ROSH
HA'AYIN, Israel, Nov. 23,
2022 /PRNewswire/ --
QUARTERLY ADJUSTED EBITDA[2] TOTALED
NIS 276 MILLION
QUARTERLY PROFIT TOTALED NIS 51
MILLION
ADJUSTED FREE CASH FLOW (BEFORE
INTEREST)[2] FOR THE FIRST 9 MONTHS OF THE YEAR
TOTALED NIS 120 MILLION
NET DEBT[2] TOTALED NIS 667
MILLION
CELLULAR SUBSCRIBER BASE AT THE END OF THE THIRD QUARTER
TOTALED APPROXIMATELY 3.04 MILLION
THE NUMBER OF HOUSEHOLDS IN BUILDINGS CONNECTED TO
PARTNER'S FIBER-OPTIC INFRASTRUCTURE TOTALS 929
THOUSAND AS OF TODAY
Third quarter 2022 highlights (compared with third
quarter 2021)
- Total Revenues: NIS 891
million (US$ 252 million), an
increase of 6%
- Service Revenues: NIS
728 million (US$ 206 million),
an increase of 8%
- Equipment Revenues: NIS
163 million (US$ 46 million),
a decrease of 1%
- Total Operating Expenses (OPEX)[2]:
NIS 495 million (US$ 140 million), an increase of 6%
- Adjusted EBITDA: NIS
276 million (US$ 78 million),
an increase of 10%
- Profit for the Period: NIS 51 million (US$ 15
million), an increase of 113%
- Adjusted Free Cash Flow (before interest):
NIS 38 million (US$ 11 million), an increase of NIS 29 million
- Cellular ARPU: NIS
51 (US$ 14), an increase of
6%
- Cellular Subscriber Base: approximately 3.04
million subscribers at quarter-end, an increase
of 1%
- Fiber-Optic Subscriber Base: 268 thousand
subscribers at quarter-end, an increase of 76 thousand since Q3
2021, and an increase of 18 thousand in the quarter
- Homes Connected (HC) to Partner's
Fiber-Optic Infrastructure: 900 thousand at
quarter-end, an increase of 276 thousand since Q3 2021, and an
increase of 63 thousand in the quarter
- Infrastructure-Based Internet Subscriber Base:
403 thousand subscribers at quarter-end, an increase of 38
thousand since Q3 2021, and an increase of 8 thousand in the
quarter
- TV Subscriber Base: 222 thousand subscribers
at quarter-end, a decrease of 4 thousand subscribers since Q3 2021,
and a decrease of 2 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, 2022.
Commenting on the results for the third quarter 2022, Mr.
Avi Gabbay, CEO of Partner,
noted:
"Partner continues to report growth and stability in the
financial results together with continued investment in
fiber-optics and 5G deployment. Correspondingly, in these days we
have concluded the formalization of the company's management team
while staying focused on further service improvements for our
customers."
Ms. Sigal Tzadok, Partner's
Acting Chief Financial Officer, commented on the results:
"The revenues growth in both the cellular and fixed-line
segments compared to the corresponding quarter last year was the
result of a stronger seasonality impact on the third quarter in the
cellular segment, and the continued growth in fiber-optics
subscribers. Along with the growth in revenues, we continued to
control the level of OPEX and thus despite high one-time expenses
in the quarter, in the amount of NIS 17
million due to the collective employment agreement that was
signed in July 2022, we succeeded in
bringing about in the quarter an increase of 10% in Adjusted
EBITDA, which totaled NIS 276 million
compared with NIS 250 million in the
corresponding quarter last year.
Partner continues with the expedited 5G infrastructure
deployment and expects to achieve over 40% population coverage by
the end of the year. The cellular subscriber base decreased in the
quarter by 53 thousand subscribers due to the net decrease of 66
thousand Ministry of Education subscribers who had joined for
limited periods. Excluding Ministry of Education subscribers, the
cellular subscriber base increased by 13 thousand, of which 12
thousand were Post-Paid subscribers. Excluding the churn of
Ministry of Education subscribers, the cellular churn rate in the
third quarter of 2022 totaled 6.8% compared to 6.6% in the previous
and corresponding quarters. The strengthening momentum in cellular
ARPU continued for the second consecutive quarter as ARPU totaled
NIS 51 compared to NIS 48 in the corresponding quarter.
The fiber-optic deployment continues to be a growth engine for
the Company. The number of Homes Connected within buildings
connected to our fiber-optic infrastructure reached 900 thousand at
the end of third quarter of 2022, an increase of 63 thousand in the
quarter. As of today, the number of Homes Connected within
buildings connected to our fiber-optic infrastructure totals 929
thousand.
The fiber-optic subscriber base totaled 268 thousand at the end
of the quarter, reflecting a 30% penetration rate from potential
customers in connected buildings, unchanged from the rate at the
end of the previous quarter and the corresponding quarter. The
increase in the fiber-optic subscriber base in the quarter totaled
18 thousand, compared to an increase of 17 thousand in the previous
quarter. As of today, the fiber-optic subscriber base totals 277
thousand.
Adjusted Free Cash Flow (before interest and including lease
payments) for the quarter totaled NIS 38 million. CAPEX
payments in the third quarter of 2022 totaled NIS 205 million, including a payment for the 5G
license fee in the amount of NIS 31
million related to the tender that was held two years
ago.
Net debt was NIS 667 million at
the end of the quarter, compared with NIS
662 million at the end of the corresponding quarter. The
Company's net debt to Adjusted EBITDA ratio stood at 0.6 at the end
of the quarter, compared to a ratio of 0.8 in the corresponding
quarter last year."
