PARTNER COMMUNICATIONS REPORTS FIRST QUARTER 2022 RESULTS[1]
05/24/2022 - 02:19 AM
QUARTERLY ADJUSTED EBITDA 2 TOTALED NIS 257 MILLION
NET DEBT2 NIS 720 MILLION
QUARTERLY CELLULAR SUBSCRIBER GROWTH TOTALED 40 THOUSAND
PARTNER'S FIBER-OPTIC SUBSCRIBER BASE TOTALS 243 THOUSAND AS OF TODAY
THE NUMBER OF HOUSEHOLDS IN BUILDINGS CONNECTED TO PARTNER'S FIBER-OPTIC INFRASTRUCTURE TOTALS 807 THOUSAND AS OF TODAY
ROSH HA'AYIN, Israel May 24, 2022
First quarter 2022 highlights (compared with first quarter 2021)
Total Revenues: NIS 854 million (US$ 269 million ), an increase of 3% Service Revenues: NIS 690 million (US$ 217 million ), an increase of 8% Equipment Revenues: NIS 164 million (US$ million), a decrease of 15 % Total Operating Expenses (OPEX) 2 : NIS 476 million (US$ 150 million ), a decrease of 1% Adjusted EBITDA: NIS 257 million (US$ 81 million ), an increase of 23% Profit for the Period: NIS 39 million (US$ 12 million ), an increase of NIS 34 million Adjusted Free Cash Flow (before interest) 2 : NIS 25 million (US$ 8 million ), an increase of NIS 6 million Cellular ARPU: NIS 48 (US$ 15) , unchangedCellular Subscriber Base: approximately 3.06 million at quarter-end, an increase of 6% Fiber-Optic Subscriber Base: 233 thousand subscribers at quarter-end, an increase of 78 thousand since Q1 2021, and an increase of 21 thousand in the quarter Homes Connected (HC) to Partner's Fiber-Optic Infrastructure: 770 thousand at quarter-end, an increase of 256 thousand since Q1 2021, and an increase of 70 thousand in the quarter Infrastructure-Based Internet Subscriber Base: 387 thousand subscribers at quarter-end, an increase of 48 thousand since Q1 2021, and an increase of 13 thousand in the quarter TV Subscriber Base3 : 225 thousand subscribers at quarter-end, a decrease of 9 thousand since Q1 2021, and a decrease of one 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 March 31, 2022 .
Commenting on the results for the first quarter 2022, Mr. Avi Zvi , CEO of Partner, noted:
"Partner continued with its positive financial momentum and started 2022 with excellent results despite the competitive market in which the Company operates. The improvement in the financial and operational measures is due to the work and commitment of the Company's dedicated employees, and to the clear strategy which was outlined by management over the last year.
With 807 thousand households connected to the fiber-optic network, as of today, Partner has become, this year, a national infrastructure player in the fixed-line segment as well, with an impressive fiber-optic rollout rate and the signing of significant deals which will benefit the Company's future, including with Tamares Telecom and FREETV.
Partner continues to lead 5G in Israel with a high rate of cellular subscriber base growth, with consistent addition of new subscribers at the same time as churn rates continue to fall. These outcomes reflect our significant investment in our customers and in making our processes fairer and simpler. In TV, we have returned to our original strategy of a 'Super Aggregator' and we offer today to the customer a focused and flexible product that provides the freedom to choose what to watch and what to pay for.
This is the fourth quarterly financial report since I took office as Partner's CEO. The report demonstrates that the business activities that were undertaken in the past year, are bringing about a continual and stable improvement in the Company's results, as reflected, among other things, in the 23% growth in Adjusted EBITDA compared to last year.
The acquisition of Partner's controlling stake and the appointment of new members of the Board of Directors, together with the Company's capital structure, position the Company to fully realize the strategy outlined in the past year and its transformation from a service company into a service and infrastructure company."
Mr. Tamir Amar , Partner's Deputy CEO & Chief Financial Officer, commented on the results:
"The first quarter of 2022 demonstrated the Company's ability to combine subscriber and revenue growth with improvement in profitability. The cellular segment achieved service revenue growth for a fourth consecutive quarter together with higher profitability than was achieved in the previous and corresponding quarter last year. In the fixed-line segment, fiber-optic subscriber growth continued, a trend that was reflected in the continued growth of the segment's service revenues. The fixed-line segment Adjusted EBITDA increased by 29% compared to the corresponding quarter last year, together with an improvement in the profitability margin to 28% compared with 22% in the corresponding quarter of 2021.
