amount of NIS 305 million,
and expanded its Notes Series G in a total amount of
NIS 300 million.
Regulatory Developments
Holdings of approved Israeli shareholders in the
Company
The provisions of the Company's cellular license require,
among others, that the "founding shareholders or their approved
substitutes", as defined in the cellular license, hold at least 26%
of the means of control in the Company, including 5% which must be
held by Israeli shareholders (Israeli citizens and residents), who
were approved as such by the Minister of Communications ("Israeli
Shareholders").
On November 12, 2019, the Israeli
Ministry of Communications ("MoC") issued a temporary order (ending
on November 1, 2020) amending the
Company's cellular license and reducing the percentage that the
approved Israeli Shareholders are required to hold by the amount of
shares now held by the foreign entities (from 5% down to 3.82% of
the means of control in the Company).
On October 26, 2020, the MoC
extended the term of the abovementioned order (ending on
March 1, 2021). This temporary order
is expected to allow the MoC and the Company sufficient time in
which to resolve the issue of holdings of approved Israeli
shareholders in the Company.
Upgrade of Bezeq's infrastructure to VDSL35b Technology
On July 12, 2020, Bezeq reported
that the MoC has allowed it make use of VDSL35b Technology,
According to Bezeq's report, this technology will allow it to
substantially improve internet connection speeds and will allow it
to market connections of up to 200 Mbps. Bezeq's report states that
the rollout of this new technology is expected to be limited to
approximately 230,000 subscribers. According to the MoC's approval,
the relevant retail offering may be launched four months after the
update to the existing interface with wholesale providers is
published by Bezeq. In accordance with the MoC's approval, Bezeq
has informed the Company that it launched the VDSL35b Technology.
The Launch of this service will allow Bezeq to better respond to
FTTH (Fiber to the Home) services offered by the Company, but would
also allow the Company to improve the speed of the wholesale
infrastructure services it offers, thus improving its TV
services.
Hearing regarding a reform in the structure of the Internet
Market
The fixed internet access market in Israel was historically divided into two tiers
of services: infrastructure services and ISP (internet service
provider) service. This split was intended to allow entry of new
competitors, which provide services over Bezeq's
infrastructure.
On October 4, 2020, the MoC
published a hearing regarding a reform in the structure of the
Internet Market. The hearing is aimed at ending the split of this
segment into two tiers and allowing Bezeq and Hot Telecom to market
a unified product (comprised of both infrastructure and ISP
components). This proposed reform will not apply to the business
sector. According to the hearing document, the proposed reform will
enter into force on January 1, 2022
allowing ISPs to prepare for the change in the structure of this
market. The Company has filed its position regarding this hearing.
The Company agrees with the consumer need for a unified service but
has argued that Bezeq and HOT should not be allowed to market this
service themselves, but rather through their subsidiaries (which
would purchase the infrastructure component at the same prices and
terms as all other competitors).
Maximum tariff for wholesale access to BSA service over Bezeq's
fiber optic network
Further to the description in the Company's annual report for
2018 regarding policy principles for the deployment of fiber-optic
infrastructure in Israel and the
public hearing description in the Company's Q2 2019 report, on
August 25, 2020 the MoC published its
decision regarding the maximum tariff that Bezeq will be allowed to
charge for access to the BSA (Bitstream Access) service over
Bezeq's fiber optic network. The maximum tariffs have been set as
follows - for a line with a speed of up to 550 Mbps the maximum
tariff will be NIS 71 per month
(excluding VAT) and for a line with a speed of up to 1,100 Mbps the
maximum tariff will be NIS 79 per
month (excluding VAT). These tariffs shall not include installation
fees. These tariffs mark a decrease from the initial tariffs
proposed by the MoC in its hearing on this matter (71 NIS for a speed of up to 400 Mbps, and
85 NIS for a speed of up to 1,100
Mbps), however, the proposed tariffs were meant to include
installation costs.
Business Developments
On November 9, 2020, Hermetic
Trust (1975) Ltd., which serves as a trustee, among others, of the
holders of the (Series F) debentures and the (Series G) debentures
issued by the Company, informed the Company that the scope of its
professional liability insurance coverage totals an amount of
NIS 10 million. This notice was given
in accordance with the provisions of the Series F and Series G
trust deeds, according to which the trustee must update the Company
should the insurance amount be reduced below the amount of
US$ 8 million for any reason, in
order to enable a report to be published on the subject.
Conference Call Details
Partner will hold a conference call on Wednesday, November 25, 2020 at 10.00AM Eastern Time / 5.00PM Israel Time.
To join the call, please dial the following numbers (at least 10
minutes before the scheduled time):
International: +972.3.918.0609
North America toll-free:
+1.866.860.9642
A live webcast of the call will also be available on Partner's
Investors Relations website at:
www.partner.co.il/en/Investors-Relations/lobby/
If you are unavailable to join live, the replay of the call will
be available from November 25, 2020
until December 9, 2020, at the
following numbers:
International: +972.3.925.5925
North America toll-free:
+1.888.326.9310
In addition, the archived webcast of the call will be available
on Partner's Investor Relations website at the above address for
approximately three months.
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the US Securities Act of 1933, as
amended, Section 21E of the US Securities Exchange Act of 1934, as
amended, and the safe harbor provisions of the US Private
Securities Litigation Reform Act of 1995. Words such as "estimate",
"believe", "anticipate", "expect", "intend", "seek", "will",
"plan", "could", "may", "project", "goal", "target" and similar
expressions often identify forward-looking statements but are not
the only way we identify these statements. In particular, this
press release communicates our expectation regarding the impact of
the continued cessation of international travel on the Company's
results of operations for the fourth quarter of 2020 and with
respect to the grant amount and/or discounts that the Company will
receive due to the frequency tender. In addition, all statements
other than statements of historical fact included in this press
release regarding our future performance are forward-looking
statements. We have based these forward-looking statements on our
current knowledge and our present beliefs and expectations
regarding possible future events. These forward-looking statements
are subject to risks, uncertainties and assumptions, including in
particular the grant amount and/or discounts due to the frequency
tender and the severity and duration of the impact on our business
of the current health crisis, and on the effectiveness of the
proactive measures the Company has taken to cut costs. We have also
assumed that we will continue to be able to take proactive
cost-cutting measures. In light of the current unreliability
of predictions as to the ultimate severity and duration of the
health crisis, future results may differ materially from those
currently anticipated. For further information regarding risks,
uncertainties and assumptions about Partner, trends in the Israeli
telecommunications industry in general, the impact of current
global economic conditions and possible regulatory and legal
developments, and other risks we face, see "Item 3. Key Information
- 3D. Risk Factors", "Item 4. Information on the Company", "Item 5.