Q3 2022 compared with Q3 2021
NIS Million (except EPS)
|
Q3'21
|
Q3'22
|
Comments
|
Service
Revenues
|
672
|
728
|
The increase reflected
growth in both cellular
and fixed-line services, due to an increase in
cellular roaming services and subscriber growth
in fiber-optics
|
Equipment
Revenues
|
165
|
163
|
The decrease reflected
lower sales in the
cellular segment which were largely offset by an
increase in sales in the fixed-line segment
|
Total
Revenues
|
837
|
891
|
|
Gross profit from
equipment sales
|
37
|
33
|
|
OPEX
|
467
|
495
|
The increase mainly
reflected an increase in
payroll and related expenses (of which NIS 17
million resulted from a one-time impact in the
quarter of the Special Collective Employment
Agreement from July 2022) and in roaming
expenses. The increases were partially offset by
a decrease in direct fixed-line network costs and
wholesale expenses
|
Operating
profit
|
49
|
84
|
|
Adjusted
EBITDA
|
250
|
276
|
|
Adjusted EBITDA as a
percentage of total revenues
|
30 %
|
31 %
|
|
Profit for the
period
|
24
|
51
|
|
Earnings per share
(basic, NIS)
|
0.13
|
0.28
|
|
Capital Expenditures
(cash)
|
172
|
205
|
|
Adjusted free cash flow
(before interest payments)
|
9
|
38
|
|
Net Debt
|
662
|
667
|
|
Key Performance Indicators
|
Q3'21
|
Q2'22
|
Q3'22
|
Change Q2 to Q3
|
Reported Cellular
Subscribers
(end of period, thousands)
|
3,019
|
3,095
|
3,042
|
Post-Paid: Decrease of
54 thousand
(including a decrease of 66 thousand
packages from the Ministry of Education) Pre-Paid: Increase of 1 thousand
|
Cellular Subscribers
(end of
period, thousands) excluding
packages for Ministry of
Education
|
2,926
|
3,015
|
3,028
|
Post-Paid: Increase of
12 thousand Pre-Paid: Increase
of 1 thousand
|
Monthly Average Revenue
per
Cellular User (ARPU) (NIS)
|
48
|
49
|
51
|
|
Reported Quarterly
Cellular
Churn Rate (%)
|
6.4 %
|
6.7 %
|
8.9 %
|
|
Quarterly Cellular
Churn Rate (%)
excluding packages for the
Ministry of Education
|
6.6 %
|
6.6 %
|
6.8 %
|
|
Fiber-Optic
Subscribers (end of
period, thousands)
|
192
|
250
|
268
|
Increase of 18 thousand
subscribers
|
Homes Connected to the
Fiber-
Optic Infrastructure (HC)
(end of period, thousands)
|
624
|
837
|
900
|
Increase of 63 thousand
households
|
Infrastructure-Based
Internet
Subscribers (end of period,
thousands)
|
365
|
395
|
403
|
Increase of 8 thousand
subscribers
|
TV Subscribers
(end of period,
thousands)
|
226
|
224
|
222
|
Decrease of 2 thousand
subscribers
|
Partner Consolidated Results
|
Cellular Segment
|
Fixed-Line Segment
|
Elimination
|
Consolidated
|
NIS Million
|
Q3'21
|
Q3'22
|
Change %
|
Q3'21
|
Q3'22
|
Change %
|
Q3'21
|
Q3'22
|
Q3'21
|
Q3'22
|
Change %
|
Total
Revenues
|
571
|
607
|
+6 %
|
299
|
315
|
+5 %
|
(33)
|
(31)
|
837
|
891
|
+6 %
|
Service
Revenues
|
435
|
474
|
+9 %
|
270
|
285
|
+6 %
|
(33)
|
(31)
|
672
|
728
|
+8 %
|
Equipment
Revenues
|
136
|
133
|
-2 %
|
29
|
30
|
+3 %
|
-
|
-
|
165
|
163
|
-1 %
|
Operating Profit
(Loss)
|
66
|
76
|
+15 %
|
(17)
|
8
|
|
-
|
-
|
49
|
84
|
+71 %
|
Adjusted
EBITDA
|
172
|
179
|
+4 %
|
78
|
97
|
+24 %
|
-
|
-
|
250
|
276
|
+10 %
|
Financial Review
In Q3 2022, total revenues were NIS 891 million (US$ 252
million), an increase of 6% from NIS
837 million in Q3 2021.
Service revenues in Q3 2022 totaled NIS 728 million (US$ 206
million), an increase of 8% from NIS
672 million in Q3 2021.
Service revenues for the cellular segment in Q3 2022
totaled NIS 474 million (US$ 134 million), an increase of 9% from
NIS 435 million in Q3 2021. The
increase was mainly the result of higher roaming service revenues,
reflecting the return of international air travel almost to
pre-COVID 19 levels.
Service revenues for the fixed-line segment in Q3
2022 totaled NIS 285 million
(US$ 80 million), an increase of 6%
from NIS 270 million in Q3 2021. The
increase mainly reflected higher revenues from the growth in
internet and TV services.
Equipment revenues in Q3 2022 totaled NIS 163 million (US$ 46
million), a decrease of 1% from NIS
165 million in Q3 2021, mainly reflecting lower retail sales
volumes and a decrease in sales to wholesale customers in the
cellular segment together with the impact of the Company's decision
in the final quarter of 2021 to move towards a leasing model of
internet routers to private customers instead of a sales model.
These decreases were largely offset by revenues from an increase in
business-oriented activity in the fixed-line segment.
Gross profit from equipment sales in Q3 2022
was NIS 33 million (US$ 9 million), compared with NIS 37 million in Q3 2021, a decrease of 11%,
mainly reflecting a change in the sales mix in the cellular segment
which was partially offset by an increase in profit in the
fixed-line segment, as discussed above.
Total operating expenses ('OPEX') totaled
NIS 495 million (US$ 140 million), in Q3 2022, an increase of 6%
or NIS 28 million from Q3 2021,
mainly reflecting an increase in payroll and related expenses (of
which NIS 17 million resulted from a
one-time impact in the quarter of the Special Collective Employment
Agreement from July 2022) and in
roaming expenses. The increases were partially offset by a decrease
in direct fixed-line network costs and wholesale expenses.
Including depreciation and amortization expenses and other expenses
(mainly amortization of employee share-based compensation), OPEX in
Q3 2022 increased by 3% compared with Q3 2021.
Operating profit for Q3 2022 was NIS 84 million (US$ 24
million), an increase of 71% compared with NIS 49 million in Q3 2021.
Adjusted EBITDA in Q3 2022 totaled NIS 276 million (US$ 78
million), an increase of 10% from NIS
250 million in Q3 2021. As a percentage of total revenues,
Adjusted EBITDA in Q3 2022 was 31% compared with 30% in Q3
2021.
Adjusted EBITDA for the cellular segment was
NIS 179 million (US$ 51 million) in Q3 2022, an increase of 4%
from NIS 172 million in Q3 2021,
largely reflecting the increase in service revenues, as described
above, which was partially offset by the increase in payroll and
related expenses and the decrease in gross profit from equipment
sales. As a percentage of total cellular segment revenues, Adjusted
EBITDA for the cellular segment was 29% in Q3 2022 compared with
30% in Q3 2021.
Adjusted EBITDA for the fixed-line segment was
NIS 97 million (US$ 27 million) in Q3 2022, an increase of 24%
from NIS 78 million in Q3 2021,
mainly reflecting the increase in fixed-line segment service
revenues and the decrease in direct network costs and in wholesale
expenses, which were partially offset by the increase in payroll
and related expenses. As a percentage of total fixed-line segment
revenues, Adjusted EBITDA for the fixed-line segment was 31% in Q3
2022, compared with 26% in Q3 2021.
Finance costs, net in Q3 2022 were NIS 15 million (US$ 4
million), unchanged compared with Q3 2021.
Income tax expenses in Q3 2022 were
NIS 18 million (US$ 5 million), an increase of NIS 8 million compared with NIS 10 million in Q3 2021, mainly due to the
increase in operating profit.
Profit in Q3 2022 was NIS 51
million (US$ 15 million), an
increase of NIS 27 million compared
with a profit of NIS 24 million in Q3
2021.
Based on the weighted average number of shares outstanding
during Q3 2022, basic earnings per share or ADS, was
NIS 0.28 (US$
0.08) compared with basic earnings per share or ADS of
NIS 0.13 in Q3 2021.
Cellular Segment Operational Review
At the end of Q3 2022, the Company's cellular subscriber
base (including mobile data, 012 Mobile subscribers and
M2M subscriptions) was approximately 3.04 million, including
approximately 2.68 million Post-Paid subscribers or 88% of the
base, and 363 thousand Pre-Paid subscribers, or 12% of the
subscriber base.
