NETANYA, Israel, Nov. 14, 2016 /PRNewswire/ --
Third Quarter 2016 Highlights (compared to third quarter of 2015):
- Total Revenues totaled NIS 992 million ($264 million)
compared to NIS 1,032 million ($275 million) in the third quarter
last year, a decrease of 3.9%
- Service revenues totaled NIS 758 million ($202 million)
compared to NIS 789 million ($210 million) in the third quarter
last year, a decrease of 3.9%
- EBITDA1 totaled NIS 209 million ($55 million) compared to NIS 235 million ($63
million) in the third quarter last year, a decrease of 11.1%
- EBITDA margin 21.1%, down from 22.8%
- Operating income totaled NIS 73 million ($19 million)
compared to NIS 96 million ($26 million) in the third quarter last
year, a decrease of 24.0%
- Net income totaled NIS 33 million ($9 million) compared
to NIS 40 million ($11 million) in the third quarter last year, a
decrease of 17.5%
- Free cash flow1 totaled NIS 81 million ($22
million) compared to NIS 127 million ($34 million) in the
third quarter last year, a decrease of 36.2%
- Cellular subscriber base totaled approximately 2.822 million subscribers (at the end of September 2016)
_______________
[1] Please see "Use of Non-IFRS financial measures" section in this press release.
Nir Sztern, the Company's Chief Executive Officer, referred to the results of the third
quarter:
"The third quarter was characterized by continued growth in the fixed-line segment in an environment of aggressive
competition. The results of the quarter were affected, among others, by a decrease in revenues recognized in relation to national
roaming services, due to Golan not paying the full agreed monthly consideration. Other than this adverse effect, the Company's
results in this quarter, both in the financial parameters and in the operational parameters, were good, similar to the previous
quarter.
The efforts invested in strengthening our position as a telecommunications group bear fruit afresh in each quarter. Cellcom tv
is a success. Over 100 thousand customers chose quality and advanced TV, rich and diverse content, dozens of channels and all for
the best price in Israel."
Shlomi Fruhling, Chief Financial Officer, said:
"The third quarter of 2016 was characterized by continued growth in the fixed-line segment and the continuous competition in
the cellular field, which was reflected in a mild erosion of service revenues compared to the previous quarter. In October 2016, Golan Telecom did not pay the full agreed consideration for national roaming services already
rendered and due and as a result in this quarter the Company recorded a decrease of revenues in an amount of NIS 40 million. Following this effect, EBITDA in this quarter totaled to approximately NIS 209 million. If Golan's payments continue to be partial, the Company's results will be adversely affected
by a decrease in revenues from national roaming services.
In the fixed-line segment we continue the growth trend due to the continued recruitment of customers to Cellcom tv, landline
wholesale market and triple-play services. The Company recorded an increase in revenues from the Internet and TV fields, which
was partially offset by a decrease in revenues from long distance calls.
The Group continues to act to decrease its operating expenses. In the first nine months of 2016, the selling, marketing,
general and administrative expenses of the Group decreased by approximately 8.0% compared to the same period last year. In
September 2016, the Company completed a debt raising through the issuance of two new series of
debentures in Israel in a total amount of approximately NIS 400
million. This successful issuance represents a continued vote of confidence by investors in the Company.
The free cash flow for the third quarter of 2016 totaled NIS 81 million, a 36.2% decrease
compared to NIS 127 million in the third quarter of 2015. The decrease in free cash flow was mainly
due to a decrease in receipts from customers for services and end user equipment. The Company's Board of Directors decided not to
distribute a dividend for the third quarter of 2016, given the continued intensified competition in the market and its effect on
the Company's operating results and in order to further strengthen the Company's balance sheet. The Board of Directors will
re-evaluate its decision as market conditions develop, and taking into consideration the Company's needs."
Cellcom Israel Ltd. (NYSE: CEL; TASE: CEL) ("Cellcom Israel" or the "Company" or the "Group"), announced today its financial
results for the third quarter of 2016. Revenues for the third quarter of 2016 totaled NIS 992
million ($264 million). EBITDA for the third quarter of 2016 totaled NIS 209 million ($55 million), reflecting a margin of 21.1% of total revenues.
Net income for the third quarter of 2016 totaled NIS 33 million ($9
million). Basic earnings per share for the third quarter of 2016 totaled NIS 0.33
($0.09).
Main Consolidated Financial Results:
|
Q3/2016
|
Q3/2015
|
Change%
|
Q3/2016
|
Q3/2015
|
|
NIS million
|
US$ million
(convenience translation)
|
Total revenues
|
992
|
1,032
|
(3.9%)
|
264
|
275
|
Operating Income
|
73
|
96
|
(24.0%)
|
19
|
26
|
Net Income
|
33
|
40
|
(17.5%)
|
9
|
11
|
Free cash flow
|
81
|
127
|
(36.2%)
|
22
|
34
|
EBITDA
|
209
|
235
|
(11.1%)
|
55
|
63
|
EBITDA, as percent of total revenues
|
21.1%
|
22.8%
|
(7.5%)
|
|
|
Main Financial Data by Operating Segments:
Starting from the first quarter of 2016, the Company presents its operations in two segments, "Cellular" segment and
"Fixed-line" segment. These segments are managed separately for allocating resources and assessing performance purposes. The
Company adjusted its operating segments reporting for prior periods on a retroactive basis, therefore the segment reporting for
those periods reflect the new reporting format.
- Cellular Segment - the segment includes the cellular communications services, end user cellular equipment and supplemental
services.
- Fixed-line segment - the segment includes landline telephony services, internet infrastructure and connectivity services,
television services, end user fixed-line equipment and supplemental services.
|
Cellular (*)
|
Fixed-line (**)
|
Consolidation adjustments
(***)
|
Consolidated results
|
NIS million
|
Q3'16
|
Q3'15
|
Change
%
|
Q3'16
|
Q3'15
|
Change
%
|
Q3'16
|
Q3'15
|
Q3'16
|
Q3'15
|
Change
%
|
Total revenues
|
729
|
787
|
(7.4%)
|
315
|
295
|
6.8%
|
(52)
|
(50)
|
992
|
1,032
|
(3.9%)
|
Service revenues
|
534
|
572
|
(6.6%)
|
276
|
267
|
3.4%
|
(52)
|
(50)
|
758
|
789
|
(3.9%)
|
Equipment revenues
|
195
|
215
|
(9.3%)
|
39
|
28
|
39.3%
|
-
|
-
|
234
|
243
|
(3.7%)
|
EBITDA
|
149
|
168
|
(11.3%)
|
60
|
67
|
(10.4%)
|
-
|
-
|
209
|
235
|
(11.1%)
|
EBITDA, as percent of total revenues
|
20.4%
|
21.3%
|
(4.2%)
|
19.0%
|
22.7%
|
(16.3%)
|
|
|
21.1%
|
22.8%
|
(7.5%)
|
|
|
(*)
|
The segment includes the cellular communications services, end user
cellular equipment and supplemental services.
|
|
|
(**)
|
The segment includes landline telephony services, internet infrastructure
and connectivity services, television services, end user fixed-line equipment and supplemental services.
|
|
|
(***)
|
Include cancellation of inter-segment revenues between "Cellular" and
"Fixed-line" segments.
|
Financial Review
Revenues for the third quarter of 2016 decreased 3.9% totaling NIS 992 million
($264 million), compared to NIS 1,032 million ($275 million) in the third quarter of last year. The decrease in revenues is attributed to a 3.9% decrease in
service revenues and a 3.7% decrease in equipment revenues.
Service revenues totaled NIS 758 million ($202 million) in
the third quarter of 2016, a 3.9% decrease from NIS 789 million ($210
million) in the third quarter of last year.