Operating and Financial Review and Prospects", "Item 8. Financial
Information - 8A. Consolidated Financial Statements and Other
Financial Information - 8A.1 Legal and Administrative Proceedings"
and "Item 11. Quantitative and Qualitative Disclosures about Market
Risk" in the Company's Annual Reports on Form 20-F filed with the
SEC, as well as its immediate reports on Form 6-K furnished to the
SEC. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
The quarterly financial results presented in this press
release are unaudited financial results. The results were prepared
in accordance with IFRS, other than the non-GAAP financial measures
presented in the section, "Use of Non-GAAP Financial Measures". The
preparation of interim condensed consolidated financial statements
in conformity with IFRS requires management to make certain
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Management based such estimates on historical experience,
information available at the time, and assumptions believed to be
reasonable under the circumstances and at such time, including the
impact of extraordinary events such as the novel coronavirus
("COVID-19"). Actual results could differ from those
estimates.
The financial information is presented in NIS millions
(unless otherwise stated) and the figures presented are
rounded accordingly. The convenience translations of the New
Israeli Shekel (NIS) figures into US Dollars were made at the rate
of exchange prevailing at September 30, 2020: US
$1.00 equals NIS 3.441. The translations were made purely for
the convenience of the reader.
Use of Non-GAAP Financial Measures
The following non-GAAP measures are used in this report. These
measures are not financial measures under IFRS and may not be
comparable to other similarly titled measures for other companies.
Further, the measures may not be indicative of the Company's
historic operating results nor are meant to be predictive of
potential future results.
Non-GAAP
Measure
|
Calculation
|
Most Comparable
IFRS
Financial Measure
|
Adjusted
EBITDA
|
Profit
(Loss)
add
Income tax
expenses,
Finance costs,
net,
Depreciation and
amortization expenses (including
amortization of intangible assets, deferred
expenses-right of use and impairment charges),
Other expenses
(mainly amortization of share based
compensation)
Adjusted
EBITDA
divided
by
Total
revenues
|
Profit
(Loss)
|
Adjusted EBITDA
margin (%)
|
Adjusted Free
Cash Flow
|
Net cash provided by
operating activities
add
Net cash used in
investing activities
deduct
Proceeds from
(investment in) short-term
deposits,
net
deduct
Lease principal
payments
deduct
Lease interest
payments
|
Net cash provided
by
operating activities
add
Net cash used in
investing
activities
|
Total Operating
Expenses
(OPEX)
|
Cost of service
revenues
add
Selling and marketing
expenses
add
General and
administrative expenses
deduct
Depreciation and
amortization expenses,
Other expenses (mainly
amortization of employee
share based compensation)
|
Sum of:
Cost of service
revenues,
Selling and
marketing
expenses,
General and
administrative
expenses
|
Net Debt
|
Current maturities of
notes payable and borrowings
add
Notes
payable
add
Borrowings from
banks
add
Advances on account
of notes payables
add
Financial liability
at fair value
deduct
Cash and cash
equivalents
deduct
Short-term
deposits
|
Sum of:
Current maturities of
notes
payable and borrowings,
Notes
payable,
Borrowings from
banks, Advances
on account of notes payables,
Financial liability
at fair value
Less
Sum of:
Cash and cash
equivalents,
Short-term
deposits
|
About Partner Communications
Partner Communications Company Ltd. is a leading Israeli
provider of telecommunications services (cellular, fixed-line
telephony, internet services and TV services). Partner's ADSs are
quoted on the NASDAQ Global Select Market™ and its shares are
traded on the Tel Aviv Stock Exchange (NASDAQ and TASE:
PTNR).
For more information about Partner,
see: http://www.partner.co.il/en/Investors-Relations/lobby
Contacts:
Tamir Amar
Chief Financial
Officer
Tel:
+972-54-781-4951
|
Amir Adar
Head of Investor
Relations and Corporate Projects
Tel:
+972-54-781-5051
E-mail:
investors@partner.co.il
|
PARTNER
COMMUNICATIONS COMPANY LTD.
|
(An Israeli
Corporation)
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
|
|
|
|
New Israeli
Shekels
|
Convenience translation
into
U.S. Dollars
|
|
|
December
31,
|
September
30,
|
September
30,
|
|
|
2019
|
2020
|
2020
|
|
|
(Audited)
|
(Unaudited)
|
(Unaudited)
|
|
|
In
millions
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
299
|
364
|
106
|
Short-term
deposits
|
|
552
|
658
|
191
|
Trade
receivables
|
|
624
|
582
|
169
|
Other receivables and
prepaid expenses
|
|
39
|
34
|
10
|
Deferred expenses –
right of use
|
|
26
|
28
|
8
|
Inventories
|
|
124
|
109
|
32
|
|
|
1,664
|
1,775
|
516
|
|
|
|
|
|
NON CURRENT
ASSETS
|
|
|
|
|
Trade
receivables
|
|
250
|
235
|
68
|
Deferred expenses –
right of use
|
|
102
|
111
|
32
|
Lease – right of
use
|
|
582
|
569
|
165
|
Property and
equipment
|
|
1,430
|
1,455
|
424
|
Intangible and other
assets
|
|
538
|
531
|
154
|
Goodwill
|
|
407
|
407
|
118
|
Deferred income tax
asset
|
|
41
|
35
|
10
|
Prepaid expenses and
other assets
|
|
1
|
9
|
3
|
|
|
3,351
|
3,352
|
974
|
|
|
|
|
|
TOTAL
ASSETS
|
|
5,015
|
5,127
|
1,490
|
PARTNER
COMMUNICATIONS COMPANY LTD.