During the third quarter of 2022, the cellular subscriber
base declined, net, by approximately 53 thousand
subscribers. The Post-Paid subscriber base declined, net, by
approximately 54 thousand subscribers and the Pre-Paid subscriber
base increased, net, by approximately one thousand subscribers. As
was stated in the Q2 2022 results release, most of the time-limited
packages for the Ministry of Education (MOE) reached
their expiry date in the third quarter of 2022; as a result, the
subscriber base of data and voice packages for the MOE decreased by
66 thousand and totaled 14 thousand at the end of Q3 2022.
Total cellular market share (based on the number of
subscribers) at the end of Q3 2022 was estimated to be
approximately 27%, compared to 28% at the end of Q2 2022 and
compared to 28% at the end of Q3 2021.
The quarterly churn rate for cellular subscribers in
Q3 2022 was 8.9%, compared with 6.4% in Q3 2021 and 6.7% in Q2
2022. Excluding data and voice packages for the Ministry of
Education, the churn rate in Q3 2022 was 6.8% compared with 6.6% in
Q3 2021 and 6.6% in Q2 2022.
The monthly Average Revenue per User ("ARPU") for
cellular subscribers in Q3 2022 was NIS
51 (US$ 14), an increase of 6%
from NIS 48 in Q3 2021. The increase
mainly reflected the increase in roaming services revenues.
Fixed-Line Segment Operational Review
At the end of Q3 2022:
- The Company's fiber-optic subscriber base was 268 thousand
subscribers, an increase, net, of 18 thousand subscribers during
the third quarter of 2022.
- The Company's infrastructure-based internet subscriber base was
403 thousand subscribers, an increase, net, of 8 thousand
subscribers during the third quarter of 2022.
- Households in buildings connected to our fiber-optic
infrastructure (HC) totaled 900 thousand, an increase, net, of 63
thousand during the third quarter of 2022.
- The Company's TV subscriber base totaled 222 thousand
subscribers, a decrease, net, of 2 thousand subscribers during the
third quarter of 2022.
Funding and Investing Review
In Q3 2022, Adjusted Free Cash Flow (including lease
payments) totaled NIS 38
million (US$ 11 million), an
increase of NIS 29 million compared
with NIS 9 million in Q3 2021.
Cash generated from operating activities totaled
NIS 279 million (US$ 79 million) in Q3 2022, an increase of 25%
from NIS 224 million in Q3 2021.
Lease payments (principal and interest) recorded in
cash flows from financing activities under IFRS 16 totaled
NIS 37 million (US$ 10 million) in Q3 2022, a decrease of 14%
from NIS 43 million in Q3 2021.
Cash capital expenditures (CAPEX payments), as
represented by cash flows used for the acquisition of property and
equipment and intangible assets, were NIS
205 million (US$ 58 million)
in Q3 2022, an increase of 19% from NIS 172
million in Q3 2021. CAPEX payments in the quarter included a
payment of NIS 31 million for the 5G
license fee related to the tender that was held two years ago.
Following payment of the 5G license fee, the Company expects to
receive in the fourth quarter of 2022 a grant from the Ministry of
Communications of NIS 37 million for
the deployment of its 5G network. The Company currently expects
that in the fourth quarter of 2022, CAPEX payments will be lower
than those of the corresponding period in 2021, due principally to
cost savings, payment timing differences and the receipt of the
said grant. In addition, the Company is currently examining the
CAPEX plan for 2023.
The level of net debt at the end of Q3 2022 amounted
to NIS 667 million (US$ 188 million), compared with NIS 662 million at the end of Q3 2021, an
increase of NIS 5 million.
Regulatory Developments
Draft bill on the principles of regulation of audio-visual
content provided to the public, 2022
Further to Item 4B.12e-iv of the
Company's 2021 annual report regarding the report of the committee
assigned with re-examining the overall regulatory regime applicable
to the broadcasting segment ("Folkman Committee"), on
August 9 2022, the Ministry of
Communications published a hearing for public comment regarding the
draft bill on the principles of regulation of audio-visual content
provided to the public, 2022 ("the Hearing").
According to the Hearing and the explanatory notes to the draft
bill, the bill is intended to amend current legislation in
accordance with the Folkman Committee's recommendations and to
update the set of obligations and rights applicable to all players
operating in the audio-visual content market in a number of ways,
including the proposal that audiovisual content providers which
provide their services over the internet would be required to
invest in local productions (and be subject to additional
regulations) in a gradual manner, in accordance with their annual
income from providing content. A content provider with a medium
scope of activity (whose total annual income from content provision
is between NIS 300 and 600 million)
will be required to invest 4% of such income in local productions.
A content provider with a large scope of activity (whose total
annual income exceeds NIS 600
million) will be required to invest 6.5% of such income in
local productions.
Partner is studying the Hearing document and its implications.
Since this is a Hearing and there is no certainty whether the
Hearing will mature into binding legislation and what the contents
and provisions of such legislation may be, it is difficult at this
stage to assess the extent of impact that this bill might have on
the Company's business (if it becomes binding).
Allocation of frequencies to non-public networks - Innovation
band hearing
On August 14, 2022, the Ministry
of Communications published a hearing regarding the allocation of
frequencies to non-public wireless access networks ("the
Hearing"). Non-public networks are cellular networks that are
limited to a defined area, and on which only devices which have
been pre-approved or pre-defined by the network operator may
operate. Such networks are usually used by businesses and large
organizations (such as ports, hospitals, factories, etc.). In the
Hearing, the Ministry proposes to open the cellular market to the
entry of new players through the allocation of frequencies for
local use in non-public networks, all in order to encourage
technological innovation in advanced services and applications and
to improve economic productivity of the market. Partner has
submitted its position regarding this Hearing and has objected to
the provisions proposed in it. The entry of new players and the
deployment of non-public cellular networks might harm the economic
incentive for the deployment of Partner's fifth generation
network.
Ownership of the mobile radio telephony (cellular)
network-hearing
The current provisions of cellular licenses in Israel state that the licensee shall be the
owner of the cellular network by which it provides these services
to its subscribers. On August 16,
2022, the Ministry of Communications published a hearing on
the subject of ownership of the cellular, MRT networks ("the
Hearing"). As part of the Hearing, the Ministry proposes to
amend the cellular licenses in Israel so that in the future the licensee will
no longer be required to be the owner of the cellular network.
According to the Hearing, the Ministry is considering allowing
entrepreneurs to establish cellular sites on top of existing street
infrastructure facilities (such as light poles, electricity poles,
signs and bus stops), and such entrepreneurs will own the cell site
that will be deployed, which they will rent in one form or another
to the cellular companies.
Partner has submitted its position regarding this Hearing and
has objected to the provisions proposed in it. The deployment of
cellular infrastructures by private entrepreneurs on existing
street infrastructures might impede the deployment of Partner's
fifth generation network in these infrastructures and increase the
acquisition costs for such sites.