Service revenues in the cellular segment totaled NIS 534 million ($142 million) in the third quarter of 2016, a 6.6% decrease from NIS 572 million
($152 million) in the third quarter of last year. This decrease resulted mainly from a decrease in
cellular services revenues due to the ongoing erosion in the price of these services and churn of customers as a result of the
competition in the cellular market. This decrease was also affected by a decrease in revenues from national roaming services. For
additional details regarding national roaming revenues from Golan Telecom Ltd. ("Golan") in this quarter see under "Golan
Telecom" section in this press release.
Service revenues in the fixed-line segment totaled NIS 276 million ($73 million) in the third quarter of 2016, a 3.4% increase from NIS 267 million
($71 million) in the third quarter of last year. This increase resulted mainly from an increase in
revenues from Internet and TV fields. Such increase was partially offset by a decrease in revenues from long distance calls.
Equipment revenues in the third quarter of 2016 totaled NIS 234 million ($62 million), a 3.7% decrease compared to NIS 243 million ($65 million) in the third quarter of last year. This decrease resulted mainly from a decrease in the quantity
of end user equipment sold during the third quarter of 2016 as compared with the third quarter of 2015. This decrease was
partially offset by an increase in equipment sales in the fixed-line segment.
Cost of revenues for the third quarter of 2016 totaled NIS 669 million ($178 million), compared to NIS 671 million ($179
million) in the third quarter of 2015, a 0.3% decrease. This decrease resulted mainly from a decrease in costs of end user
equipment, primarily as a result of a decrease in the quantity of end user equipment sold during the third quarter of 2016 as
compared with the third quarter of 2015, which was partially offset by an increase in content costs related to the TV field and
in costs related to the landline wholesale market field.
Gross profit for the third quarter of 2016 decreased 10.5% to NIS 323 million
($86 million), compared to NIS 361 million ($96 million) in the third quarter of 2015. Gross profit margin for the third quarter of 2016 amounted
to 32.6%, down from 35.0% in the third quarter of 2015.
Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for the third quarter of 2016 decreased
6.8% to NIS 247 million ($66 million), compared to NIS 265 million ($71 million) in the third quarter of 2015. This decrease is
primarily a result of decrease in depreciation and amortization expenses and efficiency measures implemented by the Company.
Operating income for the third quarter of 2016 decreased by 24% to NIS 73 million
($19 million) from NIS 96 million ($26
million) in the third quarter of 2015. The decrease in the operating income resulted from a decrease in revenues primarily
due to the ongoing erosion in service revenues.
EBITDA for the third quarter of 2016 decreased by 11.1% totaling NIS 209 million
($55 million) compared to NIS 235 million ($63
million) in the third quarter of 2015. EBITDA for the third quarter of 2016, as a percent of third quarter revenues,
totaled 21.1% down from 22.8% in the third quarter of 2015. The decrease in the EBITDA resulted mainly from the ongoing erosion
in service revenues and from an adverse effect of NIS 40 million in the third quarter of 2016. For
additional details see under "Golan Telecom" section in this press release. The decrease was partially offset by a decrease in
operating expenses, mainly as a result of efficiency measures implemented by the Company.
Cellular segment EBITDA totaled NIS 149 million ($39 million),
compared to NIS 168 million ($45 million) in the third quarter last
year, a decrease of 11.3% resulted mainly from a decrease in service revenues as mentioned above. For additional details
regarding an adverse effect of NIS 40 million in the third quarter of 2016 see under "Golan
Telecom" section in this press release. Fixed-line segment EBITDA totaled NIS 60 million
($16 million), a 10.4% decrease from the third quarter last year, mainly as a result of an erosion
in long distance calls revenues and an erosion in internet field profitability.
Financing expenses, net for the third quarter of 2016 decreased 14.3% and totaled NIS 42
million ($11 million), compared to NIS 49 million
($13 million) in the third quarter of 2015. The decrease resulted mainly from losses in the third
quarter of 2015 from hedging transactions regarding the Israeli Consumer Price Index, associated with the Company's
debentures.
Taxes on income for the third quarter of 2016 totaled NIS 2 million ($1 million) of tax income, compared to NIS 7 million ($2
million) of tax expenses in the third quarter of 2015. The decrease resulted mainly from tax income, which was recorded in
this quarter, as a result of a tax assessment agreement for the years 2012-2013.
Net Income for the third quarter of 2016 totaled NIS 33 million ($9 million), compared to NIS 40 million ($11
million) in the third quarter of 2015, a 17.5% decrease.
Basic earnings per share for the third quarter of 2016 totaled NIS 0.33 ($0.09), compared to NIS 0.40 ($0.11) in the third
quarter last year.
OPERATING REVIEW
MAIN PERFORMANCE INDICATORS - Cellular segment:
|
Q3/2016
|
Q3/2015
|
Change (%)
|
Cellular subscribers at the end of period (in thousands)
|
2,822
|
2,832
|
(0.4%)
|
Churn Rate for cellular subscribers (in %)
|
10.5%
|
10.1%
|
4.0%
|
Monthly cellular ARPU (in NIS)
|
62.8
|
66.0
|
(4.8%)
|
Cellular subscriber base – at the end of the third quarter of 2016 the Company had approximately 2.822 million cellular
subscribers. During the third quarter of 2016 the Company's cellular subscriber base increased by approximately 10,000 net
cellular subscribers.
Cellular Churn Rate for the third quarter of 2016 totaled 10.5%, compared to 10.1% in the third quarter of 2015.
The monthly cellular Average Revenue per User ("ARPU") for the third quarter of 2016 totaled NIS
62.8 ($16.7), compared to NIS 66.0 ($17.6) in the third quarter of 2015. The decrease in ARPU resulted, among others, from the ongoing erosion in
the prices of cellular services, resulting from the intense competition in the cellular market, and from a decrease in revenues
from national roaming.
MAIN PERFORMANCE INDICATORS - FIXED-LINE SEGMENT:
|
Q3/2016
|
Q3/2015
|
Change (%)
|
Internet infrastructure field- households at the end of
period (in thousands)
|
146
|
70
|
108.6%
|
TV field- households at the end of period (in
thousands)
|
99
|
50
|
98.0%
|
FINANCING AND INVESTMENT REVIEW
Cash Flow
Free cash flow for the third quarter of 2016 totaled NIS 81 million ($22 million), compared to NIS 127 million ($34
million) in the third quarter of 2015, a 36.2% decrease. The decrease in free cash flow was mainly due to a decrease in
receipts from customers for services and end user equipment.
Total Equity
Total Equity as of September 30, 2016 amounted to NIS 1,325
million ($352 million) primarily consisting of accumulated undistributed retained earnings
of the Company.
Cash Capital Expenditures in Fixed Assets and Intangible Assets
During the third quarter of 2016 the Company invested NIS 80 million ($21
million) in fixed assets and intangible assets (including, among others, investments in the Company's communications
networks, information systems, software and TV set-top boxes), compared to NIS 86 million
($23 million) in the third quarter of 2015.
Dividend
On November 14, 2016, the Company's Board of Directors decided not to declare a cash dividend
for the third quarter of 2016. In making its decision, the board of directors considered the Company's dividend policy and
business status and decided not to distribute a dividend at this time, given the intensified competition and its adverse effect
on the Company's results of operations, and in order to strengthen the Company's balance sheet. The board of directors will
re-evaluate its decision in future quarters. No future dividend declaration is guaranteed and is subject to the Company's board
of directors' sole discretion, as detailed in the Company's annual report for the year ended December 31,
2015 on Form 20-F dated March 21, 2016, under "Item 8 - Financial Information – A.
Consolidated Statements and Other Financial Information - Dividend Policy".
Debentures
For information regarding the Company's summary of financial liabilities and details regarding the Company's outstanding
debentures as of September 30, 2016, see "Disclosure for Debenture Holders" section in this press
release.