|
(An Israeli
Corporation)
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
|
|
|
|
New Israeli
Shekels
|
Convenience
translation
into
U.S. Dollars
|
|
|
December
31,
|
September
30,
|
September
30,
|
|
|
2019
|
2020
|
2020
|
|
|
(Audited)
|
(Unaudited)
|
(Unaudited)
|
|
|
In
millions
|
CURRENT
LIABILITIES
|
|
|
|
|
Current maturities of
notes payable and borrowings
|
|
367
|
290
|
84
|
Trade
payables
|
|
716
|
693
|
201
|
Payables in respect of
employees
|
|
103
|
79
|
24
|
Other payables (mainly
institutions)
|
|
23
|
25
|
7
|
Income tax
payable
|
|
30
|
32
|
9
|
Lease
liabilities
|
|
131
|
127
|
37
|
Deferred revenues from
HOT mobile
|
|
31
|
31
|
9
|
Other deferred
revenues
|
|
45
|
65
|
19
|
Provisions
|
|
43
|
33
|
10
|
|
|
1,489
|
1,375
|
400
|
NON CURRENT
LIABILITIES
|
|
|
|
|
Notes
payable
|
|
1,275
|
1,265
|
368
|
Borrowings from
banks
|
|
138
|
99
|
29
|
Financial liability at
fair value
|
|
28
|
14
|
4
|
Liability for employee
rights upon retirement, net
|
|
43
|
41
|
12
|
Lease
liabilities
|
|
486
|
474
|
138
|
Deferred
revenues from HOT mobile
|
|
102
|
79
|
23
|
Provisions and
other non-current liabilities
|
|
37
|
66
|
18
|
|
|
2,109
|
2,038
|
592
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
3,598
|
3,413
|
992
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Share capital -
ordinary shares of NIS 0.01 par
value: authorized - December 31, 2019 and September 30, 2020 - 235,000,000
shares; issued and
outstanding
-
|
2
|
2
|
1
|
December 31, 2019 –
*162,915,990 shares
|
|
|
|
September 30, 2020 –
*182,736,313 shares
|
|
|
|
Capital
surplus
|
|
1,077
|
1,315
|
382
|
Accumulated retained
earnings
|
|
576
|
597
|
173
|
Treasury shares, at
cost December 31, 2019 –
**8,275,837 shares September
30, 2020 – **7,787,618 shares
|
|
(238)
|
(200)
|
(58)
|
TOTAL
EQUITY
|
|
1,417
|
1,714
|
498
|
TOTAL LIABILITIES
AND EQUITY
|
|
5,015
|
5,127
|
1,490
|
* Net of treasury shares.
** Including restricted shares in amount of 1,247,583 and
940,226 as of December 31, 2019 and
September 30, 2020, respectively, held by a trustee under the
Company's Equity Incentive Plan, such shares may become outstanding
upon completion of vesting conditions.
PARTNER
COMMUNICATIONS COMPANY LTD.
|
(An Israeli
Corporation)
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
|
|
|
|
New Israeli
shekels
|
Convenience
translation
into
U.S. dollars
|
|
|
9 months period
ended
September
30,
|
3 months period
ended
September
30,
|
9 months
period ended September
30,
|
3 months
period ended September
30,
|
|
|
2019
|
2020
|
2019
|
2020
|
2020
|
2020
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
In millions
(except per share data)
|
Revenues,
net
|
|
2,400
|
2,381
|
825
|
800
|
692
|
233
|
Cost of
revenues
|
|
2,014
|
1,985
|
687
|
677
|
577
|
197
|
Gross
profit
|
|
386
|
396
|
138
|
123
|
115
|
36
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
228
|
212
|
78
|
72
|
62
|
21
|
General and
administrative expenses
|
|
124
|
129
|
42
|
39
|
37
|
11
|
Other income,
net
|
|
23
|
21
|
8
|
8
|
6
|
2
|
Operating
profit
|
|
57
|
76
|
26
|
20
|
22
|
6
|
Finance
income
|
|
4
|
4
|
1
|
1
|
1
|
*
|
Finance
expenses
|
|
52
|
60
|
19
|
25
|
17
|
7
|
Finance costs,
net
|
|
48
|
56
|
18
|
24
|
16
|
7
|
Profit (loss)
before income tax
|
|
9
|
20
|
8
|
(4)
|
6
|
(1)
|
Income tax expenses
(income)
|
|
(3)
|
8
|
1
|
1
|
2
|
*
|
Profit (loss) for the
period
|
|
12
|
12
|
7
|
(5)
|
4
|
(1)
|
Attributable
to:
|
|
|
|
|
|
|
|
Owners of the
Company
|
|
12
|
12
|
7
|
(5)
|
4
|
(1)
|
Non-controlling
interests
|
|
*
|
|
|
|
|
|
Profit
(loss) for the period
|
|
12
|
12
|
7
|
(5)
|
4
|
(1)
|
|
|
|
|
|
|
|
|
Earnings (losses)
per share
|
|
|
|
|
|
|
|
Basic
|
|
0.07
|
0.06
|
0.04
|
(0.03)
|
0.02
|
(0.01)
|
Diluted
|
|
0.07
|
0.06
|
0.04
|
(0.03)
|
0.02
|
(0.01)
|
Weighted average
number of shares
outstanding (in thousands)
|
|
|
|
|
|
|
|
Basic
|
|
162,802
|
182,183
|
162,864
|
182,688
|
182,183
|
182,688
|
Diluted
|
|
163,497
|
182,839
|
163,505
|
182,688
|
182,839
|
182,688
|
*
Representing an amount of less than 1 million.
|
PARTNER
COMMUNICATIONS COMPANY LTD.
|
(An Israeli
Corporation)
|
INTERIM CONDENSED CONSOLIDATED
STATEMENTS
|
OF COMPREHENSIVE
INCOME
|
|
|
|
New Israeli
shekels
|
Convenience
translation
into U.S. dollars
|
|
|
9 months period
ended
September 30,
|
3 months period
ended
September 30,
|
9 months
period ended
September
30,
|
3 months
period ended
September
30,
|
|
|
2019
|
2020
|
2019
|
2020
|
2020
|
2020
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
In
millions
|
Profit (loss) for the
period
|
|
12
|
12
|
7
|
(5)
|
4
|
(1)
|
Other
comprehensive income
for the period, net of
income tax
|
|
|
1
|
|
|
*
|
|
TOTAL
COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD
|
|
12
|
13
|
7
|
(5)
|
4
|
(1)
|
Total
comprehensive income (loss) attributable to:
|
|
|
|
|
|
|
|
Owners of the
Company
|
|
12
|
13
|
7
|
(5)
|
4
|
(1)
|
Non-controlling
interests
|
|
*
|
|
|
|
|
|
TOTAL
COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD
|
|
12
|
13
|
7
|
(5)
|
4
|
(1)
|
|
|
|
|
|
|
|
|
*
Representing an amount of less than 1 million.