Decision regarding the telecommunications regulations
(Telecommunications and Broadcasting) general permit for the
provision of a telecommunications service, 2022
On October 2, 2022, the
Communications Regulations (Telecommunications and Broadcasting) a
general authorization for the provision of telecommunications
services, 2022 ("the Regulations") was enacted. The
Regulations set the procedures for registration in the registry and
the terms of the general authorization document ("General
Authorization") which will apply to registered service providers.
According to the Regulations, their provision will not apply to
existing licensees, and therefore Partner's main activities will
not be regulated through registration in the registry, but will
remain subject to its licenses. According to the explanatory notes
to the Regulations, the Ministry of Communications intends to map
out the existing licenses and actively cancel provisions in them
that are expressly regulated by the Regulations, however this
process is expected to be completed only in the first quarter of
2023. It should be noted that most of the provisions of the
Regulations include lenient provisions in comparison to the
provisions of the existing licenses, however some of these
provisions are burdensome in comparison to the provisions of the
licenses. These burdensome provisions include, among others, an
obligation to disconnect "dormant subscribers" from Internet access
services (subscribers who continue to pay a monthly fee for the
service without using the service) provided that they have not used
the service for six months, as well as an obligation to inform the
subscriber of his right to receive a copy of any telephone
conversation with the service center and provide it to the
subscriber within 5 business days. Insofar as it will be determined
that such obligations apply to Partner, they are not expected to
have a material effect on the Company. However, the effect of the
transition to the terms of the General Authorization and the
subsequent license amendments depends, among others, on how this
change is implemented by the Ministry of Communications and also on
the wording of the expected amendments to the licenses (during the
first quarter of 2023).
Conference Call Details
Partner will host a conference call to discuss its financial
results on Wednesday, November 23 at
10.00 a.m. Eastern Time /
5.00 p.m. Israel Time.
Please dial the following numbers (at least 10 minutes before
the scheduled time) in order to participate:
International: +972.3.918.0687
North America toll-free:
+1.888.407.2553
A live webcast of the call will also be available on Partner's
Investors Relations website
at: http://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 23, 2022
until December 7, 2022, at the
following numbers:
International: +972.3.925.5921
North America toll-free:
+1.888.254.7270
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 belief regarding (i) the Company's
continued investment in fiber optics; (ii) the continued expedited
deployment of the 5G infrastructure and obtaining 40% population
coverage by the end of the year; (iii) the fiber-optic deployment
as a growth engine for the Company; (iv) the Company's expectation
to receive a 5G network deployment grant from the Ministry of
Communications; and (v) future changes in CAPEX payments. 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 (i) the remaining impact on our business of the Covid-19
health crisis, (ii) unexpected technical or commercial issues which
may arise as we continue to deploy and expand the use of our fiber
optic infrastructure; and (iii) unexpected technical or financial
constraints which undermine the pursuit of such strategy. In
light of the current unreliability of predictions as to the
ultimate severity and duration of the Covid-19 health crisis, as
well as the specific regulatory and business risks facing our
business, 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 possible
regulatory and legal developments, and other risks we face, see
"Item 3. Key Information - 3D. Risk Factors", "Item 4. Information
on the Company", "Item 5. Operating and Financial Review and
Prospects", "Item 8. Financial Information - 8A. Consolidated
Financial Statements and Other Financial Information - 8A.1 Legal
and Administrative Proceedings" and "Item 11. Quantitative and
Qualitative Disclosures about Market Risk" in the Company's Annual
Reports on Form 20-F filed with the SEC, as well as its immediate
reports on Form 6-K furnished to the SEC. We undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
The quarterly financial results presented in this press
release are unaudited financial results.
The results were prepared in accordance with IFRS, other than
the non-GAAP financial measures presented in the section "Use of
Non-GAAP Financial Measures".
The financial information is presented in NIS millions
(unless otherwise stated) and the figures presented are
rounded accordingly. The convenience translations of the New
Israeli Shekel (NIS) figures into US Dollars were made at the rate
of exchange prevailing at September 30,
2022: US $1.00 equals
NIS 3.543. 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
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
|
Adjusted EBITDA margin
(%)
|
|
|
Adjusted Free Cash
Flow
|
Cash flows from
operating activities
add
Cash flows from
investing activities
deduct
Investment in deposits,
net
deduct
Lease principal
payments
deduct
Lease interest
payments
|
Cash flows from
operating activities
add
Cash flows from
investing activities
|
Total Operating
Expenses (OPEX)
|
Cost of service
revenues
add
Selling and marketing
expenses
add
General and
administrative expenses
add
Credit
losses
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,
Credit
losses
|
Net Debt
|
Current maturities of
notes payable and
borrowings
add
Notes
payable
add
Borrowings from
banks
add
Financial liability at
fair value
deduct
Cash and cash
equivalents
deduct
Short-term
and long-term deposits
|
Sum of:
Current maturities of
notes payable
and borrowings,
Notes
payable,
Borrowings from
banks,
Financial liability at
fair value
Less
Sum
of:
Cash and cash
equivalents,
Short-term
deposits,
Long-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:
Sigal Tzadok
Acting 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,
|
|
|
2021
|
2022
|
2022
|
|
|
(Audited)
|
(Unaudited)
|
(Unaudited)
|
|
|
In millions
|
CURRENT ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
308
|
549
|
155
|
Short-term
deposits
|
|
344
|
206
|
58
|
Trade
receivables
|
|
571
|
599
|
169
|
Other receivables and
prepaid expenses
|
|
152
|
91
|
26
|
Deferred expenses –
right of use
|
|
27
|
31
|
9
|
Inventories
|
|
87
|
99
|
28
|
|
|
1,489
|
1,575
|
445
|
|
|
|
|
|
NON CURRENT ASSETS
|
|
|
|
|
Long-term
deposits
|
|
280
|
|
|
Trade
receivables
|
|
245
|
215
|
61
|
Deferred expenses –
right of use
|
|
142
|
164
|
46
|
Lease – right of
use
|
|
679
|
670
|
189
|
Property and
equipment
|
|
1,644
|
1,749
|
494
|
Intangible and other
assets
|
|
472
|
437
|
123
|
Goodwill
|
|
407
|
407
|
115
|
Deferred income tax
asset
|
|
34
|
24
|
7
|
Other non-current
receivables
|
|
1
|
*
|
*
|
|
|
3,904
|
3,666
|
1,035
|
|
|
|
|
|
TOTAL ASSETS
|
|
5,393
|
5,241
|
1,480
|
* Representing an amount of less than 1 million.