Loan from Financial Institutions
Pursuant to a loan agreement entered by the Company and two financial institutions in May 2015,
in June 2016 the first loan under the agreement in a principal amount of NIS
200 million was provided to the Company. For details regarding the fulfilling of financial covenants included in the loan
agreement, which are identical to those included in the Company's Debentures Series F through K, see comment no.1 to the table of
"Aggregation of the information regarding the debenture series issued by the Company" under "Disclosure for Debenture Holders"
section in this press release. For additional details regarding the loan see the Company's most recent annual report for the year
ended December 31, 2015 on Form 20-F, filed on March 21, 2016, under
"Item 5B. Liquidity and Capital Resources – Other Credit Facilities".
OTHER DEVELOPMENTS DURING THE THIRD QUARTER OF 2016 AND SUBSEQUENT TO THE END OF THE REPORTING PERIOD
Network Sharing with Xfone
In October 2016, the 4G network sharing and 2G and 3G hosting services agreement entered by the
Company and Marathon 018 Xfone Ltd., or Xfone, in July 2016 (Xfone was awarded 4G frequencies in
the 2015 frequencies tender and has not entered the cellular market yet), was approved by the Israeli Antitrust commissioner,
subject to the annulment of a certain provision. The agreement further requires the approval of the Israeli Ministry of
communications.
For additional details see the Company's annual report for the year ended December 31, 2015,
dated March 21, 2016, on Form 20-F, or the Company's 2015 Annual Report under "Item 3 Key
Information - D. Risk Factors– Risks Related to our Business –We face intense competition in all aspects of our business" and
under "Item 4. Information on the Company – B. Business Overview - Competition – Cellular" and " - Government Regulation
–Additional MNOs", and the Company's current reports on Form 6-K dated August 10, 2016 under "Other
developments during the second quarter of 2016 and subsequent to the end of the reporting period –Agreement with Xfone", and
October 30, 2016.
Golan Telecom
Following the previously reported notification of the Israeli Antitrust commissioner and the Ministry of Communications that
they are opposing the proposed purchase of Golan Telecom Ltd., or Golan, by the Company, in September
2016 each of Golan and the Company filed a petition against the Ministry of Communication's decision not to approve the
purchase of Golan by the Company. In addition, in the last months, the Company agreed to allow Golan, as an exception to its "no
shop" obligation included in the Share Purchase Agreement of Golan's shares by the Company, or SPA, to conduct negotiations with
certain third parties which showed interest in the possible purchase of Golan's share capital or operations or a part thereof.
The Company has been conducting advanced negotiations of a possible network sharing agreement which will also resolve past
national roaming payment differences with Golan, previously reported, with such third parties looking into the purchase of Golan.
The terms of the agreements negotiated vary but the Company estimates that should any of such negotiations mature into an
agreement, the Company will be entitled to receive an annual sum which is somewhat lower than was previously estimated and
reported. Any such agreement will be subject to the completion of negotiations to the Company's satisfaction, the approval of the
Company's board of directors, the acquisition of Golan by such third party and the receipt of all regulatory approvals for all
such agreements. The Company cannot estimate the results of any of the abovementioned negotiations, whether such negotiations
shall mature into an agreement and whether such agreement shall be approved by the regulators.
Following the previously reported Golan's request to appeal the interim injunction granted by the district court against the
consummation of a hosting agreement between Hot Mobile Ltd., another Israeli cellular operator, and Golan, or the Hot Agreement,
in September 2016 Golan's request to appeal the said interim injunction was rejected by the Israeli
Supreme Court, and Hot – Telecommunications Systems Ltd., the controlling shareholder of Hot Mobile Ltd., announced that the Hot
Agreement was canceled.
Also, in October 2016: (1) Golan filed a lawsuit against the Company asking the Israeli district
court to declare that it does not owe the Company the previously reported past national roaming payment differences (set in the
SPA to NIS 600 million plus VAT) or alternatively, decrease certain payments. The Company believes
this lawsuit is unfounded, is contrary to the binding National Roaming Agreement, or NRA, and SPA between the parties and Golan's
numerous statements to both the Company and the regulators, attesting to the NIS 600 million sum
(including approval of the monthly invoices which are the basis for the sum and a letter Golan written to the Prime Minister of
Israel in his capacity as Minister of communications) and the Company intends to act vigorously
in order to dismiss it. (2) Golan unilaterally and in breach of the SPA and NRA between the parties, informed the Company that in
light of certain unspecified claims it supposedly has in the matter, it will pay the Company a monthly amount of NIS 10.6 million (plus VAT) instead of the agreed NIS 21 million (plus VAT) for
the national roaming services already provided by the Company and due in October and until further notice. The Company rejected
any alleged claim in respect of this matter and in November 2016, as Golan failed to pay the full
monthly payments due, the Company commenced legal proceedings against Golan in that regard. Further, in October 2016, the Company provided Golan with a specific formal warning before a liquidation request may be
filed against Golan in case it does not pay all due amounts.
As to date, Golan did not pay the Company the full agreed monthly consideration due for national roaming services already
rendered in 2016, the Company did not recognize part of the revenues in respect of such services. As a result, the Company's
EBITDA for the third quarter of 2016 was adversely affected in the amount of NIS 40 million. In
case the aforementioned negotiations with third parties looking into the purchase of Golan mature into an agreement, the
assumptions at the basis of the above decrease in revenues recognition, may change and require an adjustment respectively.
Further, a substantial reduction of the Company's future revenues from Golan will have a material adverse effect on the Company's
revenues and results of operations.
In November 2016, according to the provisions of the SPA, the Company demanded Golan to pay in
December 2016 the sum of NIS 600 million plus VAT - regarding past
national roaming payment differences.
For additional details see the Company's 2015 Annual Report under "Item 3 Key Information - D. Risk Factors– Risks Related to
our Business –We face intense competition in all aspects of our business" and "- Risks Related to the Proposed Acquisition of
Golan Telecom Ltd." and under "Item 4. Information on the Company – B. Business Overview - General - Agreement for the Purchase
of Golan", and under "-Competition – Cellular" and " - Government Regulation –Additional MNOs", and the Company's current reports
on Form 6-K dated August 10, 2016 under "Other developments during the second quarter of 2016 and
subsequent to the end of the reporting period – Golan Telecom", September 6, 12, 21 and 22, 2016,
and October 10, 2016.
Debt Raising
In September 2016, the Company issued two new series of debentures as follows:
- Series J debentures in a principal amount of approximately NIS 103 million at an interest
rate of 2.45% per annum, linked to the Israeli Consumer Price Index. Series J debentures principal will be payable in six
installments, of which the first four installments of 15% of the principal each will be paid on July
5 of the years 2021 through 2024, and the remaining two installments of 20% of the principal each will be paid on
July 5 of the years 2025 through 2026. Interest on the outstanding principal of the Series J
debentures is payable on January 5 and on July 5 of each of the
years 2017 through 2026.
- Series K debentures in a principal amount of approximately NIS 304 million, at an interest
rate of 3.55% per annum, without linkage. Series K debentures principal will be payable in six installments, of which the first
four installments of 15% of the principal each will be paid on July 5 of the years 2021 through
2024, and the remaining two installments of 20% of the principal each will be paid on July 5 of
the years 2025 and 2026. Interest on the outstanding principal of the Series K debentures is payable on January 5 and on July 5 of each of the years 2017 through 2026.
Both series were issued at par value (NIS 1,000 per unit).
The debentures (rated ilA+/Stable) were issued in a public offering in Israel based on the
Company's Israeli shelf prospectus and were listed for trading on the Tel Aviv Stock Exchange.
The total net consideration received by the Company was approximately NIS 403 million.
The Series J and Series K debentures are unsecured and contain standard terms and conditions in addition to certain additional
undertakings by the Company generally similar to the terms of the Company's existing Series G and Series H debentures. The
Company intends to use the net proceeds from the offering for general corporate purposes, which may include financing its
operating and investment activity, refinancing of outstanding debt under its debentures and other credit facilities, and dividend
distributions, subject to certain restrictions that apply to dividend distributions made by the Company and to the decisions of
the Company's board of directors from time to time.