Our cellular subscriber base increased in the quarter by 40 thousand subscribers, of which 37 thousand were Post-Paid subscribers. The cellular churn rate in the first quarter of 2022 totaled 7.0% . Excluding the churn of Ministry of Education subscribers who joined for limited periods, churn rate totaled 6.7% , compared to 6.9% in the corresponding quarter last year. ARPU in the first quarter remained stable at NIS 48 for the fifth consecutive quarter.
In the fixed-line segment, the number of Homes Connected within buildings connected to our fiber-optic infrastructure reached 770 thousand at the end of first quarter of 2022, an increase of 70 thousand in the quarter. The increase in fiber-optic subscribers continued and even achieved a record high for quarterly growth, as the fiber-optic subscriber base increased by 21 thousand in the quarter, compared to increases of 20 thousand and 19 thousand in the previous two quarters, respectively. Partner's fiber-optic subscriber base totaled 233 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 last year. Regarding TV, the number of subscribers totaled 225 thousand at the end of the quarter.
Adjusted EBITDA in the first quarter of 2022 totaled NIS 257 million , an increase of 23% compared to NIS 209 million in the corresponding quarter last year.
In the first quarter of 2022, the recovery trend in roaming service revenues that was seen in the fourth quarter of 2021 continued. Looking ahead, the Company expects this trend to continue, and roaming service revenues in the second quarter are expected to be even higher than those in the first quarter mainly due to seasonality effects.
Adjusted Free Cash Flow (before interest and including lease payments) for the quarter totaled NIS 23 million. CAPEX payments totaled NIS 170 million . Net debt was NIS 720 million at the end of the quarter, compared with NIS 639 million at the end of the corresponding quarter last year, an increase of NIS 81 million . The Company's net debt to Adjusted EBITDA ratio stood at 0.7 at the end of the quarter, compared to a ratio of 0.8 in the previous quarter and the corresponding quarter last year."
Q1 2022 compared with Q1 2021
NIS Million (except EPS)
Q1'21
Q1'22
Comments
Service Revenues
639
690
The increase reflected growth in cellular and fixed-line
Equipment Revenues
194
164
The decrease reflected a lower volume of equipment sales
Total Revenues
833
854
Gross profit from equipment sales
42
33
OPEX
481
476
The decrease mainly reflected a decrease in an expense
Operating profit
28
72
Adjusted EBITDA
209
257
Adjusted EBITDA as a percentage
25%
30%
Profit for the period
5
39
Earnings per share (basic, NIS)
0.03
0.21
Capital Expenditures (cash)
149
170
Adjusted free cash flow (before interest payments)
19
25
Net Debt
639
720
Key Performance Indicators
Q1'21
Q4'21
Q1'22
Change Q4 to Q1
Reported Cellular Subscribers
2,903
3,023
3,063
Post-Paid: Increase of 37 thousand (Ministry of
Pre-Paid: Increase of 3 thousand
Cellular Subscribers (end of
2,857
2,948
2,988
Post-Paid: Increase of 37 thousand
Pre-Paid: Increase of 3 thousand
Monthly Average Revenue per
48
48
48
Reported Quarterly Cellular Churn
6.8%
7.9%
7.0%
Quarterly Cellular Churn Rate (%)
6.9%
7.3%
6.7%
Fiber-Optic Subscribers (end of
155
212
233
Increase of 21 thousand subscribers
Homes Connected to the Fiber-Optic (HC), (end of period,
514
700
770
Increase of 70 thousand households
Infrastructure-Based Internet (end of period,
339
374
387
Increase of 13 thousand subscribers
TV Subscribers (end of period,
234
226
225
Decrease of 1 thousand subscribers
Partner Consolidated Results
Cellular Segment
Fixed-Line Segment
Elimination
Consolidated
NIS Million
Q1 ' 21
Q1 ' 22
Change %
Q1 ' 21
Q1 ' 22
Change %
Q1 ' 21
Q1 ' 22
Q1 ' 21
Q1 ' 22
Change %
Total Revenues
573
585
+2%
294
302
+3%
(34)
(33)
833
854
+3%
Service Revenues
413
443
+7%
260
280
+8%
(34)
(33)
639
690
+8%
Equipment Revenues
160
142
-11%
34
22
-35%
-
-
194
164
-15%
Operating Profit (Loss)
39
71
+82%
(11)
1
-
-
28
72
+157%
Adjusted EBITDA
143
172
+20%
66
85
+29%
-
-
209
257
+23%
Financial Review
In Q1 2022, total revenues were NIS 854 million (US$ 269 million ), an increase of 3% from NIS 833 million in Q1 2021.