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,
|
|
|
2021
|
2022
|
2022
|
|
|
(Audited)
|
(Unaudited)
|
(Unaudited)
|
|
|
In millions
|
CURRENT LIABILITIES
|
|
|
|
|
Current
maturities of notes payable and borrowings
|
|
268
|
245
|
69
|
Trade
payables
|
|
705
|
661
|
187
|
Other payables and
provisions
|
|
185
|
205
|
58
|
Current maturities of
lease liabilities
|
|
125
|
130
|
37
|
Deferred revenues and
other
|
|
139
|
149
|
42
|
|
|
1,422
|
1,390
|
393
|
NON CURRENT LIABILITIES
|
|
|
|
|
Notes
payable
|
|
1,224
|
1,010
|
285
|
Borrowings
from banks
|
|
184
|
167
|
47
|
Liability for employee
rights upon retirement, net
|
|
35
|
31
|
9
|
Lease
liabilities
|
|
595
|
580
|
163
|
Deferred
revenues from HOT mobile
|
|
39
|
16
|
5
|
Non-current
liabilities and provisions
|
|
35
|
33
|
9
|
|
|
2,112
|
1,837
|
518
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
3,534
|
3,227
|
911
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Share capital -
ordinary shares of NIS 0.01
par
value: authorized - December 31, 2021
and September 30, 2022
- 235,000,000 shares;
issued
and outstanding
-
|
2
|
2
|
1
|
December 31, 2021 –
*183,678,220 shares
|
|
|
|
September 30,
2022 – *185,437,628
shares
|
|
|
|
Capital
surplus
|
|
1,279
|
1,221
|
345
|
Accumulated
retained earnings
|
|
742
|
897
|
253
|
Treasury shares, at
cost
December 31, 2021 –
**7,337,759 shares
September 30, 2022 – **
6,600,769 shares
|
|
(164)
|
(106)
|
(30)
|
TOTAL EQUITY
|
|
1,859
|
2,014
|
569
|
TOTAL LIABILITIES AND EQUITY
|
|
5,393
|
5,241
|
1,480
|
* Net of treasury shares.
** Including restricted shares in amount of 1,349,119 and
527,589 as of December 31, 2021 and
September 30, 2022, 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,
|
|
|
2021
|
2022
|
2021
|
2022
|
2022
|
2022
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
In millions (except per share
data)
|
Revenues,
net
|
|
2,510
|
2,604
|
837
|
891
|
735
|
252
|
Cost of
revenues
|
|
2,054
|
1,993
|
667
|
672
|
563
|
190
|
Gross profit
|
|
456
|
611
|
170
|
219
|
172
|
62
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
238
|
268
|
81
|
93
|
75
|
26
|
General and
administrative expenses
|
|
132
|
124
|
46
|
49
|
35
|
14
|
Other income,
net
|
|
21
|
22
|
6
|
7
|
6
|
2
|
Operating profit
|
|
107
|
241
|
49
|
84
|
68
|
24
|
Finance
income
|
|
5
|
5
|
2
|
2
|
2
|
1
|
Finance
expenses
|
|
55
|
59
|
17
|
17
|
17
|
5
|
Finance costs,
net
|
|
50
|
54
|
15
|
15
|
15
|
4
|
Profit before income tax
|
|
57
|
187
|
34
|
69
|
53
|
20
|
Income tax
expenses
|
|
19
|
50
|
10
|
18
|
14
|
5
|
Profit for the
period
|
|
38
|
137
|
24
|
51
|
39
|
15
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
Basic
|
|
0.21
|
0.75
|
0.13
|
0.28
|
0.21
|
0.08
|
Diluted
|
|
0.21
|
0.74
|
0.13
|
0.27
|
0.21
|
0.08
|
Weighted average number of
shares
outstanding (in
thousands)
|
|
|
|
|
|
|
|
Basic
|
|
183,145
|
184,310
|
183,212
|
184,794
|
184,310
|
184,794
|
Diluted
|
|
183,739
|
186,893
|
183,770
|
186,973
|
186,893
|
186,973
|
|
|
|
|
|
|
|
|
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,
|
|
|
2021
|
2022
|
2021
|
2022
|
2022
|
2022
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
In millions
|
Profit for the
period
|
|
38
|
137
|
24
|
51
|
39
|
15
|
Other comprehensive income
for the period, net of
income tax
|
|
|
2
|
|
1
|
*
|
*
|
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD
|
|
38
|
139
|
24
|
52
|
39
|
15
|
* 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, 2022
|
|
|
9 months period ended September 30, 2021
|
|
|
In millions (Unaudited)
|
|
|
In millions (Unaudited)
|
|
|
Cellular
segment
|
|
Fixed line segment
|
|
Elimination
|
|
Consolidated
|
|
|
Cellular
segment
|
|
Fixed line
segment
|
|
Elimination
|
|
Consolidated
|
|
Segment revenue -
Services
|
1,365
|
|
759
|
|
|
|
2,124
|
|
|
1,258
|
|
702
|
|
|
|
1,960
|
|
Inter-segment revenue -
Services
|
9
|
|
85
|
|
(94)
|
|
|
|
|
10
|
|
90
|
|
(100)
|
|
|
|
Segment revenue -
Equipment
|
410
|
|
70
|
|
|
|
480
|
|
|
453
|
|
97
|
|
|
|
550
|
|
Total revenues
|
1,784
|
|
914
|
|
(94)
|
|
2,604
|
|
|
1,721
|
|
889
|
|
(100)
|
|
2,510
|
|
Segment cost of
revenues - Services
|
900
|
|
707
|
|
|
|
1,607
|
|
|
906
|
|
716
|
|
|
|
1,622
|
|
Inter-segment cost
of revenues - Services
|
85
|
|
9
|
|
(94)
|
|
|
|
|
90
|
|
10
|
|
(100)
|
|
|
|
Segment cost of
revenues - Equipment
|
344
|
|
42
|
|
|
|
386
|
|
|
374
|
|
58
|
|
|
|
432
|
|
Cost of revenues
|
1,329
|
|
758
|
|
(94)
|
|
1,993
|
|
|
1,370
|
|
784
|
|
(100)
|
|
2,054
|
|
Gross profit
|
455
|
|
156
|
|
|
|
611
|
|
|
351
|
|
105
|
|
|
|
456
|
|
Operating expenses
(1)
|
239
|
|
153
|
|
|
|
392
|
|
|
223
|
|
147
|
|
|
|
370
|
|
Other income,
net
|
13
|
|
9
|
|
|
|
22
|
|
|
12
|
|
9
|
|
|
|
21
|
|
Operating profit (loss)
|
229
|
|
12
|
|
|
|
241
|
|
|
140
|
|
(33)
|
|
|
|
107
|
|
Adjustments to
presentation of
segment
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–Depreciation and amortization
|
298
|
|
253
|
|
|
|
|
|
|
310
|
|
248
|
|
|
|
|
|
–Other
(2)
|
11
|
|
6
|
|
|
|
|
|
|
4
|
|
3
|
|
|
|
|
|
Segment Adjusted EBITDA (3)
|
538
|
|
271
|
|
|
|
|
|
|
454
|
|
218
|
|
|
|
|
|
Reconciliation of
segment subtotal Adjusted EBITDA to profit for the
period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segments subtotal Adjusted
EBITDA
|
|
|
|
|
|
|
809
|
|
|
|
|
|
|
|
|
672
|
|
-
Depreciation and amortization
|
|
|
|
|
|
|
(551)
|
|
|
|
|
|
|
|
|
(558)
|
|
- Finance
costs, net
|
|
|
|
|
|
|
(54)
|
|
|
|
|
|
|
|
|
(50)
|
|
- Income tax
expenses
|
|
|
|
|
|
|
(50)
|
|
|
|
|
|
|
|
|
(19)
|
|
- Other
|
|
|
|
|
|
|
(17)
|
|
|
|
|
|
|
|
|
(7)
|
|
Profit for the period
|
|
|
|
|
|
|
137
|
|
|
|
|
|
|
|
|
38
|
|
(1) Operating expenses include selling and marketing expenses
and general and administrative expenses. (2) Mainly amortization of
employee share based compensation. (3) 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.