The offering described in this press release, was made in Israel to residents
of Israel only. The said debentures were not and will not be registered under the U.S.
Securities Act of 1933 and were not and will not be offered or sold in the United States. This
press release shall not constitute an offer to sell or the solicitation of an offer to buy any debentures.
For additional details of the Company's Israeli shelf prospectus, the Company's public debentures and other credit facilities
see the Company's Annual Report 2015 under "Item 5. Liquidity and Capital Resources – Debt Service – Public Debentures" and
"Other Credit Facilities" and the Company's current reports on Form 6-K dated September 25 and 26,
2016 ; for details of the Company's dividend policy see the Company's Annual Report 2015 under "Item 8. Financial Information -
A. Consolidated Statements and Other Financial Information - Dividend Policy".
Director Nomination
In November 2016, the Company's Board of Directors appointed Mr. Mauricio
Wior as a member of the Board of Directors and Vice Chairman, subject to the completion of the previously reported process
of adaptation of the Company's licenses to the change in control in IDB Development Corporation Ltd., or IDB, until the Company's
next annual general meeting of shareholders. When the appointment is effective, Mr. Wior will replace Mr. Ari Bronshtein as a member of the Company's Board of Directors.
Mauricio Wior has served as deputy chairman of the board of directors of Shufersal Ltd. and
Israir Aviation and Tourism Ltd. since 2016, a member of the board of directors of IRSA Inversiones y Representaciones Sociedad
Anónima, IDB's controlling shareholder, since 2006, a member of the board of directors of Banco Hipotecario in Argentina, a substitute director in Discount Investment Corporation Ltd., the Company's controlling
shareholder, since 2014 and a member of the board of directors of additional private companies in Argentina. From 1990 to 2005 Mr. Wior served as the chariman and CEO of cellular operators in Argentina, Uruguay, Chile, Ecuador, Peru and Venezuela, and as a
senior executive of BellSouth Telecommunications, LLC. Mr. Wior holds a B.A in finance and Accounting and M.B.A. in Business
Management, both from Tel Aviv University.
For additional details see our 2015 Annual Report under "Item 3. Key Information – D. Risk Factors - Risks Related to our
Business – There are certain restrictions in our licenses relating to the ownership of our shares. As a result of a change in
control of IDB, we are currently not in compliance with the terms of our licenses" and "Item 4. Information on the Company – B.
Business Overview – Government Regulations – Our Principle License" and "Item 6. Directors, Senior Management and Employees – A.
Directors and Senior Management".
CONFERENCE CALL DETAILS
The Company will be hosting a conference call regarding its results for the third quarter of 2016 on Monday, November 14, 2016 at 09:00 am ET, 06:00 am
PT, 14:00 UK time, 16:00 Israel time. On the call, management will review and discuss the
results, and will be available to answer questions. To participate, please either access the live webcast on the Company's
website, or call one of the following teleconferencing numbers below. Please begin placing your calls at least 10 minutes before
the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in
number.
US Dial-in Number: 1 888 668 9141
|
UK Dial-in Number: 0 800 917 5108
|
Israel Dial-in Number: 03 918 0610
|
International Dial-in Number: +972 3 918 0610
|
at: 09:00 am Eastern Time; 06:00 am Pacific Time; 14:00 UK Time;
16:00 Israel Time
To access the live webcast of the conference call, please access the investor relations section of Cellcom Israel's
website: www.cellcom.co.il. After the
call, a replay of the call will be available under the same investor relations section.
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the largest Israeli cellular provider; Cellcom Israel provides its approximately
2.822 million cellular subscribers (as at September 30, 2016) with a broad range of value added
services including cellular telephony, roaming services for tourists in Israel and for its
subscribers abroad and additional services in the areas of music, video, mobile office etc., based on Cellcom Israel's
technologically advanced infrastructure. The Company operates an LTE 4 generation network and an HSPA 3.5 Generation network
enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE networks. Cellcom Israel offers
Israel's broadest and largest customer service infrastructure including telephone customer
service centers, retail stores, and service and sale centers, distributed nationwide. Through its broad customer service network
Cellcom Israel offers technical support, account information, direct to the door parcel delivery services, internet and fax
services, dedicated centers for hearing impaired, etc. Cellcom Israel further provides OTT TV services (as of December 2014), internet infrastructure (as of February 2015) and connectivity
services and international calling services, as well as landline telephone communications services in Israel, in addition to data communications services. Cellcom Israel's shares are traded both on the New York
Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please visit the Company's website
http://investors.cellcom.co.il.
Forward-Looking Statements
The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private
Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements
by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking
statements, which are subject to risks, uncertainties and assumptions about the Company, may include projections of the Company's
future financial results, its anticipated growth strategies and anticipated trends in its business. These statements are only
predictions based on the Company's current expectations and projections about future events. There are important factors that
could cause the Company's actual results, level of activity, performance or achievements to differ materially from the results,
level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause
such differences include, but are not limited to: changes to the terms of the Company's license, new legislation or decisions by
the regulator affecting the Company's operations, new competition and changes in the competitive environment, the outcome of
legal proceedings to which the Company is a party, particularly class action lawsuits, the Company's ability to maintain or
obtain permits to construct and operate cell sites, and other risks and uncertainties detailed from time to time in the Company's
filings with the U.S. Securities and Exchange Commission, including under the caption "Risk Factors" in its Annual Report for the
year ended December 31, 2015.
Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it
cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other
person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company assumes
no duty to update any of these forward-looking statements after the date hereof to conform its prior statements to actual results
or revised expectations, except as otherwise required by law.
The Company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued
by the International Accounting Standards Board (IASB). Unless noted specifically otherwise, the dollar denominated figures were
converted to US$ using a convenience translation based on the New Israeli Shekel (NIS)/US$ exchange rate of NIS 3.758 = US$ 1 as published by the Bank of Israel for September 30, 2016.
Use of non-IFRS financial measures
EBITDA is a non-IFRS measure and is defined as income before financing income (expenses), net; other income (expenses),
net (excluding expenses related to employee voluntary retirement plans); income tax; depreciation and amortization and share
based payments. This is an accepted measure in the communications industry. The Company presents this measure as an additional
performance measure as the Company believes that it enables us to compare operating performance between periods and companies,
net of any potential differences which may result from differences in capital structure, taxes, age of fixed assets and related
depreciation expenses. EBITDA should not be considered in isolation, or as a substitute for operating income, any other
performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as
measures of profitability or liquidity. EBITDA does not take into account debt service requirements, or other commitments,
including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company's
use. In addition, EBITDA as presented by the Company may not be comparable to similarly titled measures reported by other
companies, due to differences in the way these measures are calculated. See the reconciliation of net income to EBITDA under
"Reconciliation of Non-IFRS Measures" in the press release.
Free cash flow is a non-IFRS measure and is defined as the net cash provided by operating activities (including the
effect of exchange rate fluctuations on cash and cash equivalents), minus the net cash used in investing activities excluding
short-term investment in tradable debentures and deposits and proceeds from sales of such debentures (including interest received
in relation to such debentures) and deposits. See "Reconciliation of Non-IFRS Measures" below.