|
PARTNER
COMMUNICATIONS COMPANY LTD.
|
(An Israeli
Corporation)
|
INTERIM SEGMENT
INFORMATION & ADJUSTED EBITDA RECONCILIATION
|
|
|
New Israeli
Shekels
|
|
|
New Israeli
Shekels
|
|
|
9 months period
ended September 30, 2020
|
|
|
9 months period
ended September 30, 2019
|
|
|
In millions
(Unaudited)
|
|
|
In millions
(Unaudited)
|
|
|
Cellular segment
|
|
Fixed line segment
|
|
Elimination
|
|
Consolidated
|
|
|
Cellular segment
|
|
Fixed line segment
|
|
Elimination
|
|
Consolidated
|
|
Segment revenue -
Services
|
1,235
|
|
641
|
|
|
|
1,876
|
|
|
1,348
|
|
576
|
|
|
|
1,924
|
|
Inter-segment revenue -
Services
|
12
|
|
100
|
|
(112)
|
|
|
|
|
12
|
|
111
|
|
(123)
|
|
|
|
Segment revenue -
Equipment
|
410
|
|
95
|
|
|
|
505
|
|
|
399
|
|
77
|
|
|
|
476
|
|
Total
revenues
|
1,657
|
|
836
|
|
(112)
|
|
2,381
|
|
|
1,759
|
|
764
|
|
(123)
|
|
2,400
|
|
Segment cost of
revenues - Services
|
960
|
|
625
|
|
|
|
1,585
|
|
|
1,044
|
|
601
|
|
|
|
1,645
|
|
Inter-segment cost
of revenues - Services
|
100
|
|
12
|
|
(112)
|
|
|
|
|
111
|
|
12
|
|
(123)
|
|
|
|
Segment cost of
revenues - Equipment
|
339
|
|
61
|
|
|
|
400
|
|
|
321
|
|
48
|
|
|
|
369
|
|
Cost of
revenues
|
1,399
|
|
698
|
|
(112)
|
|
1,985
|
|
|
1,476
|
|
661
|
|
(123)
|
|
2,014
|
|
Gross
profit
|
258
|
|
138
|
|
|
|
396
|
|
|
283
|
|
103
|
|
|
|
386
|
|
Operating expenses
(3)
|
227
|
|
114
|
|
|
|
341
|
|
|
253
|
|
99
|
|
|
|
352
|
|
Other income,
net
|
15
|
|
6
|
|
|
|
21
|
|
|
17
|
|
6
|
|
|
|
23
|
|
Operating
profit
|
46
|
|
30
|
|
|
|
76
|
|
|
47
|
|
10
|
|
|
|
57
|
|
Adjustments to
presentation of
segment
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–Depreciation and
amortization
|
342
|
|
192
|
|
|
|
|
|
|
418
|
|
149
|
|
|
|
|
|
–Other
(1)
|
7
|
|
2
|
|
|
|
|
|
|
14
|
|
(2)
|
|
|
|
|
|
Segment Adjusted
EBITDA (2)
|
395
|
|
224
|
|
|
|
|
|
|
479
|
|
157
|
|
|
|
|
|
Reconciliation of
segment subtotal Adjusted
EBITDA to profit for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segments subtotal
Adjusted EBITDA (2)
|
|
|
|
|
|
|
619
|
|
|
|
|
|
|
|
|
636
|
|
-
Depreciation and amortization
|
|
|
|
|
|
|
(534)
|
|
|
|
|
|
|
|
|
(567)
|
|
- Finance
costs, net
|
|
|
|
|
|
|
(56)
|
|
|
|
|
|
|
|
|
(48)
|
|
- Income tax
income (expenses)
|
|
|
|
|
|
|
(8)
|
|
|
|
|
|
|
|
|
3
|
|
- Other
(1)
|
|
|
|
|
|
|
(9)
|
|
|
|
|
|
|
|
|
(12)
|
|
Profit for the
period
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
12
|
|
PARTNER
COMMUNICATIONS COMPANY LTD.
|
(An Israeli
Corporation)
|
INTERIM SEGMENT
INFORMATION & ADJUSTED EBITDA RECONCILIATION
|
|
|
New Israeli
Shekels
|
|
|
New Israeli
Shekels
|
|
|
3 months period
ended September 30, 2020
|
|
|
3 months period
ended September 30, 2019
|
|
|
In millions
(Unaudited)
|
|
|
In millions
(Unaudited)
|
|
|
Cellular segment
|
|
Fixed line
segment
|
|
Elimination
|
|
Consolidated
|
|
|
Cellular segment
|
|
Fixed line segment
|
|
Elimination
|
|
Consolidated
|
|
Segment revenue -
Services
|
411
|
|
220
|
|
|
|
631
|
|
|
462
|
|
196
|
|
|
|
658
|
|
Inter-segment revenue -
Services
|
4
|
|
32
|
|
(36)
|
|
|
|
|
4
|
|
37
|
|
(41)
|
|
|
|
Segment revenue -
Equipment
|
134
|
|
35
|
|
|
|
169
|
|
|
142
|
|
25
|
|
|
|
167
|
|
Total
revenues
|
549
|
|
287
|
|
(36)
|
|
800
|
|
|
608
|
|
258
|
|
(41)
|
|
825
|
|
Segment cost of
revenues - Services
|
320
|
|
226
|
|
|
|
546
|
|
|
350
|
|
203
|
|
|
|
553
|
|
Inter-segment cost
of revenues - Services
|
32
|
|
4
|
|
(36)
|
|
|
|
|
37
|
|
4
|
|
(41)
|
|
|
|
Segment cost of
revenues - Equipment
|
110
|
|
21
|
|
|
|
131
|
|
|
119
|
|
15
|
|
|
|
134
|
|
Cost of
revenues
|
462
|
|
251
|
|
(36)
|
|
677
|
|
|
506
|
|
222
|
|
(41)
|
|
687
|
|
Gross
profit
|
87
|
|
36
|
|
|
|
123
|
|
|
102
|
|
36
|
|
|
|
138
|
|
Operating expenses
(3)
|
72
|
|
39
|
|
|
|
111
|
|
|
84
|
|
36
|
|
|
|
120
|
|
Other income,
net
|
5
|
|
3
|
|
|
|
8
|
|
|
6
|
|
2
|
|
|
|
8
|
|
Operating
profit
|
20
|
|
*
|
|
|
|
20
|
|
|
24
|
|
2
|
|
|
|
26
|
|
Adjustments to
presentation of
segment
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–Depreciation and
amortization
|
113
|
|
68
|
|
|
|
|
|
|
140
|
|
55
|
|
|
|
|
|
–Other
(1)
|
1
|
|
2
|
|
|
|
|
|
|
6
|
|
(2)
|
|
|
|
|
|
Segment Adjusted
EBITDA (2)
|
134
|
|
70
|
|
|
|
|
|
|
170
|
|
55
|
|
|
|
|
|
Reconciliation of
segment subtotal Adjusted
EBITDA to profit (loss) for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segments subtotal
Adjusted EBITDA(2)
|
|
|
|
|
|
|
204
|
|
|
|
|
|
|
|
|
225
|
|
-
Depreciation and amortization
|
|
|
|
|
|
|
(181)
|
|
|
|
|
|
|
|
|
(195)
|
|
- Finance
costs, net
|
|
|
|
|
|
|
(24)
|
|
|
|
|
|
|
|
|
(18)
|
|
- Income tax expenses
|
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
|
|
(1)
|
|
- Other
(1)
|
|
|
|
|
|
|
(3)
|
|
|
|
|
|
|
|
|
(4)
|
|
Profit (loss) for
the period
|
|
|
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
7
|
|
* Representing an amount of less
than 1 million.