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, 2022
|
|
|
3 months period ended September 30, 2021
|
|
|
In millions (Unaudited)
|
|
|
In millions (Unaudited)
|
|
|
Cellular segment
|
|
Fixed line
segment
|
|
Elimination
|
|
Consolidated
|
|
|
Cellular segment
|
|
Fixed line segment
|
|
Elimination
|
|
Consolidated
|
|
Segment revenue -
Services
|
471
|
|
257
|
|
|
|
728
|
|
|
432
|
|
240
|
|
|
|
672
|
|
Inter-segment revenue -
Services
|
3
|
|
28
|
|
(31)
|
|
|
|
|
3
|
|
30
|
|
(33)
|
|
|
|
Segment revenue -
Equipment
|
133
|
|
30
|
|
|
|
163
|
|
|
136
|
|
29
|
|
|
|
165
|
|
Total revenues
|
607
|
|
315
|
|
(31)
|
|
891
|
|
|
571
|
|
299
|
|
(33)
|
|
837
|
|
Segment cost of
revenues - Services
|
305
|
|
237
|
|
|
|
542
|
|
|
291
|
|
248
|
|
|
|
539
|
|
Inter-segment cost
of revenues - Services
|
28
|
|
3
|
|
(31)
|
|
|
|
|
30
|
|
3
|
|
(33)
|
|
|
|
Segment cost of
revenues - Equipment
|
115
|
|
15
|
|
|
|
130
|
|
|
110
|
|
18
|
|
|
|
128
|
|
Cost of revenues
|
448
|
|
255
|
|
(31)
|
|
672
|
|
|
431
|
|
269
|
|
(33)
|
|
667
|
|
Gross profit
|
159
|
|
60
|
|
|
|
219
|
|
|
140
|
|
30
|
|
|
|
170
|
|
Operating expenses
(1)
|
87
|
|
55
|
|
|
|
142
|
|
|
78
|
|
49
|
|
|
|
127
|
|
Other income,
net
|
4
|
|
3
|
|
|
|
7
|
|
|
4
|
|
2
|
|
|
|
6
|
|
Operating profit (loss)
|
76
|
|
8
|
|
|
|
84
|
|
|
66
|
|
(17)
|
|
|
|
49
|
|
Adjustments to
presentation of
segment
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–Depreciation and
amortization
|
100
|
|
87
|
|
|
|
|
|
|
105
|
|
93
|
|
|
|
|
|
–Other
(2)
|
3
|
|
2
|
|
|
|
|
|
|
1
|
|
2
|
|
|
|
|
|
Segment Adjusted EBITDA (3)
|
179
|
|
97
|
|
|
|
|
|
|
172
|
|
78
|
|
|
|
|
|
Reconciliation of
segment subtotal Adjusted EBITDA to
profit for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segments subtotal Adjusted
EBITDA
|
|
|
|
|
|
|
276
|
|
|
|
|
|
|
|
|
250
|
|
-
Depreciation and amortization
|
|
|
|
|
|
|
(187)
|
|
|
|
|
|
|
|
|
(198)
|
|
- Finance
costs, net
|
|
|
|
|
|
|
(15)
|
|
|
|
|
|
|
|
|
(15)
|
|
- Income
tax expenses
|
|
|
|
|
|
|
(18)
|
|
|
|
|
|
|
|
|
(10)
|
|
- Other
|
|
|
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
(3)
|
|
Profit for the period
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
24
|
|
(1) Operating expenses include selling and marketing
expenses and general and administrative expenses. (2) Mainly
amortization of employee share based compensation. (3) 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.
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,
|
|
2021
|
2022
|
2022
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
In millions
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
Cash generated from
operations (Appendix)
|
612
|
788
|
222
|
Income tax
paid
|
(1)
|
(9)
|
(3)
|
Net cash provided by
operating activities
|
611
|
779
|
219
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
Acquisition of
property and equipment
|
(344)
|
(407)
|
(115)
|
Acquisition of
intangible and other assets
|
(116)
|
(142)
|
(40)
|
Proceeds from
deposits, net
|
45
|
418
|
118
|
Interest
received
|
1
|
3
|
1
|
Net cash used in
investing activities
|
(414)
|
(128)
|
(36)
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
Lease principal
payments
|
(102)
|
(100)
|
(28)
|
Lease interest
payments
|
(14)
|
(13)
|
(4)
|
Interest
paid
|
(43)
|
(44)
|
(12)
|
Proceeds from issuance
of notes payable, net of issuance costs
|
23
|
(1)
|
*
|
Repayment of notes
payable
|
(128)
|
(213)
|
(60)
|
Repayment of non-current
borrowings
|
(39)
|
(39)
|
(11)
|
Net cash used in
financing activities
|
(303)
|
(410)
|
(115)
|
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
|
(106)
|
241
|
68
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
376
|
308
|
87
|
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
|
270
|
549
|
155
|
|
|
|
|
* 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 statements
|
|
|
New Israeli Shekels
|
Convenience
translation into
U.S. Dollars
|
|
9 months period ended September
30,
|
|
2021
|
2022
|
2022
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
In millions
|
|
|
|
|
Cash generated from operations:
|
|
|
|
Profit for the
period
|
38
|
137
|
39
|
Adjustments for:
|
|
|
|
Depreciation and
amortization
|
535
|
528
|
149
|
Amortization of
deferred expenses - Right of use
|
23
|
23
|
6
|
Employee share based
compensation expenses
|
8
|
16
|
5
|
Liability for employee
rights upon retirement, net
|
4
|
(2)
|
(1)
|
Finance costs
(income), net
|
(3)
|
12
|
3
|
Lease interest
payments
|
14
|
|
|
Interest
paid
|
43
|
44
|
12
|
Interest
received
|
(1)
|
(3)
|
(1)
|
Deferred income
taxes
|
12
|
10
|
3
|
Income tax
paid
|
1
|
9
|
3
|
Changes in operating
assets and liabilities:
|
|
|
|
Decrease (increase) in
accounts receivable:
|
|
|
|
Trade
|
(18)
|
2
|
1
|
Other
|
7
|
62
|
17
|
Increase (decrease) in
accounts payable and accruals:
|
|
|
|
Trade
|
(18)
|
(25)
|
(7)
|
Other payables and provisions
|
26
|
19
|
5
|
Deferred revenues and other
|
(9)
|
(13)
|
(3)
|
Increase in deferred
expenses - Right of use
|
(42)
|
(49)
|
(14)
|
Current income
tax
|
6
|
30
|
8
|
Increase in
inventories
|
(14)
|
(12)
|
(3)
|
Cash generated from operations
|
612
|
788
|
222
|
|
|
|
|
|
|
|
|
|
At September 30, 2022 and 2021,
trade and other payables include NIS 134
million ($38 million) and
NIS 124 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,
|
|
2021
|
2022
|
2021
|
2022
|
2022
|
2022
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
In millions
|
Net cash provided by
operating activities
|
611
|
779
|
224
|
279
|
219
|
79
|
Net cash used in
investing activities
|
(414)
|
(128)
|
(177)
|
(64)
|
(36)
|
(18)
|
Proceeds from
(investment in) short-term
deposits,
net
|
(45)
|
(418)
|
5
|
(140)
|
(118)
|
(40)
|
Lease principal
payments
|
(102)
|
(100)
|
(38)
|
(33)
|
(28)
|
(9)
|
Lease interest
payments
|
(14)
|
(13)
|
(5)
|
(4)
|
(4)
|
(1)
|
Adjusted Free Cash Flow
|
36
|
120
|
9
|
38
|
33
|
11
|
Interest
paid
|
(43)
|
(44)
|
(1)
|
*
|
(12)
|
*
|
Adjusted Free Cash Flow After Interest
|
(7)
|
76
|
8
|
38
|
21
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Representing an amount of less than 1 million.