Company Contact
Shlomi Fruhling
Chief Financial Officer
investors@cellcom.co.il
Tel: +972 52 998 9755
|
Investor Relations Contact
Ehud Helft
GK Investor & Public Relations in partnership with LHA
cellcom@GKIR.com
Tel: +1 617 418 3096
|
|
Financial Tables Follow
Cellcom Israel Ltd.
|
(An Israeli Corporation)
|
|
Condensed Consolidated Interim Statements of Financial
Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
|
|
|
translation
|
|
|
|
|
|
|
|
|
into US dollar
|
|
|
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
December 31,
|
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
|
NIS millions
|
|
US$ millions
|
|
NIS millions
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
550
|
|
1,026
|
|
273
|
|
761
|
Current investments, including derivatives
|
|
380
|
|
286
|
|
76
|
|
281
|
Trade receivables
|
|
1,316
|
|
1,307
|
|
348
|
|
1,254
|
Other receivables
|
|
77
|
|
88
|
|
23
|
|
104
|
Inventory
|
|
80
|
|
56
|
|
15
|
|
85
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
2,403
|
|
2,763
|
|
735
|
|
2,485
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
768
|
|
811
|
|
216
|
|
785
|
Property, plant and equipment, net
|
|
1,761
|
|
1,660
|
|
441
|
|
1,745
|
Intangible assets, net
|
|
1,269
|
|
1,213
|
|
323
|
|
1,254
|
Deferred tax assets
|
|
12
|
|
3
|
|
1
|
|
9
|
|
|
|
|
|
|
|
|
|
Total non- current assets
|
|
3,810
|
|
3,687
|
|
981
|
|
3,793
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
6,213
|
|
6,450
|
|
1,716
|
|
6,278
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current maturities of debentures
|
|
738
|
|
865
|
|
230
|
|
734
|
Trade payables and accrued expenses
|
|
631
|
|
687
|
|
183
|
|
677
|
Current tax liabilities
|
|
55
|
|
-
|
|
-
|
|
53
|
Provisions
|
|
126
|
|
108
|
|
29
|
|
110
|
Other payables, including derivatives
|
|
261
|
|
200
|
|
53
|
|
286
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
1,811
|
|
1,860
|
|
495
|
|
1,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term loans from financial institutions
|
|
-
|
|
200
|
|
53
|
|
-
|
Debentures
|
|
3,057
|
|
2,860
|
|
761
|
|
3,054
|
Provisions
|
|
19
|
|
30
|
|
8
|
|
20
|
Other long-term liabilities
|
|
18
|
|
29
|
|
8
|
|
24
|
Liability for employee rights upon retirement, net
|
|
12
|
|
11
|
|
3
|
|
12
|
Deferred tax liabilities
|
|
125
|
|
135
|
|
36
|
|
123
|
|
|
|
|
|
|
|
|
|
Total non- current liabilities
|
|
3,231
|
|
3,265
|
|
869
|
|
3,233
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
5,042
|
|
5,125
|
|
1,364
|
|
5,093
|
|
|
|
|
|
|
|
|
|
Equity attributable to owners of the Company
|
|
|
|
|
|
|
|
|
Share capital
|
|
1
|
|
1
|
|
-
|
|
1
|
Cash flow hedge reserve
|
|
(3)
|
|
(1)
|
|
-
|
|
(2)
|
Retained earnings
|
|
1,156
|
|
1,309
|
|
348
|
|
1,170
|
|
|
|
|
|
|
|
|
|
Non-controlling interests
|
|
17
|
|
16
|
|
4
|
|
16
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
1,171
|
|
1,325
|
|
352
|
|
1,185
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
6,213
|
|
6,450
|
|
1,716
|
|
6,278
|
Cellcom Israel Ltd.
|
(An Israeli Corporation)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
|
|
|
translation
|
|
|
|
|
|
translation
|
|
|
|
|
|
|
|
|
into US dollar
|
|
|
|
|
|
into US dollar
|
|
|
|
|
For the nine
months ended
September 30,
|
|
For the nine
months ended
September 30,
|
|
For the three
months ended
September 30,
|
|
For the three
months ended
September 30,
|
|
For the
year ended
December 31,
|
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
|
NIS millions
|
|
US$millions
|
|
NIS millions
|
|
US$millions
|
|
NIS millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
3,134
|
|
3,043
|
|
810
|
|
1,032
|
|
992
|
|
264
|
|
4,180
|
Cost of revenues
|
|
(2,075)
|
|
(2,005)
|
|
(533)
|
|
(671)
|
|
(669)
|
|
(178)
|
|
(2,763)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
1,059
|
|
1,038
|
|
277
|
|
361
|
|
323
|
|
86
|
|
1,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
(459)
|
|
(432)
|
|
(115)
|
|
(155)
|
|
(141)
|
|
(38)
|
|
(620)
|
General and administrative expenses
|
|
(349)
|
|
(311)
|
|
(83)
|
|
(110)
|
|
(106)
|
|
(28)
|
|
(465)
|
Other expenses, net
|
|
(20)
|
|
(17)
|
|
(5)
|
|
-
|
|
(3)
|
|
(1)
|
|
(22)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
231
|
|
278
|
|
74
|
|
96
|
|
73
|
|
19
|
|
310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing income
|
|
46
|
|
39
|
|
10
|
|
21
|
|
12
|
|
3
|
|
55
|
Financing expenses
|
|
(175)
|
|
(149)
|
|
(39)
|
|
(70)
|
|
(54)
|
|
(14)
|
|
(232)
|
Financing expenses, net
|
|
(129)
|
|
(110)
|
|
(29)
|
|
(49)
|
|
(42)
|
|
(11)
|
|
(177)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxes on income
|
|
102
|
|
168
|
|
45
|
|
47
|
|
31
|
|
8
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit (taxes on income)
|
|
(24)
|
|
(32)
|
|
(9)
|
|
(7)
|
|
2
|
|
1
|
|
(36)
|
Profit for the period
|
|
78
|
|
136
|
|
36
|
|
40
|
|
33
|
|
9
|
|
97
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Company
|
|
77
|
|
135
|
|
36
|
|
40
|
|
33
|
|
9
|
|
95
|
Non-controlling interests
|
|
1
|
|
1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2
|
Profit for the period
|
|
78
|
|
136
|
|
36
|
|
40
|
|
33
|
|
9
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (in NIS)
|
|
0.77
|
|
1.34
|
|
0.36
|
|
0.40
|
|
0.33
|
|
0.09
|
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (in NIS)
|
|
0.77
|
|
1.34
|
|
0.36
|
|
0.40
|
|
0.33
|
|
0.09
|
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares used in the calculation of basic earnings
per share (in shares)
|
|
100,585,898
|
|
100,604,578
|
|
100,604,578
|
|
100,588,638
|
|
100,604,578
|
|
100,604,578
|
|
100,589,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares used in the calculation of diluted
earnings per share (in shares)
|
|
100,585,898
|
|
100,646,549
|
|
100,646,549
|
|
100,589,948
|
|
100,677,621
|
|
100,677,621
|
|
100,589,530
|
Cellcom Israel Ltd.