Service revenues in Q1 2022 totaled NIS 690 million (US$ 217 million ), an increase of 8% from NIS 639 million in Q1 2021.
Service revenues for the cellular segment in Q1 2022 totaled NIS 443 million (US$ 139 million ), an increase of 7% from NIS 413 million in Q1 2021. The increase was mainly the result of higher roaming service revenues due to the lower negative impact of COVID-19 on roaming service revenues compared to Q1 2021, and growth of the cellular subscriber base, partially offset by the continued price erosion, although to a lesser degree than in the past.
Service revenues for the fixed-line segment in Q1 2022 totaled NIS 280 million (US$ 88 million ), an increase of 8% from NIS 260 million in Q1 2021. 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 Q1 2022 totaled NIS 164 million (US$ 52 million ), a decrease of 15% from NIS 194 million in Q1 2021, mainly reflecting a decrease in the volume of equipment sales to wholesale customers in the cellular segment, and a decrease in sales in the fixed-line segment, largely reflecting 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.
Gross profit from equipment sales in Q1 2022 was NIS 33 million (US$ 10 million ), compared with NIS 42 million in Q1 2021, a decrease of 21% , mainly reflecting the decrease in wholesale sales in the cellular segment and the decrease in fixed-line sales.
Total operating expenses ('OPEX') totaled NIS 476 million (US$ 150 million ) in Q1 2022, a decrease of 1% or NIS 5 million from Q1 2021, mainly reflecting the decrease in an expense line-item provision, as well as decreases in international telephony expenses and in logistics expenses, which were partially offset by an increase in content expenses. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q1 2022 remained unchanged compared with Q1 2021.
Operating profit for Q1 2022 was NIS 72 million (US$ 23 million ), an increase of 157% compared with NIS 28 million in Q1 2021.
Adjusted EBITDA in Q1 2022 totaled NIS 257 million (US$ 81 million ), an increase of 23% from NIS 209 million in Q1 2021. As a percentage of total revenues, Adjusted EBITDA in Q1 2022 was 30% compared with 25% in Q1 2021.
Adjusted EBITDA for the cellular segment was NIS 172 million (US$ 54 million ) in Q1 2022, an increase of 20% from NIS 143 million in Q1 2021, largely reflecting the increase in revenues as described above, and the decrease in the operating expenses including the provision decrease and the decrease in logistics expenses. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment was 29% in Q1 2022, compared with 25% in Q1 2021.
Adjusted EBITDA for the fixed-line segment was NIS 85 million (US$ 27 million ) in Q1 2022, an increase of 29% from NIS 66 million in Q1 2021, mainly reflecting the increase in fixed-line segment service revenues which was partially offset by a decrease in gross profit from equipment sales due to the cessation of sales of internet routers, as described above. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment was 28% in Q1 2022, compared with 22% in Q1 2021.
Finance costs, net in Q1 2022 were NIS 18 million (US$ 6 million ), a decrease of 5% compared with NIS 19 million in Q1 2021.
Income tax expenses in Q1 2022 were NIS 15 million (US$ 5 million ), an increase of 275% compared with NIS 4 million in Q1 2021, mainly due to the increase in operating profit.
Profit in Q1 2022 was NIS 39 million (US$ 12 million ), an increase of NIS 34 million compared with profit of NIS 5 million in Q1 2021.
Based on the weighted average number of shares outstanding during Q1 2022, basic earnings per share or ADS, was NIS 0.21 (US$ 0.07) compared with basic earnings per share or ADS, of NIS 0.03 in Q1 2021.
Cellular Segment Operational Review
At the end of Q1 2022, the Company's cellular subscriber base (including mobile data, 012 Mobile subscribers and M2M subscriptions) was approximately 3.06 million, including approximately 2.71 million Post-Paid subscribers or 88% of the base, and 355 thousand Pre-Paid subscribers, or 12% of the subscriber base.