(1) Mainly amortization of employee share based compensation.
(2) Adjusted EBITDA as reviewed by the CODM represents Earnings
Before Interest (finance costs, net), Taxes, Depreciation and
Amortization (including amortization of intangible assets, deferred
expenses-right of use and impairment charges) and Other expenses
(mainly amortization of share based compensation). Adjusted EBITDA
is not a financial measure under IFRS and may not be comparable to
other similarly titled measures for other companies. Adjusted
EBITDA may not be indicative of the Group's historic operating
results nor is it meant to be predictive of potential future
results. The usage of the term "Adjusted EBITDA" is to highlight
the fact that the Amortization includes amortization of deferred
expenses – right of use and amortization of employee share based
compensation and impairment charges. (3) Operating
expenses include selling and marketing expenses and general and
administrative expenses.
PARTNER
COMMUNICATIONS COMPANY LTD.
|
(An Israeli
Corporation)
|
INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
New Israeli
Shekels
|
Convenience
translation
into
U.S. Dollars
|
|
9 months period
ended September 30,
|
|
2019
|
2020
|
2020
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
In
millions
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Cash generated from
operations (Appendix)
|
660
|
605
|
175
|
Income tax
paid
|
(1)
|
(1)
|
*
|
Net cash provided by
operating activities
|
659
|
604
|
175
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Acquisition of
property and equipment
|
(378)
|
(293)
|
(85)
|
Acquisition of
intangible and other assets
|
(124)
|
(124)
|
(36)
|
Acquisition of a
business, net of cash acquired
|
(3)
|
|
|
Investment in
short-term deposits, net
|
(156)
|
(106)
|
(31)
|
Interest
received
|
1
|
3
|
1
|
Consideration received
from sales of property and equipment
|
2
|
|
|
Net cash used in
investing activities
|
(658)
|
(520)
|
(151)
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Lease principal
payments
|
(109)
|
(102)
|
(30)
|
Lease interest
payments
|
(15)
|
(13)
|
(4)
|
Interest
paid
|
(21)
|
(42)
|
(12)
|
Share
issuance
|
|
276
|
80
|
Proceeds from issuance
of notes payable, net of issuance costs
|
256
|
412
|
120
|
Proceeds from issuance
of option warrants exercisable for notes
payables
|
37
|
|
|
Repayment of notes
payable
|
|
(510)
|
(148)
|
Repayment of
non-current borrowings
|
(39)
|
(39)
|
(11)
|
Repayment of current
borrowings
|
(13)
|
|
|
Settlement of
contingent consideration
|
|
(1)
|
*
|
Transactions with
non-controlling interests
|
(2)
|
|
|
Net cash provided by
financing activities
|
94
|
(19)
|
(5)
|
INCREASE IN CASH
AND CASH EQUIVALENTS
|
95
|
65
|
19
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF
PERIOD
|
416
|
299
|
87
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
511
|
364
|
106
|
|
|
|
|
* Representing an amount of less than 1
million.
PARTNER
COMMUNICATIONS COMPANY LTD.
|
(An
Israeli Corporation)
|
INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Appendix - Cash
generated from operations and supplemental
information
|
|
|
New Israeli
Shekels
|
Convenience
translation
into
U.S. Dollars
|
|
9 months period
ended September 30,
|
|
2019
|
2020
|
2020
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
In
millions
|
|
|
|
|
Cash generated from
operations:
|
|
|
|
Profit for the
period
|
12
|
12
|
4
|
Adjustments for:
|
|
|
|
Depreciation and amortization
|
546
|
511
|
149
|
Amortization of deferred expenses - Right of use
|
21
|
23
|
7
|
Employee share based compensation expenses
|
13
|
8
|
2
|
Liability for employee rights upon retirement, net
|
2
|
(1)
|
*
|
Finance costs,
net
|
4
|
(1)
|
(1)
|
Lease interest
payments
|
15
|
13
|
4
|
Interest
paid
|
21
|
42
|
12
|
Interest
received
|
(1)
|
(3)
|
(1)
|
Deferred income taxes
|
2
|
6
|
2
|
Income tax
paid
|
1
|
1
|
*
|
Capital loss from property and equipment
|
(2)
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Decrease (increase) in accounts receivable:
|
|
|
|
Trade
|
71
|
57
|
16
|
Other
|
(2)
|
3
|
1
|
Increase (decrease) in
accounts payable and accruals:
|
|
|
|
Trade
|
28
|
(14)
|
(4)
|
Other payables
|
8
|
(22)
|
(7)
|
Provisions
|
(14)
|
(10)
|
(3)
|
Deferred revenues from HOT mobile
|
(24)
|
(23)
|
(7)
|
Other deferred revenues
|
6
|
20
|
6
|
Increase in
deferred expenses - Right of use
|
(39)
|
(34)
|
(10)
|
Current income
tax
|
(6)
|
2
|
1
|
Decrease (increase) in inventories
|
(2)
|
15
|
4
|
Cash generated from
operations
|
660
|
605
|
175
|
|
|
|
|
|
|
|
|
|
* Representing an amount of less than 1
million.