|
(An Israeli Corporation)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
|
|
|
translation
|
|
|
|
|
|
translation
|
|
|
|
|
|
|
|
|
into US dollar
|
|
|
|
|
|
into US dollar
|
|
|
|
|
For the nine
months ended
September 30,
|
|
For the nine
months ended
September 30,
|
|
For the three
months ended
September 30,
|
|
For the three
months ended
September 30,
|
|
For the
year ended
December 31,
|
|
|
|
|
|
|
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
|
NIS millions
|
|
US$ millions
|
|
NIS millions
|
|
US$millions
|
|
NIS millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
78
|
|
136
|
|
36
|
|
40
|
|
33
|
|
9
|
|
97
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
419
|
|
398
|
|
106
|
|
138
|
|
131
|
|
35
|
|
562
|
Share based payment
|
|
1
|
|
4
|
|
1
|
|
1
|
|
1
|
|
-
|
|
3
|
Loss (gain) on sale of property, plant and equipment
|
|
(2)
|
|
6
|
|
2
|
|
-
|
|
3
|
|
1
|
|
(1)
|
Income tax expense (tax benefit)
|
|
24
|
|
32
|
|
9
|
|
7
|
|
(2)
|
|
(1)
|
|
36
|
Financing expenses, net
|
|
129
|
|
110
|
|
29
|
|
49
|
|
42
|
|
11
|
|
177
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in inventory
|
|
9
|
|
29
|
|
7
|
|
5
|
|
7
|
|
2
|
|
4
|
Change in trade receivables (including long-term amounts)
|
|
128
|
|
(38)
|
|
(10)
|
|
15
|
|
37
|
|
10
|
|
209
|
Change in other receivables (including long-term amounts)
|
|
(21)
|
|
(19)
|
|
(5)
|
|
3
|
|
(34)
|
|
(9)
|
|
(34)
|
Changes in trade payables, accrued expenses and provisions
|
|
(70)
|
|
44
|
|
12
|
|
1
|
|
14
|
|
4
|
|
(54)
|
Change in other liabilities (including long-term amounts)
|
|
(14)
|
|
(26)
|
|
(7)
|
|
(31)
|
|
(49)
|
|
(13)
|
|
(95)
|
Income tax paid
|
|
(56)
|
|
(73)
|
|
(20)
|
|
(20)
|
|
(23)
|
|
(6)
|
|
(68)
|
Net cash from operating activities
|
|
625
|
|
603
|
|
160
|
|
208
|
|
160
|
|
43
|
|
836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant, and equipment
|
|
(232)
|
|
(217)
|
|
(58)
|
|
(70)
|
|
(66)
|
|
(17)
|
|
(305)
|
Acquisition of intangible assets
|
|
(75)
|
|
(55)
|
|
(14)
|
|
(16)
|
|
(14)
|
|
(4)
|
|
(91)
|
Change in current investments, net
|
|
134
|
|
(7)
|
|
(2)
|
|
(3)
|
|
(3)
|
|
(1)
|
|
231
|
Payments for other derivative contracts, net
|
|
(1)
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
-
|
Proceeds from sale of property, plant and equipment
|
|
5
|
|
2
|
|
1
|
|
1
|
|
1
|
|
-
|
|
4
|
Interest received
|
|
15
|
|
9
|
|
2
|
|
2
|
|
2
|
|
1
|
|
15
|
Repayment of a long term deposit
|
|
48
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
48
|
Dividend received
|
|
2
|
|
-
|
|
-
|
|
2
|
|
-
|
|
-
|
|
2
|
Net cash used in investing activities
|
|
(104)
|
|
(268)
|
|
(71)
|
|
(85)
|
|
(80)
|
|
(21)
|
|
(96)
|
Cellcom Israel Ltd.
|
(An Israeli Corporation)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Cash Flows
(cont'd)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
|
|
translation
|
|
|
|
|
|
translation
|
|
|
|
|
|
|
|
into US dollar
|
|
|
|
|
|
into US dollar
|
|
|
|
For the nine
months ended
September 30,
|
|
For the nine
months ended
September 30,
|
|
For the three
months ended
September 30,
|
|
For the three
months ended
September 30,
|
|
For the
year ended
December 31,
|
|
|
|
|
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
NIS millions
|
|
US$ millions
|
|
NIS millions
|
|
US$millions
|
|
NIS millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for derivative contracts, net
|
(26)
|
|
(10)
|
|
(3)
|
|
(17)
|
|
(4)
|
|
(1)
|
|
(32)
|
Long term loans from financial institutions
|
-
|
|
200
|
|
53
|
|
-
|
|
-
|
|
-
|
|
-
|
Repayment of debentures
|
(873)
|
|
(732)
|
|
(195)
|
|
(350)
|
|
(347)
|
|
(92)
|
|
(873)
|
Proceeds from issuance of debentures, net of issuance costs
|
(3)
|
|
653
|
|
174
|
|
-
|
|
403
|
|
107
|
|
(3)
|
Dividend paid
|
-
|
|
(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1)
|
Interest paid
|
(227)
|
|
(180)
|
|
(48)
|
|
(103)
|
|
(88)
|
|
(24)
|
|
(227)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
(1,129)
|
|
(70)
|
|
(19)
|
|
(470)
|
|
(36)
|
|
(10)
|
|
(1,136)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in cash and cash equivalents
|
(608)
|
|
265
|
|
70
|
|
(347)
|
|
44
|
|
12
|
|
(396)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents as at the beginning of the period
|
1,158
|
|
761
|
|
203
|
|
894
|
|
982
|
|
261
|
|
1,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash and cash
equivalents
|
-
|
|
-
|
|
-
|
|
3
|
|
-
|
|
-
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents as at the end of the period
|
550
|
|
1,026
|
|
273
|
|
550
|
|
1,026
|
|
273
|
|
761
|
Cellcom Israel Ltd
|
(An Israeli Corporation)
|
|
|
|
|
|
|
Reconciliation for Non-IFRS Measures
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
|
|
The following is a reconciliation of net income to EBITDA:
|
|
|
|
|
|
|
|
Three-month period ended
September 30,
|
|
Year ended
December 31,
|
|
2015
|
|
2016
|
|
Convenience
translation
into US dollar
2016
|
|
2015
|
|
NIS millions
|
|
US$ millions
|
|
NIS millions
|
Profit for the period
|
40
|
|
33
|
|
9
|
|
97
|
Taxes on income (tax benefit)
|
7
|
|
(2)
|
|
(1)
|
|
36
|
Financing income
|
(21)
|
|
(12)
|
|
(3)
|
|
(55)
|
Financing expenses
|
70
|
|
54
|
|
14
|
|
232
|
Other expenses (income)
|
-
|
|
4
|
|
1
|
|
(3)
|
Depreciation and amortization
|
138
|
|
131
|
|
35
|
|
562
|
Share based payments
|
1
|
|
1
|
|
-
|
|
3
|
EBITDA
|
235
|
|
209
|
|
55
|
|
872
|
Free cash flow
|
|
|
|
|
|
|
The following table shows the calculation of free cash flow:
|
|
|
|
|
|
|
|
Three-month period ended
September 30,
|
|
Year ended
December 31,
|
|
2015
|
|
2016
|
|
Convenience
translation
into US dollar
2016
|
|
2015
|
|
NIS millions
|
|
US$ millions
|
|
NIS millions
|
Cash flows from operating
activities(*)
|
211
|
|
160
|
|
43
|
|
835
|
Cash flows from investing
activities
|
(85)
|
|
(80)
|
|
(21)
|
|
(96)
|
Sale of short-term tradable
debentures and deposits (**)
|
1
|
|
1
|
|
-
|
|
(245)
|
Free cash flow
|
127
|
|
81
|
|
22
|
|
494
|
|
(*) Including the effects of exchange rate fluctuations in cash and
cash equivalents.
|
(**) Net of interest received in relation to tradable
debentures.
|
Cellcom Israel Ltd.