During the first quarter of 2022, the cellular subscriber base increased, net, by 40 thousand subscribers. The Post-Paid subscriber base increased, net, by 37 thousand subscribers and the Pre-Paid subscriber base increased, net, by 3 thousand subscribers. The subscriber base of data packages and voice packages for the Ministry of Education (MOE) remained unchanged at 75 thousand, due to the extension of contracts for a number of subscribers for further limited periods.
Total cellular market share (based on the number of subscribers) at the end of Q1 2022 was estimated to be approximately 28% , compared with 28% at the end of Q4 2021 and 27% at the end of Q1 2021.
The quarterly churn rate for cellular subscribers in Q1 2022 was 7.0% , compared with 7.9% in Q4 2021 and 6.8% in Q1 2021. Excluding data and voice packages for the Ministry of Education, the churn rate in Q1 2022 was 6.7% compared with 7.3% in Q4 2021 and 6.9% in Q1 2021.
The monthly Average Revenue per User ("ARPU") for cellular subscribers in Q1 2022 was NIS 48 (US$ 15) , unchanged from Q1 2021. This stability mainly reflected the increase in roaming services revenues which was offset by the continued price erosion, although to a lesser degree than in the past, and by a decrease in interconnect contribution to ARPU.
Fixed-Line Segment Operational Review
At the end of Q1 2022:
The Company's fiber-optic subscriber base was 233 thousand subscribers, an increase, net, of 21 thousand subscribers during the first quarter of 2022. The Company's infrastructure-based internet subscriber base was 387 thousand subscribers, an increase, net, of 13 thousand subscribers during the first quarter of 2022. Households in buildings connected to our fiber-optic infrastructure (HC) totaled 770 thousand, an increase of 70 thousand during the first quarter of 2022. The Company's TV subscriber base totaled 225 thousand subscribers, a decrease, net, of 1 thousand subscribers during the first quarter of 2022. Funding and Investing Review
In Q1 2022, Adjusted Free Cash Flow (including lease payments) totaled NIS 25 million (US$ 8 million ), an increase of 32% compared with NIS 19 million in Q1 2021.
Cash generated from operating activities totaled NIS 237 million (US$ 75 million ) in Q1 2022, an increase of 14% from NIS 208 million in Q1 2021.
Lease payments (principal and interest) , recorded in cash flows from financing activities under IFRS 16, totaled NIS 42 million (US$ 13 million ) in Q1 2022, an increase of 2% from NIS 41 million in Q1 2021.
Cash capital expenditures (CAPEX payments) , as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 170 million (US$ 54 million ) in Q1 2022, an increase of 14% from NIS 149 million in Q1 2021.
The level of net debt at the end of Q1 2022 amounted to NIS 720 million (US$ 227 million ), compared with NIS 639 million at the end of Q1 2021, an increase of NIS 81 million .
Regulatory Developments
Removal of competitive barriers in "Kosher Line" cellular services
Currently, the terms under which cellular services are provided to the ultra-orthodox segment in Israel are established in agreements with a single kosher authorization entity (The Rabbinical Committee for Communications). Under the terms of these agreements, kosher lines, among other things, have no access to the internet, cannot receive or send text messages, can only operate on handsets whose features have been limited, may only use certain number ranges and may only be ported-out to operators that have been approved by the kosher authorization entity.
On May 1, 2022 , following a consultation process, the Ministry of Communications ("MoC") published a decision regarding the removal of competitive barriers in "Kosher Line" cellular services. According to the Minister's decision:
A. As from July 31, 2022 , a cellular licensee will not be able to reject a port-out request due to the subscriber being assigned to a particular tariff plan;
B. As from November 1, 2022 , a cellular licensee will be required to allow subscribers to switch to any plan it offers to its subscribers, regardless of the phone number assigned to the subscriber or the type of handset in the subscriber's possession. In addition, a cellular licensee will be required to offer a subscriber who explicitly requests it a tariff plan in such a way that the service will be provided only using a handset whose features have been restricted or blocked for a service or an application at the request of a subscriber or group of subscribers, provided it offers the same plan using handsets in which no such restrictions have been made. The Company is preparing for the implementation of the decision and is studying the implications for its operations.
Results of the first annual incentive tender for the deployment of FTTH networks
On March 7, 2022 the MoC published the results of its first annual incentive tender for the rollout of FTTH (fiber to the home) networks in non-economically feasible areas where Bezeq has decided not to deploy its FTTH network. According to the MoC's announcement Partner will be obliged to deploy its FTTH network to approximately 12,000 households in the incentive areas. According to the terms of the tender, the final grant of the financial incentive for deployment to these households is dependent upon a number of terms and conditions.