At September 30, 2020 and 2019,
trade and other payables include NIS 114
million ($33 million) and
NIS 133 million, respectively, in respect of acquisition of
intangible assets and property and equipment; payments in respect
thereof are presented in cash flows from investing activities.
These balances are recognized in the cash flow statements upon
payment.
Reconciliation of
Non-GAAP Measures:
|
|
Adjusted Free
Cash Flow
|
New Israeli
Shekels
|
Convenience
translation
into
U.S. Dollars
|
|
9 months
period ended
September
30,
|
3 months period
ended
September
30,
|
9 months period
ended
September
30,
|
3 months period
ended
September
30,
|
|
2019
|
2020
|
2019
|
2020
|
2020
|
2020
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
In
millions
|
Net cash provided by
operating activities
|
659
|
604
|
230
|
207
|
175
|
60
|
Net cash used in
investing
activities
|
(658)
|
(520)
|
(90)
|
(198)
|
(151)
|
(58)
|
Investment in
short-termdeposits, net
|
156
|
106
|
(85)
|
51
|
31
|
15
|
Lease principal
payments
|
(109)
|
(102)
|
(37)
|
(35)
|
(30)
|
(10)
|
Lease interest
payments
|
(15)
|
(13)
|
(5)
|
(4)
|
(4)
|
(1)
|
Adjusted Free Cash
Flow
|
33
|
75
|
13
|
21
|
21
|
6
|
Interest
paid
|
(21)
|
(42)
|
(1)
|
(9)
|
(12)
|
(3)
|
Adjusted Free Cash
Flow After Interest
|
12
|
33
|
12
|
12
|
9
|
3
|
|
|
|
|
|
|
|
Total Operating
Expenses (OPEX)
|
New Israeli
Shekels
|
Convenience
translation
into
U.S. Dollars
|
|
9 months period
ended
September
30,
|
3 months period
ended
September
30,
|
9
months period
ended
September
30,
|
3 months
period ended
September
30,
|
|
2019
|
2020
|
2019
|
2020
|
2020
|
2020
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
In
millions
|
Cost of revenues –
Services
|
1,645
|
1,585
|
553
|
546
|
461
|
159
|
Selling and marketing
expenses
|
228
|
212
|
78
|
72
|
62
|
21
|
General and
administrative expenses
|
124
|
129
|
42
|
39
|
37
|
11
|
Depreciation and
amortization
|
(567)
|
(534)
|
(195)
|
(181)
|
(156)
|
(53)
|
Other
|
(12)
|
(1)
|
(4)
|
(1)
|
*
|
*
|
OPEX
|
1,418
|
1,391
|
474
|
475
|
404
|
138
|
|
|
|
|
|
|
|
* Representing an amount of less than 1
million.
Key Financial and Operating Indicators
(unaudited) ****
NIS M unless
otherwise stated
|
Q3'
18
|
Q4'
18
|
Q1'
19
|
Q2'
19
|
Q3'
19
|
Q4'
19
|
Q1'
20
|
Q2'
20
|
Q3'
20
|
|
2018
|
2019
|
Cellular Segment
Service Revenues
|
476
|
447
|
441
|
453
|
466
|
438
|
423
|
409
|
415
|
|
1,843
|
1,798
|
Cellular Segment
Equipment Revenues
|
143
|
165
|
142
|
115
|
142
|
172
|
146
|
130
|
134
|
|
643
|
571
|
Fixed-Line Segment
Service Revenues
|
220
|
220
|
224
|
230
|
233
|
238
|
245
|
244
|
252
|
|
852
|
925
|
Fixed-Line Segment
Equipment Revenues
|
25
|
24
|
28
|
24
|
25
|
26
|
32
|
28
|
35
|
|
92
|
103
|
Reconciliation for
consolidation
|
(42)
|
(42)
|
(41)
|
(41)
|
(41)
|
(40)
|
(39)
|
(37)
|
(36)
|
|
(171)
|
(163)
|
Total
Revenues
|
822
|
814
|
794
|
781
|
825
|
834
|
807
|
774
|
800
|
|
3,259
|
3,234
|
Gross Profit from
Equipment Sales
|
44
|
42
|
39
|
35
|
33
|
37
|
37
|
30
|
38
|
|
166
|
144
|
Operating
Profit*
|
48
|
14
|
9
|
22
|
26
|
30
|
36
|
20
|
20
|
|
116
|
87
|
Cellular Segment
Adjusted EBITDA*
|
145
|
119
|
150
|
159
|
170
|
156
|
132
|
129
|
134
|
|
524
|
635
|
Fixed-Line Segment
Adjusted EBITDA*
|
56
|
53
|
47
|
55
|
55
|
61
|
83
|
71
|
70
|
|
198
|
218
|
Total Adjusted
EBITDA*
|
201
|
172
|
197
|
214
|
225
|
217
|
215
|
200
|
204
|
|
722
|
853
|
Adjusted EBITDA
Margin (%)*
|
24%
|
21%
|
25%
|
27%
|
27%
|
26%
|
27%
|
26%
|
26%
|
|
22%
|
26%
|
OPEX*
|
504
|
502
|
472
|
472
|
474
|
467
|
460
|
456
|
475
|
|
1,996
|
1,885
|
Finance costs,
net*
|
10
|
12
|
14
|
16
|
18
|
20
|
19
|
13
|
24
|
|
53
|
68
|
Profit
(Loss)*
|
26
|
19
|
2
|
3
|
7
|
7
|
10
|
7
|
(5)
|
|
56
|
19
|
Capital Expenditures
(cash)
|
117
|
143
|
185
|
143
|
174
|
127
|
151
|
119
|
147
|
|
502
|
629
|
Capital Expenditures
(additions)
|
111
|
177
|
157
|
142
|
150
|
129
|
129
|
121
|
179
|
|
499
|
578
|
Adjusted Free Cash
Flow
|
70
|
(22)
|
(11)
|
31
|
13
|
16
|
10
|
44
|
21
|
|
124
|
49
|
Adjusted Free Cash
Flow (after interest)
|
62
|
(37)
|
(15)
|
15
|
12
|
0
|
8
|
13
|
12
|
|
55
|
12
|
Net Debt
|
898
|
950
|
977
|
965
|
956
|
957
|
673
|
658
|
646
|
|
950
|
957
|
Cellular Subscriber
Base (Thousands)**
|
2,630
|
2,646
|
2,620
|
2,616
|
2,651
|
2,657
|
2,676
|
2,708
|
2,762
|
|
2,646
|
2,657
|
Post-Paid Subscriber
Base (Thousands)**
|
2,333
|
2,361
|
2,340
|
2,337
|
2,366
|
2,366
|
2,380
|
2,404
|
2,437
|
|
2,361
|
2,366
|
Pre-Paid Subscriber
Base (Thousands)
|
297
|
285
|
280
|
279
|
285
|
291
|
296
|
304
|
325
|
|
285
|
291
|
Cellular ARPU
(NIS)
|
60
|
57
|
56
|
58
|
59
|
55
|
53
|
51
|
51
|
|
58
|
57
|
Cellular Churn Rate
(%)**
|
8.0%
|
8.5%
|
8.5%
|
7.9%
|
7.7%
|
7.2%
|
7.5%
|
7.5%
|
7.3%
|
|
35%
|
31%
|
Number of Employees
(FTE)***
|
2,821
|
2,782
|
2,897
|
2,895
|
2,923
|
2,834
|
1,867
|
2,745
|
2,731
|
|
2,782
|
2,834
|
* Figures from 2019 include impact
of adoption of IFRS 16 - Leases (see also report 20-F).