|
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,
|
|
2021
|
2022
|
2021
|
2022
|
2022
|
2022
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
In millions
|
Cost of revenues -
Services
|
1,622
|
1,607
|
539
|
542
|
454
|
154
|
Selling and marketing
expenses
|
238
|
268
|
81
|
93
|
75
|
26
|
General and
administrative expenses
|
132
|
124
|
46
|
49
|
35
|
14
|
Depreciation and
amortization
|
(558)
|
(551)
|
(198)
|
(187)
|
(155)
|
(53)
|
Other (1)
|
(1)
|
(7)
|
(1)
|
(2)
|
(2)
|
(1)
|
OPEX
|
1,433
|
1,441
|
467
|
495
|
407
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Mainly amortization of employee share-based
compensation and other adjustments.
Key Financial and Operating Indicators
(unaudited) *
|
NIS M unless otherwise
stated
|
Q1' 20
|
Q2' 20
|
Q3' 20
|
Q4' 20
|
Q1' 21
|
Q2' 21
|
Q3' 21
|
Q4' 21
|
Q1' 22
|
Q2' 22
|
Q3' 22
|
|
2020
|
2021
|
Cellular Segment
Service Revenues
|
423
|
409
|
415
|
416
|
413
|
420
|
435
|
431
|
443
|
457
|
474
|
|
1,663
|
1,699
|
Cellular Segment
Equipment Revenues
|
146
|
130
|
134
|
135
|
160
|
157
|
136
|
149
|
142
|
135
|
133
|
|
545
|
602
|
Fixed-Line Segment
Service Revenues
|
245
|
244
|
252
|
252
|
260
|
262
|
270
|
274
|
280
|
279
|
285
|
|
993
|
1,066
|
Fixed-Line Segment
Equipment Revenues
|
32
|
28
|
35
|
41
|
34
|
34
|
29
|
29
|
22
|
18
|
30
|
|
136
|
126
|
Reconciliation for
consolidation
|
(39)
|
(37)
|
(36)
|
(36)
|
(34)
|
(33)
|
(33)
|
(30)
|
(33)
|
(30)
|
(31)
|
|
(148)
|
(130)
|
Total Revenues
|
807
|
774
|
800
|
808
|
833
|
840
|
837
|
853
|
854
|
859
|
891
|
|
3,189
|
3,363
|
Gross Profit from
Equipment Sales
|
37
|
30
|
38
|
40
|
42
|
39
|
37
|
34
|
33
|
28
|
33
|
|
145
|
152
|
Operating Profit
|
36
|
20
|
20
|
20
|
28
|
30
|
49
|
56
|
72
|
85
|
84
|
|
96
|
163
|
Cellular Segment
Adjusted EBITDA
|
132
|
129
|
134
|
138
|
143
|
139
|
172
|
162
|
172
|
187
|
179
|
|
533
|
616
|
Fixed-Line Segment
Adjusted EBITDA
|
83
|
71
|
70
|
65
|
66
|
74
|
78
|
88
|
85
|
89
|
97
|
|
289
|
306
|
Total Adjusted EBITDA
|
215
|
200
|
204
|
203
|
209
|
213
|
250
|
250
|
257
|
276
|
276
|
|
822
|
922
|
Adjusted EBITDA Margin
(%)
|
27 %
|
26 %
|
26 %
|
25 %
|
25 %
|
25 %
|
30 %
|
29 %
|
30 %
|
32 %
|
31 %
|
|
26 %
|
27 %
|
OPEX
|
460
|
456
|
475
|
480
|
481
|
485
|
467
|
469
|
476
|
469
|
495
|
|
1,871
|
1,901
|
Finance costs,
net
|
19
|
13
|
24
|
13
|
19
|
16
|
15
|
14
|
18
|
21
|
15
|
|
69
|
64
|
Profit (Loss)
|
10
|
7
|
(5)
|
5
|
5
|
9
|
24
|
77
|
39
|
47
|
51
|
|
17
|
115
|
Capital Expenditures
(cash)
|
151
|
119
|
147
|
156
|
149
|
139
|
172
|
212
|
170
|
174
|
205
|
|
573
|
672
|
Capital Expenditures
(additions)
|
129
|
121
|
179
|
166
|
142
|
182
|
112
|
244
|
166
|
174
|
161
|
|
595
|
680
|
Adjusted Free Cash
Flow
|
10
|
44
|
21
|
(3)
|
19
|
8
|
9
|
(79)
|
25
|
57
|
38
|
|
72
|
(43)
|
Adjusted Free Cash Flow
(after interest)
|
8
|
13
|
12
|
(10)
|
18
|
(33)
|
8
|
(84)
|
24
|
14
|
38
|
|
23
|
(91)
|
Net Debt
|
673
|
658
|
646
|
657
|
639
|
670
|
662
|
744
|
720
|
706
|
667
|
|
657
|
744
|
Cellular Subscriber
Base (Thousands)
|
2,676
|
2,708
|
2,762
|
2,836
|
2,903
|
2,970
|
3,019
|
3,023
|
3,063
|
3,095
|
3,042
|
|
2,836
|
3,023
|
Post-Paid Subscriber
Base (Thousands)
|
2,380
|
2,404
|
2,437
|
2,495
|
2,548
|
2,615
|
2,664
|
2,671
|
2,708
|
2,733
|
2,679
|
|
2,495
|
2,671
|
Pre-Paid Subscriber
Base (Thousands)
|
296
|
304
|
325
|
341
|
355
|
355
|
355
|
352
|
355
|
362
|
363
|
|
341
|
352
|
Cellular ARPU
(NIS)
|
53
|
51
|
51
|
49
|
48
|
48
|
48
|
48
|
48
|
49
|
51
|
|
51
|
48
|
Cellular Churn Rate
(%)
|
7.5 %
|
7.5 %
|
7.3 %
|
7.2 %
|
6.8 %
|
7.2 %
|
6.4 %
|
7.9 %
|
7.0 %
|
6.7 %
|
8.9 %
|
|
30 %
|
28 %
|
Infrastructure-Based
Internet Subscribers (Thousands)
|
281
|
295
|
311
|
329
|
339
|
354
|
365
|
374
|
387
|
395
|
403
|
|
329
|
374
|
Fiber-Optic Subscribers
(Thousands)
|
87
|
101
|
120
|
139
|
155
|
173
|
192
|
212
|
233
|
250
|
268
|
|
139
|
212
|
Homes connected to
fiber-optic infrastructure (Thousands)
|
361
|
396
|
432
|
465
|
514
|
571
|
624
|
700
|
770
|
837
|
900
|
|
465
|
700
|
TV Subscriber Base
(Thousands)
|
200
|
215
|
224
|
232
|
234
|
223**
|
226
|
226
|
225
|
224
|
222
|
|
232
|
226**
|
Number of Employees
(FTE)
|
1,867
|
2,745
|
2,731
|
2,655
|
2,708
|
2,628
|
2,627
|
2,574
|
2,536
|
2,588
|
2,660
|
|
2,655
|
2,574
|
* See footnote 2 regarding use of non-GAAP
measures.