|
(An Israeli Corporation)
|
|
Key financial and operating indicators
|
NIS millions unless otherwise stated
|
Q1-2015
|
Q2-2015
|
Q3-2015
|
Q4-2015
|
Q1-2016
|
Q2-2016
|
Q3-2016
|
FY-2015
|
|
|
|
|
|
|
|
|
|
Cellular service revenues
|
582
|
573
|
572
|
546
|
559
|
567
|
534
|
2,273
|
Fixed-line service revenues
|
269
|
264
|
267
|
263
|
264
|
264
|
276
|
1,063
|
|
|
|
|
|
|
|
|
|
Cellular equipment revenues
|
245
|
237
|
215
|
233
|
219
|
217
|
195
|
930
|
Fixed-line equipment revenues
|
17
|
17
|
28
|
56
|
29
|
30
|
39
|
118
|
|
|
|
|
|
|
|
|
|
Consolidation adjustments
|
(51)
|
(51)
|
(50)
|
(52)
|
(49)
|
(49)
|
(52)
|
(204)
|
Total revenues
|
1,062
|
1,040
|
1,032
|
1,046
|
1,022
|
1,029
|
992
|
4,180
|
|
|
|
|
|
|
|
|
|
Cellular EBITDA
|
130
|
149
|
168
|
154
|
178
|
181
|
149
|
601
|
Fixed-line EBITDA
|
66
|
67
|
67
|
71
|
60
|
57
|
60
|
271
|
Total EBITDA
|
196
|
216
|
235
|
225
|
238
|
238
|
209
|
872
|
|
|
|
|
|
|
|
|
|
Operating profit
|
55
|
80
|
96
|
79
|
101
|
104
|
73
|
310
|
Financing expenses, net
|
18
|
62
|
49
|
48
|
24
|
44
|
42
|
177
|
Profit for the period
|
26
|
12
|
40
|
19
|
59
|
44
|
33
|
97
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
127
|
119
|
127
|
121
|
149
|
103
|
81
|
494
|
|
|
|
|
|
|
|
|
|
Cellular subscribers at the end of period (in 000's)
|
2,885
|
2,848
|
2,832
|
2,835
|
2,813
|
2,812
|
2,822
|
2,835
|
Monthly cellular ARPU (in NIS)
|
65.5
|
65.5
|
66.0
|
63.0
|
65.2
|
66.0
|
62.8
|
65.0
|
Churn rate for cellular subscribers (%)
|
11.9%
|
10.2%
|
10.1%
|
11.1%
|
11.1%
|
10.6%
|
10.5%
|
42.0%
|
Cellcom Israel Ltd.
|
Disclosure for debenture holders as of September 30, 2016
|
|
Aggregation of the information regarding the debenture series issued by
the Company (1), in million NIS
|
|
Series
|
Original Issuance Date
|
Principal on the Date of Issuance
|
As of 30.09.2016
|
As of 14.11.2016
|
Interest Rate (fixed)
|
Principal Repayment Dates
|
Interest Repayment Dates (3)
|
Linkage
|
Trustee
Contact Details
|
Principal
Balance on Trade
|
Linked Principal Balance
|
Interest Accumulated in Books
|
Debenture Balance Value in Books (2)
|
Market Value
|
Principal Balance on Trade
|
Linked Principal Balance
|
From
|
To
|
B (4)
|
22/12/05
02/01/06*
05/01/06*
10/01/06*
31/05/06*
|
925.102
|
185.020
|
220.804
|
8.628
|
229.432
|
230.202
|
185.020
|
220.605
|
5.30%
|
05.01.13
|
05.01.17
|
January-5
|
Linked to CPI
|
Hermetic Trust (1975) Ltd. Meirav Ofer Oren. 113 Hayarkon St., Tel Aviv.
Tel: 03-5274867.
|
D (7)**
|
07/10/07
03/02/08*
06/04/09*
30/03/11*
18/08/11*
|
2,423.075
|
299.602
|
350.411
|
4.516
|
354.927
|
362.638
|
299.602
|
349.876
|
5.19%
|
01.07.13
|
01.07.17
|
July-1
|
Linked to CPI
|
Hermetic Trust (1975) Ltd. Meirav Ofer Oren. 113 Hayarkon St., Tel Aviv.
Tel: 03-5274867.
|
E (7)
|
06/04/09
30/03/11*
18/08/11*
|
1,798.962
|
163.633
|
163.437
|
7.537
|
170.974
|
173.271
|
163.633
|
163.494
|
6.25%
|
05.01.12
|
05.01.17
|
January-5
|
Not linked
|
Hermetic Trust (1975) Ltd. Meirav Ofer Oren. 113 Hayarkon St., Tel Aviv.
Tel: 03-5274867.
|
F (4)(5)(6)**
|
20/03/12
|
714.802
|
714.802
|
732.977
|
8.022
|
740.999
|
783.780
|
714.802
|
732.186
|
4.60%
|
05.01.17
|
05.01.20
|
January-5
and July-5
|
Linked to CPI
|
Strauss Lazar Trust Company (1992) Ltd. Ori Lazar. 17 Yizhak Sadeh St., Tel
Aviv. Tel: 03- 6237777.
|
G (4)(5)(6)**
|
20/03/12
|
285.198
|
285.198
|
285.423
|
4.752
|
290.175
|
311.351
|
285.198
|
285.410
|
6.99%
|
05.01.17
|
05.01.19
|
January-5
and July-5
|
Not linked
|
Strauss Lazar Trust Company (1992) Ltd. Ori Lazar. 17 Yizhak Sadeh St., Tel
Aviv. Tel: 03- 6237777.
|
H (4)(5)(7)**
|
08/07/14
03/02/15*
11/02/15*
|
949.624
|
949.624
|
818.221
|
4.482
|
822.703
|
950.688
|
949.624
|
820.210
|
1.98%
|
05.07.18
|
05.07.24
|
January-5
and July-5
|
Linked to CPI
|
Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel Aviv.
Tel: 03-6374355.
|
I (4)(5)(7)**
|
08/07/14
03/02/15*
11/02/15*
30/03/16*
|
804.010
|
804.010
|
750.869
|
7.934
|
758.803
|
867.929
|
804.010
|
751.556
|
4.14%
|
05.07.18
|
05.07.25
|
January-5
and July-5
|
Not linked
|
Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel Aviv.
Tel: 03-6374355.
|
J (4)(5)
|
26/09/16
|
103.267
|
103.267
|
102.197
|
0.028
|
102.225
|
102.538
|
103.267
|
102.207
|
2.45%
|
05.07.21
|
05.07.26
|
January-5 and July-5
|
Linked to CPI
|
Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel Aviv.
Tel: 03-6374355.
|
K (4)(5)**
|
26/09/16
|
303.971
|
303.971
|
300.782
|
0.118
|
300.900
|
302.877
|
303.971
|
300.808
|
3.55%
|
05.07.21
|
05.07.26
|
January-5 and July-5
|
Not linked
|
Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel Aviv.
Tel: 03-6374355.
|
Total
|
|
8,308.011
|
3,809.127
|
3,725.121
|
46.017
|
3,771.138
|
4,085.274
|
3,809.127
|
3,726.352
|
|
|
|
|
|
|
Comments:
(1) In the reporting period, the Company fulfilled all terms of the debentures. The Company also fulfilled all terms of the
Indentures and loan agreements. Debentures Series F through K financial and loan agreements covenants - as of September 30, 2016 the net leverage (net debt to EBITDA excluding one time events ratio- see definition in the
Company's annual report for the year ended December 31, 2015 on Form 20-F, under "Item 5. Operating
and Financial Review and Prospects – B. Liquidity and Capital Resources – Debt Service– Public Debentures") was 2.89 (the net
leverage without excluding one-time events was 2.89). In the reporting period, no cause for early repayment occurred. (2)
Including interest accumulated in the books. (3) Annual payments, excluding Series F through K debentures in which the payments
are semi annual. (4) Regarding debenture Series B and F through K and loan agreements, the Company undertook not to create any
pledge on its assets, as long as debentures or loans are not fully repaid, subject to certain exclusions. (5) Regarding debenture
Series F through K and loan agreements - the Company has the right for early redemption under certain terms (see the Company's
annual report for the year ended December 31, 2015 on Form 20-F, under "Item 5. Operating and
Financial Review and Prospects– B. Liquidity and Capital Resources – Debt Service– Public Debentures" and "-Other Credit
Facilities". (6) Regarding debenture Series F and G - in June 2013, following a third decrease of
the Company's debenture rating since their issuance, the annual interest rate has been increased by 0.25% to 4.60% and 6.99%,
respectively, beginning July 5, 2013. (7) In February 2015, pursuant
to an exchange offer of the Company's Series H and I debentures for a portion of the Company's outstanding Series D and E
debentures, respectively, or the Exchange Offer, the Company exchanged approximately NIS 555
million principal amount of Series D debentures with approximately NIS 844 million principal
amount of Series H debentures, and approximately NIS 272 million principal amount of Series E
debentures with approximately NIS 335 million principal amount of Series I debentures.