Implementation of MoC's decision regarding a reform in the structure of the Internet Market
On March 22, 2022 , the Minister amended Bezeq's license allowing it to market a unified product (comprised of both infrastructure and ISP components) to household subscribers and stipulating that from April 3, 2022 onwards, all new subscribers (and any existing subscribers who wish to alter their existing service plans) may only be offered a unified product. This amendment does not apply to the business sector, where the split between the infrastructure services and ISP service shall remain.
At this stage, the Company is unable to evaluate the impact of the decision on the Company's business, among other reasons, in view of the dependence on the determination of the KPIs and the compensation mechanisms and their enforcement by the Ministry of Communications.
License amendment regarding "Cross Ownership limitations" and "Israeli holdings and holdings of founding shareholders or their approved substitutes"
On April 10, 2022 the Ministry of Communications amended the Company MRT license and authorized the Minister of Communications to allow an Interested Party in a licensee who is a mutual fund, insurance company, investment company or pension fund to hold: (a) up to 10% of the means of control in a competing MRT operator under certain conditions (instead of holdings at a rate of up to 5% before the license amendment) without having to receive the Minister of Communications' approval, and (b) up to 25% of the means of control of a competing MRT licensee, under certain conditions, with the Minister's approval, if he believes that this will not harm competition in the cellular segment (instead of holdings at a rate of up to 10% before the license amendment). As part of this amendment to the license, the Ministry clarified in the license section titled "Israeli holdings and holdings of founding shareholders or their successors" that holdings of "founding shareholders or their successors" will not include anyone who is an "Israeli entity" in the event that the relevant licensee was instructed under section 13 of the Communications Law, 1982.
Conference Call Details
Partner will host a conference call to discuss its financial results on Tuesday, May 24, 2022 at 11.00 a.m. Eastern Time / 6.00 p.m. Israel Time.
Please dial the following numbers (at least 10 minutes before the scheduled time) in order to participate:
International: +972.3.918.0687North America toll-free: +1.888.281.1167http://www.partner.co.il/en/Investors-Relations/lobby
If you are unavailable to join live, the replay of the call will be available from May 24, 2022 until June 7, 2022 , at the following numbers:
International: +972.3.925.5921North 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 manner in which the agreements will benefit the Company's future; (ii) the opportunity to fully realize our strategy as a result of the recent acquisition of the Company's controlling stake and our capital structure and (iii) continuing growth trend for roaming revenue. 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 severity and duration of the 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; (iii) unexpected technical or financial constraints which undermine the pursuit of such strategy, and (iv) a stagnation or reduction in our customers' foreign travel patterns which reduces growth in demand for roaming services. 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 March 31, 2022: US $1.00 NIS 3.176 . 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 Adjusted EBITDA margin (%)
Profit
add
Income tax expenses,
Finance costs, net,
Depreciation and amortization expenses impairment ), Other expenses (mainly amortization of
Adjusted EBITDA divided by Total revenues
Profit
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:
Mr. Tamir Amar
Deputy CEO & Chief Financial Officer
Tel: +972-54-781-4951
Mr. 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
December 31,
March 31,
March 31,
2021
2022
2022
(Audited)
(Unaudited)
(Unaudited)
In millions
CURRENT ASSETS
Cash and cash equivalents
308
262
82
Short-term deposits
344
480