** As from Q4 2018, M2M subscriptions are
included in the post-paid subscriber base on a standardized basis.
This change had the effect of increasing the Post-Paid subscriber
base at December 31, 2018, by approximately 34 thousand
subscribers.
*** From 2019, the number of employees (FTE) also includes
the number of FTE of PHI on a proportional basis of Partner's share
in the subsidiary (50%). Excluding employees on unpaid leave as of
March 31, 2020.
****See footnote 2 regarding use of non-GAAP measures.
Disclosure for notes holders as of September 30, 2020
Information regarding the notes series issued by the Company,
in million NIS
Series
|
Original
issuance
date
|
Principal on
the date of
issuance
|
As of
30.09.2020
|
Annual interest
rate
|
Principal
repayment
dates
|
Interest
repayment
dates
|
Interest
linkage
|
Trustee contact
details
|
Principal
book value
|
Linked principal
book value
|
Interest
accumulated
in books
|
Market
value
|
From
|
To
|
|
|
|
D
|
25.04.10
04.05.11*
|
400
146
|
218
|
218
|
**
|
219
|
1.228%
(MAKAM+1.2%)
|
30.12.17
|
30.12.21
|
30.03, 30.06, 30.09,
30.12
|
Variable interest
MAKAM (4)
|
Hermetic Trust (1975)
Ltd.
Merav Offer. 113 Hayarkon St.,
Tel Aviv. Tel: 03-5544553.
|
F
(2) (3)
|
20.07.17
12.12.17*
04.12.18*
01.12.19*
|
255
389
150
226.75
|
512
|
512
|
3
|
526
|
2.16%
|
25.06.20
|
25.06.24
|
25.06,
25.12
|
Not Linked
|
Hermetic Trust (1975)
Ltd.
Merav Offer. 113
Hayarkon St.,
Tel Aviv. Tel: 03-5544553.
|
G
(1) (2)
|
06.01.19
01.07.19*
28.11.19*
27.02.20*
31.05.20*
01.07.20*
02.07.20*
|
225
38.5
86.5
15.1
84.8
12.2
300
|
762
|
762
|
8
|
849
|
4%
|
25.06.22
|
25.06.27
|
25.06
|
Not Linked
|
Hermetic Trust (1975)
Ltd.
Merav Offer. 113
Hayarkon St.,
Tel Aviv. Tel: 03-5544553.
|
(1) In April 2019, the
Company issued in a private placement 2 series of untradeable
option warrants that are exercisable for the Company's Series G
debentures. The exercise period of the first series is between
July 1, 2019 and May 31, 2020 and of the second series is between
July 1, 2020 and May 31, 2021. The Series G debentures that will
be allotted upon the exercise of an option warrant will be
identical in all their rights to the Company's Series G debentures
immediately upon their allotment, and will be entitled to any
payment of interest or other benefit, the effective date of which
is due after the allotment date. The debentures that will be
allotted as a result of the exercise of option warrants will be
registered on the TASE. The total amount received by the Company on
the allotment date of the option warrants is NIS 37 million. For additional details see the
Company's press release dated April 17,
2019. Following exercise of option warrants from the first
series, the Company issued Series G Notes in a total principal
amount of NIS 225 million. Following
exercise of option warrants from the second series in July 2020, the Company issued Series G Notes in a
principal amount of NIS 12.2 million.
In November 2020 the Company received
an advance of NIS 55 million, for
which the Company will issue additional Series G Notes in a
principal amount of NIS 62 million by
the end of November 2020. As of
today, the total future considerations expected to the Company in
respect of the allotment of the option warrants from the second
series (after the exercises of option warrants as described above)
and in respect of their full exercise (and assuming that there will
be no change to the exercise price) is approximately NIS 23 million.
In July 2020, the Company issued
in a private placement additional Series G Notes in a principal
amount of NIS 300 million, under the
same conditions of the original series.
(2) Regarding Series F and G Notes, the Company is
required to comply with a financial covenant that the ratio of Net
Debt to Adjusted EBITDA shall not exceed 5. Compliance will be
examined and reported on a quarterly basis. For the purpose of the
covenant, Adjusted EBITDA is calculated as the sum total for the
last 12 month period, excluding adjustable one-time items. As of
June 30, 2020, the ratio of Net Debt
to Adjusted EBITDA was 0.8. Additional stipulations regarding
Series F and G Notes mainly include: shareholders' equity shall not
decrease below NIS 400 million and NIS
600 million, respectively; the Company shall not create
floating liens subject to certain terms; the Company has the right
for early redemption under certain conditions; the Company shall
pay additional annual interest of 0.5% in the case of a two-notch
downgrade in the Notes rating and an additional annual interest of
0.25% for each further single-notch downgrade, up to a maximum
additional interest of 1%; the Company shall pay additional annual
interest of 0.25% during a period in which there is a breach of the
financial covenant. In any case, the total maximum additional
interest for Series F and G, shall not exceed 1.25% or 1%,
respectively. For more information see the Company's Annual Report
on Form 20-F for the year ended December 31,
2019.
In the reporting period, the Company was in compliance
with all financial covenants and obligations and no cause for early
repayment occurred.
(3) In July 2020, the
Company executed a partial early redemption of Series F Notes in a
total principal amount of NIS 305
million. The total amount paid was NIS 313 million.