(*) On these dates additional debentures of the series were issued, the information in the table refers to the full series.
(**) As of September 30, 2016, debentures Series D, F through I and K are material, which represent
5% or more of the total liabilities of the Company, as presented in the financial statements.
Cellcom Israel Ltd.
|
|
Disclosure for debenture holders as of September 30, 2016
(cont.)
|
|
Debentures Rating Details*
|
|
Series
|
Rating Company
|
Rating as of 30.09.2016 (1)
|
Rating as of 14.11.2016
|
Rating assigned upon issuance of the Series
|
Recent date of rating as of 14.11.2016
|
Additional ratings between original issuance and the recent date of rating
as of 14.11.2016 (2)
|
|
Rating
|
B
|
S&P Maalot
|
A+
|
A+
|
AA-
|
08/2016
|
5/2006, 9/2007, 1/2008, 10/2008, 3/2009, 9/2010, 8/2011, 1/2012, 3/2012,
5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 1/2015, 9/2015, 3/2016, 08/2016
|
AA-, AA,AA-,A+ (2)
|
D
|
S&P Maalot
|
A+
|
A+
|
AA-
|
08/2016
|
1/2008, 10/2008, 3/2009, 9/2010, 8/2011, 1/2012, 3/2012, 5/2012, 11/2012,
6/2013, 6/2014, 8/2014, 01/2015, 9/2015, 3/2016, 08/2016
|
AA-, AA,AA-,A+ (2)
|
E
|
S&P Maalot
|
A+
|
A+
|
AA
|
08/2016
|
9/2010, 8/2011, 1/2012, 3/2012, 5/2012, 11/2012, 6/2013, 6/2014, 8/2014,
01/2015, 9/2015, 3/2016, 08/2016
|
AA,AA-,A+ (2)
|
F
|
S&P Maalot
|
A+
|
A+
|
AA
|
08/2016
|
5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 1/2015, 9/2015, 3/2016,
08/2016
|
AA,AA-,A+ (2)
|
G
|
S&P Maalot
|
A+
|
A+
|
AA
|
08/2016
|
5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 1/2015, 9/2015, 3/2016,
08/2016
|
AA,AA-,A+ (2)
|
H
|
S&P Maalot
|
A+
|
A+
|
A+
|
08/2016
|
6/2014, 8/2014, 1/2015, 9/2015, 3/2016, 08/2016
|
A+ (2)
|
I
|
S&P Maalot
|
A+
|
A+
|
A+
|
08/2016
|
6/2014, 8/2014, 1/2015, 9/2015, 3/2016, 08/2016
|
A+ (2)
|
J
|
S&P Maalot
|
A+
|
A+
|
A+
|
08/2016
|
08/2016
|
A+ (2)
|
K
|
S&P Maalot
|
A+
|
A+
|
A+
|
08/2016
|
08/2016
|
A+ (2)
|
(1) In August 2016, S&P Maalot affirmed the Company's rating of
"ilA+/stable".
(2) In September 2007, S&P Maalot issued a notice that the AA-
rating for debentures issued by the Company was in the process of recheck with positive implications (Credit Watch Positive). In
October 2008, S&P Maalot issued a notice that the AA- rating for debentures issued by the
Company is in the process of recheck with stable implications (Credit Watch Stable). This process was withdrawn upon assignment
of AA rating in March 2009. In August 2011, S&P Maalot issued a
notice that the AA rating for debentures issued by the Company is in the process of recheck with negative implications (Credit
Watch Negative). In May 2012, S&P Maalot updated the Company's rating from an "ilAA/negative"
to an "ilAA-/negative". In November 2012, S&P Maalot affirmed the Company's rating of
"ilAA-/negative". In June 2013, S&P Maalot updated the Company's rating from an
"ilAA-/negative" to an "ilA+/stable". In June 2014, August 2014,
January 2015, September 2015, March
2016 and August 2016, S&P Maalot affirmed the Company's rating of "ilA+/stable". For
details regarding the rating of the debentures see the S&P Maalot report dated August 23,
2016.
* 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.
Cellcom Israel Ltd.
Summary of Financial Undertakings (according to repayment dates) as of September 30,
2016
a. Debentures issued to the public by the Company and held by the public, excluding such debentures 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
|
637,170
|
219,989
|
-
|
-
|
-
|
151,815
|
Second year
|
332,564
|
222,844
|
-
|
-
|
-
|
101,381
|
Third year
|
332,564
|
165,805
|
-
|
-
|
-
|
77,750
|
Fourth year
|
332,564
|
80,245
|
-
|
-
|
-
|
59,102
|
Fifth year and on
|
705,871
|
865,358
|
-
|
-
|
-
|
148,815
|
Total
|
2,340,733
|
1,554,241
|
-
|
-
|
-
|
538,863
|
b. Private debentures and other non-bank credit, excluding such debentures 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
|
-
|
-
|
-
|
-
|
-
|
9,187
|
Second year
|
-
|
50,000
|
-
|
-
|
-
|
9,200
|
Third year
|
-
|
50,000
|
-
|
-
|
-
|
6,900
|
Fourth year
|
-
|
50,000
|
-
|
-
|
-
|
4,606
|
Fifth year and on
|
-
|
50,000
|
-
|
-
|
-
|
2,297
|
Total
|
-
|
200,000
|
-
|
-
|
-
|
32,190
|
c. Credit from banks in Israel based on the Company's "Solo" financial data
(in thousand NIS) - None.
d. Credit from banks abroad based on the Company's "Solo" financial data (in thousand NIS) - None.
Cellcom Israel Ltd.
Summary of Financial Undertakings (according to repayment dates) as of September 30,
2016 (cont.)
e. Total of sections a - d above, total credit from banks, non-bank credit and debentures 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
|
637,170
|
219,989
|
-
|
-
|
-
|
161,002
|
Second year
|
332,564
|
272,844
|
-
|
-
|
-
|
110,581
|
Third year
|
332,564
|
215,805
|
-
|
-
|
-
|
84,650
|
Fourth year
|
332,564
|
130,245
|
-
|
-
|
-
|
63,708
|
Fifth year and on
|
705,871
|
915,358
|
-
|
-
|
-
|
151,112
|
Total
|
2,340,733
|
1,754,241
|
-
|
-
|
-
|
571,053
|
f. Out of the balance sheet Credit exposure based on the Company's "Solo" financial data -
None.
g. Out of the 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 (in thousand NIS) - None.
h. Total balances of the credit from banks, non-bank credit and debentures of all the consolidated companies,
excluding companies that are reporting corporations and excluding Company's data presented in sections a - d above (in thousand
NIS) - None.
i. Total balances of credit granted to the Company by the parent company or a controlling
shareholder and balances of debentures offered by the Company held by the parent company or the controlling shareholder (in
thousand NIS) - 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 debentures offered by the Company held by
companies held by the parent company or the controlling shareholder, which are not controlled by the Company (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
|
5,877
|
683
|
-
|
-
|
-
|
581
|
Second year
|
874
|
156
|
-
|
-
|
-
|
234
|
Third year
|
874
|
156
|
-
|
-
|
-
|
210
|
Fourth year
|
874
|
156
|
-
|
-
|
-
|
185
|
Fifth year and on
|
5,156
|
1,420
|
-
|
-
|
-
|
458
|
Total
|
13,655
|
2,571
|
-
|
-
|
-
|
1,668
|
k. Total balances of credit granted to the Company by consolidated companies and balances of debentures
offered by the Company held by the consolidated companies (in thousand NIS) - None.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cellcom-israel-announces-third-quarter-2016-results-300361988.html
SOURCE Cellcom Israel Ltd.