151
Trade receivables
571
585
184
Other receivables and prepaid expenses
152
130
41
Deferred expenses – right of use
27
27
10
Inventories
87
103
32
1,489
1,587
500
NON CURRENT ASSETS
Long-term deposits
280
200
63
Trade receivables
245
237
75
Deferred expenses – right of use
142
154
48
Lease – right of use
679
675
213
Property and equipment
1,644
1,665
524
Intangible and other assets
472
476
150
Goodwill
407
407
128
Deferred income tax asset
34
25
8
Other non-current receivables
1
1
*
3,904
3,840
1,209
TOTAL ASSETS
5,393
5,427
1,709
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
New Israeli Shekels
Convenience
December 31,
March 31,
March 31,
2021
2022
2022
(Audited)
(Unaudited)
(Unaudited)
In millions
CURRENT LIABILITIES
Current maturities of notes payable and borrowings
268
260
82
Trade payables
705
726
229
Other payables and provisions
185
181
57
Current maturities of lease liabilities
125
126
39
Deferred revenues and other
139
145
46
1,422
1,438
453
NON CURRENT LIABILITIES
Notes payable
1,224
1,224
385
Borrowings from banks
184
178
56
Liability for employee rights upon retirement, net
35
34
11
Lease liabilities
595
583
183
Deferred revenues from HOT mobile
39
31
10
Non-current liabilities and provisions
35
35
11
2,112
2,085
656
TOTAL LIABILITIES
3,534
3,523
1,109
EQUITY
Share capital - ordinary shares of NIS 0.01
par value: authorized - December 31, 2021
and March 31, 2022 - 235,000,000 shares;
issued and outstanding -
2
2
1
December 31, 2021 – *183,678,220 shares
March 31, 2022 – *184,124,013 shares
Capital surplus
1,279
1,254
395
Accumulated retained earnings
742
787
248
Treasury shares, at cost
December 31, 2021 – **7,337,759 shares – **7,019,921 shares
(164)
(139)
(44)
TOTAL EQUITY
1,859
1,904
600
TOTAL LIABILITIES AND EQUITY
5,393
5,427
1,709
* Net of treasury shares. December 31, 2021 and March 31, 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
3 months period ended March 31,
2021
2022
2022
(Unaudited)
(Unaudited)
(Unaudited)
In millions (except per share data)
Revenues, net
833
854
269
Cost of revenues
691
665
209
Gross profit
142
189
60
Selling and marketing expenses
79
88
28
General and administrative expenses
42
36
11
Other income, net
7
7
2
Operating profit
28
72
23
Finance income
1
1
*
Finance expenses
20
19
6
Finance costs, net
19
18
6
Profit before income tax
9
54
17
Income tax expenses
4
15
5
Profit for the period
5
39
12
Earnings per share
Basic
0.03
0.21
0.07
Diluted
0.03
0.21
0.07
Weighted average number of shares outstanding
Basic
183,071
183,965
183,965
Diluted
183,609
186,469
186,469
* 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
3 months period ended March 31,
2021
2022
2022
(Unaudited)
(Unaudited)
(Unaudited)
In millions
Profit for the period
5
39
12
Other comprehensive income
for the period, net of income tax
-
-
-
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
5
39
12
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION
New Israeli Shekels
New Israeli Shekels
3 months period ended March 31, 2022
3 months period ended March 31, 2021
In millions (Unaudited)
In millions (Unaudited)
Cellular segment
Fixed line segment
Elimination
Consolidated
Cellular segment
Fixed line segment
Elimination
Consolidated
Segment revenue - Services
440
250
690
409
230
639
Inter-segment revenue - Services
3
30
(33)
4
30
(34)
Segment revenue - Equipment
142
22
164
160
34
194
Total revenues
585
302
(33)
854
573
294
(34)
833
Segment cost of revenues - Services
298
236
534
306
233
539
Inter-segment cost of revenues - Services
30
3
(33)
30
4
(34)
Segment cost of revenues - Equipment
116
15
131
132
20
152
Cost of revenues
444
254
(33)
665
468
257
(34)
691
Gross profit
141
48
189
105
37
142
Operating expenses (3)
74
50
124
71
50
121
Other income, net
4
3
7
5
2
7
Operating profit (loss)
71
1
72
39
(11)
28
Adjustments to presentation of segment
Adjusted EBITDA
–Depreciation and amortization
97
82
103
76
–Other (1)
4
2
1
1
Segment Adjusted EBITDA (2)
172
85
143
66
Reconciliation of segment subtotal Adjusted
Segments subtotal Adjusted EBITDA (2)
257
209
- Depreciation and amortization
(179)
(179)
- Finance costs, net
(18)
(19)
- Income tax expenses
(15)
(4)