** In Q2'21, the Company removed from its TV subscriber base
approximately 21,000 subscribers who had joined at various
different times and had remained in trial periods of over six
months without charge or usage.
Disclosure for notes holders as of September 30,
2022
|
Information regarding the notes series issued by the
Company, in million NIS
|
|
Series
|
Original issuance
date
|
Principal on the date
of issuance
|
As of
30.09.2022
|
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
|
|
|
Principal book
value
|
F
(2)
|
20.07.17
12.12.17*
04.12.18*
01.12.19*
|
255
389
150
226.75
|
256
|
256
|
1
|
252
|
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*
26.11.20*
31.05.21*
|
225
38.5
86.5
15.1
84.8
12.2
300
62.2
26.5
|
766
|
766
|
8
|
760
|
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.
|
H
(2)
|
26.12.21
|
198.4
|
198
|
198
|
1
|
172
|
2.08 %
|
25.06.25
|
25.06.30
|
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 were 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 were
allotted upon the exercise of an option warrant were identical in
all their rights to the Company's Series G debentures immediately
upon their allotment, and are entitled to any payment of interest
or other benefit, the effective date of which is due after the
allotment date. The debentures that were allotted as a result of
the exercise of option warrants were 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, the Company issued Series G Notes in a total
principal amount of NIS 101 million.
The issuance in May 2021 was the
final exercise of option warrants from the second series.
(2) Regarding Series F Notes, Series G Notes, Series H
Notes and borrowing P, borrowing Q and borrowing R 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
September 30, 2022, the ratio of Net Debt to Adjusted EBITDA
was 0.6. Additional stipulations mainly include: Shareholders'
equity shall not decrease below NIS 400
million and no dividends will be declared if shareholders'
equity will be below NIS 650 million
regarding Series F notes, borrowing P and borrowing Q.
Shareholders' equity shall not decrease below NIS 600 million and no dividends will be declared
if shareholders' equity will be below NIS
750 million regarding Series G notes and borrowing R.
Shareholders' equity shall not decrease below NIS 700 million and no dividends will be declared
if shareholders' equity will be below NIS
850 million regarding Series H notes. The Company shall not
create floating liens subject to certain terms. The Company has the
right for early redemption under certain conditions. With respect
to notes payable series F, series G and series H: 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; debt rating will not decrease below BBB- for a
certain period. In any case, the total maximum additional interest
for Series F, Series G and Series H, shall not exceed 1.25%, 1% or
1.25%, respectively. For more information see the Company's Annual
Report on Form 20-F for the year ended December 31, 2021.
In the reporting period, the Company was in
compliance with all financial covenants and obligations and no
cause for early repayment occurred.
* On these dates additional Notes of the series were
issued. The information in the table refers to the full series.
Disclosure for Notes holders as of September 30, 2022
(cont.)
|
Notes Rating Details*
|
|
Series
|
Rating
Company
|
Rating as of
30.09.2022 and
23.11.2022 (1)
|
Rating assigned
upon
issuance of the Series
|
Recent date of rating
as of
30.09.2022 and 23.11.2022
|
Additional ratings
between the original issuance date and the recent date of rating
(2)
|
Date
|
Rating
|
F
|
S&P
Maalot
|
ilA+
|
ilA+
|
08/2022
|
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,
11/2020, 05/2021,
08/2021, 12/2021, 08/2022
|
ilA+, ilA+, ilA+, ilA+,
ilA+,
ilA+, ilA+,
ilA+, ilA+,
ilA+,
ilA+, ilA+,
ilA+, ilA+,
ilA+,
ilA+, ilA+, ilA+,
ilA+, ilA+
|
G
|
S&P
Maalot
|
ilA+
|
ilA+
|
08/2022
|
12/2018, 01/2019,
04/2019, 08/2019, 02/2020,
05/2020, 06/2020,
07/2020, 08/2020, 11/2020,
05/2021, 08/2021,
12/2021, 08/2022
|
ilA+, ilA+, ilA+, ilA+,
ilA+,
ilA+, ilA+, ilA+, ilA+,
ilA+,
ilA+, ilA+,
ilA+, ilA+
|
H
|
S&P
Maalot
|
ilA+
|
ilA+
|
08/2022
|
12/2021,
08/2022
|
ilA+,
ilA+
|
(1) In August 2022, S&P Maalot
reaffirmed the Company's rating of "ilA+/Stable".
(2) For details regarding the rating of the notes see the
S&P Maalot reports dated August 7,
2022.
* 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, 2022
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
|
-
|
212,985
|
-
|
-
|
-
|
40,282
|
Second year
|
-
|
212,985
|
-
|
-
|
-
|
34,191
|
Third year
|
-
|
124,765
|
-
|
-
|
-
|
27,950
|
Fourth year
|
-
|
190,008
|
-
|
-
|
-
|
23,722
|
Fifth year and
on
|
-
|
479,219
|
-
|
-
|
-
|
22,692
|
Total
|
-
|
1,219,962
|
-
|
-
|
-
|
148,837
|
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
|
-
|
30,073
|
-
|
-
|
-
|
4,650
|
Second year
|
-
|
17,080
|
-
|
-
|
-
|
4,044
|
Third year
|
-
|
30,000
|
-
|
-
|
-
|
3,820
|
Fourth year
|
-
|
15,000
|
-
|
-
|
-
|
3,060
|
Fifth year and
on
|
-
|
105,000
|
-
|
-
|
-
|
8,416
|
Total
|
-
|
197,153
|
-
|
-
|
-
|
23,990
|
Summary of Financial Undertakings (according to repayment dates)
as of September 30, 2022 (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
|
-
|
243,058
|
-
|
-
|
-
|
44,932
|
Second year
|
-
|
230,065
|
-
|
-
|
-
|
38,235
|
Third year
|
-
|
154,765
|
-
|
-
|
-
|
31,770
|
Fourth year
|
-
|
205,008
|
-
|
-
|
-
|
26,782
|
Fifth year and
on
|
-
|
584,219
|
-
|
-
|
-
|
31,108
|
Total
|
-
|
1,417,115
|
-
|
-
|
-
|
172,827
|
f. Off-balance sheet credit exposure based on the
Company's "Solo" financial data– As of September 30, 2022, the Company provided
financial guarantees in a total amount of NIS 85 million.
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.
[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:https://www.prnewswire.com/news-releases/partner-communications-reports-third-quarter-2022-results1-301685936.html
SOURCE Partner Communications Company Ltd.