(4) 'MAKAM' is a variable interest based on the yield of
12 month government bonds issued by the government of Israel. The interest rate is updated on a
quarterly basis.
* On these dates additional Notes of the
series were issued. The information in the table refers to the full
series. **
Representing an amount of less than NIS 1
million.
Disclosure for Notes holders as of September 30, 2020 (cont.)
Notes Rating Details*
Series
|
Rating
Company
|
Rating as of
30.09.2020 and 25.11.2020 (1)
|
Rating assigned
upon issuance of the Series
|
Recent date of
rating
as of 30.09.2020 and 25.11.2020
|
Additional ratings
between the original issuance date and the recent date of rating
(2)
|
Date
|
Rating
|
D
|
S&P
Maalot
|
ilA+
|
ilAA-
|
08/2020
|
07/2010, 09/2010,
10/2010, 09/2012,
12/2012, 06/2013,
07/2014, 07/2015,
07/2016, 07/2017,
08/2018, 11/2018,
12/2018, 01/2019,
04/2019, 08/2019,
02/2020, 05/2020,
06/2020, 07/2020
08/2020
|
ilAA-, ilAA-, ilAA-,
ilAA-,
ilAA-, ilAA-, ilAA-,
ilA+,
ilA+, ilA+, ilA+,
ilA+,
ilA+, ilA+, ilA+,
ilA+,
ilA+, ilA+, ilA+,
ilA+
ilA+
|
F
|
S&P
Maalot
|
ilA+
|
ilA+
|
08/2020
|
07/2017, 09/2017,
12/2017, 01/2018,
08/2018, 11/2018,
12/2018, 01/2019,
04/2019, 08/2019,
02/2020, 05/2020,
06/2020, 07/2020,
08/2020
|
ilA+, ilA+, ilA+,
ilA+,
ilA+, ilA+, ilA+,
ilA+,
ilA+, ilA+, ilA+,
ilA+
ilA+, ilA+,
ilA+
|
G (3)
|
S&P
Maalot
|
ilA+
|
ilA+
|
08/2020
|
12/2018, 01/2019,
04/2019, 08/2019,
02/2020,
05/2020, 06/2020, 07/2020
08/2020
|
ilA+, ilA+, ilA+,
ilA+,
ilA+, ilA+, ilA+,
ilA+
ilA+
|
(1) In August 2020, S&P Maalot
has reaffirmed the Company's ilA+ credit rating and updated the
Company's rating outlook from "negative" to "stable".
(2) For details regarding the rating of the notes see the
S&P Maalot reports dated August 10,
2020.
(3) In January 2019, the Company
issued Series G Notes in a principal amount of NIS 225 million. In July
2019, November 2019,
February 2020 and May 31, 2020 the Company issued
additional Series G Notes in a principal amount of NIS 38.5 million, NIS 86.5
million, NIS 15.1 million and
NIS 84.8 million, respectively. In
July, 2020, the Company issued additional Series G Notes in a total
principal amount of NIS 312.2
million.
* 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
Summary of Financial Undertakings (according to repayment dates)
as of September 30, 2020
a. Notes issued to the public by the Company and held by
the public, excluding such notes 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
|
-
|
237,130
|
-
|
-
|
-
|
43,244
|
Second
year
|
-
|
313,342
|
-
|
-
|
-
|
39,115
|
Third year
|
-
|
204,114
|
-
|
-
|
-
|
32,962
|
Fourth
year
|
-
|
204,114
|
-
|
-
|
-
|
27,217
|
Fifth year and
on
|
-
|
533,487
|
-
|
-
|
-
|
51,824
|
Total
|
-
|
1,492,187
|
-
|
-
|
-
|
194,362
|
b. Private notes and other non-bank credit, excluding such
notes 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 – None.
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
|
-
|
52,132
|
-
|
-
|
-
|
3,229
|
Second
year
|
-
|
52,132
|
-
|
-
|
-
|
1,959
|
Third year
|
-
|
30,073
|
-
|
-
|
-
|
825
|
Fourth
year
|
-
|
17,080
|
-
|
-
|
-
|
213
|
Fifth year and
on
|
-
|
-
|
-
|
-
|
-
|
-
|
Total
|
-
|
151,417
|
-
|
-
|
-
|
6,226
|
Summary of Financial Undertakings (according to repayment dates)
as of September 30, 2020 (cont.)
d. Credit from banks abroad based on the Company's "Solo"
financial data – None.
e. Total of sections a - d above, total credit from banks,
non-bank credit and notes 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
|
-
|
289,262
|
-
|
-
|
-
|
46,473
|
Second
year
|
-
|
365,474
|
-
|
-
|
-
|
41,074
|
Third year
|
-
|
234,187
|
-
|
-
|
-
|
33,787
|
Fourth
year
|
-
|
221,194
|
-
|
-
|
-
|
27,430
|
Fifth year and
on
|
-
|
533,487
|
-
|
-
|
-
|
51,824
|
Total
|
-
|
1,643,604
|
-
|
-
|
-
|
200,588
|
f. Off-balance sheet Credit exposure based on the
Company's "Solo" financial data (in thousand NIS) – 50,000
(Guarantees on behalf of a joint arrangement, without expiration
date).
g. Off-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 - None.
h. Total balances of the credit from banks, non-bank
credit and notes of all the consolidated companies, excluding
companies that are reporting corporations and excluding Company's
data presented in sections a - d above - None.
i. Total balances of credit granted to the Company by the
parent company or a controlling shareholder and balances of notes
offered by the Company held by the parent company or the
controlling shareholder - 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 notes offered by the Company held by companies held by the
parent company or the controlling shareholder, which are not
controlled by the Company – None.
k. Total balances of credit granted to the Company by
consolidated companies and balances of notes offered by the Company
held by the consolidated companies - None.
In addition to the total credit above, Company's financial debt
includes financial liability at fair value in respect of option
warrants issued in May 2019. At
September 30, 2020, this financial
liability totals to an amount of NIS 14
million.
In July 2020, the Company executed
a partial early redemption of Series F Notes in a total principal
amount of NIS 305 million.
[1] The quarterly financial results are unaudited.
[2] For the definition of this and
other Non-GAAP financial measures, see "Use of Non-GAAP
Financial Measures" in this press release.
View original
content:http://www.prnewswire.com/news-releases/partner-communications-reports-third-quarter-2020-results1-301180404.html
SOURCE Partner Communications Company Ltd.