- Other (1)
(6)
(2)
Profit for the period
39
5
(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
3 months period ended March 31,
2021
2022
2022
(Unaudited)
(Unaudited)
(Unaudited)
In millions
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations (Appendix)
208
240
76
Income tax paid
*
(3)
(1)
Net cash provided by operating activities
208
237
75
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment
(109)
(116)
(37)
Acquisition of intangible and other assets
(40)
(54)
(17)
Investment in deposits, net
(70)
(56)
(18)
Interest received
1
*
*
Net cash used in investing activities
(218)
(226)
(72)
CASH FLOWS FROM FINANCING ACTIVITIES:
Lease principal payments
(36)
(37)
(12)
Lease interest payments
(5)
(5)
(2)
Interest paid
(1)
(1)
*
Proceeds from issuance of notes payable, net of issuance costs
(1)
*
Repayment of non-current borrowings
(13)
(13)
(4)
Net cash used in financing activities
(55)
(57)
(18)
DECREASE IN CASH AND CASH EQUIVALENTS
(65)
(46)
(15)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
376
308
97
CASH AND CASH EQUIVALENTS AT END OF PERIOD
311
262
82
* 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
3 months period ended March 31,
2021
2022
2022
(Unaudited)
(Unaudited)
(Unaudited)
In millions
Cash generated from operations:
Profit for the period
5
39
12
Adjustments for:
Depreciation and amortization
171
171
54
Amortization of deferred expenses - Right of use
8
8
3
Employee share based compensation expenses
2
6
2
Liability for employee rights upon retirement, net
1
Finance costs, net
(1)
(1)
(1)
Lease interest payments
5
5
2
Interest paid
1
1
*
Interest received
(1)
*
*
Deferred income taxes
3
10
3
Income tax paid
*
3
1
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable:
Trade
(44)
(6)
(2)
Other
9
21
7
Increase (decrease) in accounts payable and accruals:
Trade
43
25
8
Other payables and provisions
43
(9)
(3)
Deferred revenues and other
3
(2)
(1)
Increase in deferred expenses - Right of use
(13)
(20)
(6)
Current income tax
1
5
2
Increase in inventories
(28)
(16)
(5)
Cash generated from operations
208
240
76
* Representing an amount of less than 1 million.
At March 31, 2022 and 2021, trade and other payables include NIS 170 million ($54 million
These balances are recognized in the cash flow statements upon payment.
Reconciliation of Non-GAAP Measures:
Adjusted Free Cash Flow
New Israeli Shekels
Convenience
3 months period ended March 31,
2021
2022
2022
(Unaudited)
(Unaudited)
(Unaudited)
In millions
Net cash provided by operating activities
208
237
75
Net cash used in investing activities
(218)
(226)
(72)
Investment in deposits, net
70
56
18
Lease principal payments
(36)
(37)
(12)
Lease interest payments
(5)
(5)
(2)
Adjusted Free Cash Flow
19
25
7
Interest paid
(1)
(1)
*
Adjusted Free Cash Flow After Interest
18
24
7
* Representing an amount of less than 1 million.
Total Operating Expenses (OPEX)
New Israeli Shekels
Convenience
3 months period ended March 31,
2021
2022
2022
(Unaudited)
(Unaudited)
(Unaudited)
In millions
Cost of revenues - Services
539
534
169
Selling and marketing expenses
79
88
28
General and administrative expenses
42
36
11
Depreciation and amortization
(179)
(179)
(57)
Other (1)
*
(3)
(1)
OPEX
481
476
150
* Representing an amount of less than 1 million.
(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
2020
2021
Cellular Segment Service Revenues
423
409
415
416
413
420
435
431
443
1,663
1,699
Cellular Segment Equipment Revenues
146
130
134
135
160
157
136
149
142
545
602
Fixed-Line Segment Service Revenues
245
244
252
252
260
262
270
274
280
993
1,066
Fixed-Line Segment Equipment Revenues
32
28
35
41
34
34
29
29
22
136
126
Reconciliation for consolidation
(39)
(37)
(36)
(36)
(34)
(33)
(33)
(30)
(33)
(148)
(130)
Total Revenues
807
774
800
808
833
840
837
853
854
3,189
3,363
Gross Profit from Equipment Sales
37
30
38
40
42
39
37
34
33
145
152
Operating Profit
36
20
20
20
28
30
49
56
72
96
163
Cellular Segment Adjusted EBITDA
132
129
134
138
143
139
172
162
172
533
616
Fixed-Line Segment Adjusted EBITDA
83
71
70
65
66
74
78
88
85
289
306
Total Adjusted EBITDA
215
200
204
203
209
213
250
250
257
822
922
Adjusted EBITDA Margin (%)
27%
26%
26%
25%
25%
25%
30%
29%
30%
26%
27%
OPEX
460
456
475
480
481
485
467
469
476
1,871
1,901
Finance costs, net
19
13
24
13
19
16
15
14
18
69
64
Profit (Loss)
10
7
(5)
5
5
9
24
77
39
17
115
Capital Expenditures (cash)
151
119
147
156
149
139
172
212
170
573
672
Capital Expenditures (additions)
129
121
179
166
142
182
112
244
166
595
680
Adjusted Free Cash Flow
10
44
21
(3)
19
8
9
(79)
25
72
(43)
Adjusted Free Cash Flow (after interest)
8
13
12
(10)
18
(33)
8
(84)
24
23
(91)
Net Debt
673
658
646
657
639
670
662
744
720
657
744
Cellular Subscriber Base (Thousands)
2,676
2,708
2,762
2,836
2,903
2,970
3,019
3,023
3,063
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
2,495
2,671
Pre-Paid Subscriber Base (Thousands)
296
304
325
341
355
355
355
352
355
341
352
Cellular ARPU (NIS)
53
51
51
49
48
48
48
48
48
51
48
Cellular Churn Rate (%)
7.5%
7.5%
7.3%
7.2%
6.8%
7.2%
6.4%
7.9%
7.0%
30%
28%
Infrastructure-Based Internet Subscribers (Thousands)
281
295
311
329
339
354
365
374
387
329
374
Fiber-Optic Subscribers (Thousands)
87
101
120
139
155
173
192
212
233
139
212
Homes connected to fiber-optic infrastructure (Thousands)
361
396
432
465
514
571
624
700
770
465
700
TV Subscriber Base (Thousands)
200
215
224
232
234
223**
226
226
225
232
226**
Number of Employees (FTE)
1,867
2,745
2,731
2,655
2,708
2,628
2,627
2,574
2,536
2,655
2,574
* See footnote 2 regarding use of non-GAAP measures.
Disclosure for notes holders as of March 31, 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 31.03.2022
Annual interest rate
Principal repayment dates
Interest repayment dates
Interest linkage
Trustee contact details
Principal
Linked principal
Interest accumulated
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
384
384
2
387
2.16%
25.06.20
25.06.24
25.06, 25.12
Not Linked
Hermetic Trust (1975) Ltd.
Merav Offer. 113 Hayarkon St.,
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
851
851
26
910
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
186
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.March 31, 2022 , the ratio of Net Debt to Adjusted EBITDA was 0.8. 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 March 31, 2022 (cont.)
Notes Rating Details*
Series
Rating Company
Rating as of 31.03.2022 and 24.05.2022 (1)
Rating assigned upon issuance of the Series
Recent date of rating as of 31.03.2022 and 24.05.2022
Additional ratings between the original issuance date and the recent date of rating (2)
Date
Rating
F
S&P Maalot
ilA+
ilA+
12/2021
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
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+
12/2021
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
ilA+, ilA+, ilA+, ilA+, ilA+,
ilA+, ilA+, ilA+, ilA+, ilA+,
ilA+, ilA+, ilA+
H
S&P Maalot
ilA+
ilA+
12/2021
12/2021
ilA+
(1) In August 2021 , 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 11, 2021 .
* 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 March 31, 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
ILS linked
ILS not linked
Euro
Dollar
Other
First year
-
212,985
-
-
-
42,987
Second year
-
212,985
-
-
-
38,901
Third year
-
212,985
-
-
-
32,810
Fourth year
-
124,765
-
-
-
27,950
Fifth year and on
-
669,226
-
-
-
46,414
Total
-
1,432,946
-
-
-
189,062
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
ILS linked
ILS not linked
Euro
Dollar
Other
First year
-
44,779
-
-
-
5,461
Second year
-
22,720
-
-
-
4,325
Third year
-
5,720
-
-
-
3,861
Fourth year
-
30,000
-
-
-
3,439
Fifth year and on
-
120,000
-
-
-
9,933
Total
-
223,219
-
-
-
27,019
Summary of Financial Undertakings (according to repayment dates) as of March 31, 2022 (cont.)
d. Credit from banks abroad based on the Company's "Solo" financial data – None.
Principal payments
Gross interest
ILS linked
ILS not linked
Euro
Dollar
Other
First year
-
257,764
-
-
-
48,448
Second year
-
235,705
-
-
-
43,226
Third year
-
218,705
-
-
-
36,671
Fourth year
-
154,765
-
-
-
31,389
Fifth year and on
-
789,226
-
-
-
56,347
Total
-
1,656,165
-
-
-
216,081
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).
1 2 3
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SOURCE Partner Communications Company Ltd.
