PARTNER Advanced Communications System Quick Reference Guide
Partner Communications Company Ltd. · Partner Communications Company Ltd. Company presentation Q2...
Transcript of Partner Communications Company Ltd. · Partner Communications Company Ltd. Company presentation Q2...
1 August 28, 2013
Partner Communications Company Ltd.
Company presentation
Q2 2013 Results
22
This presentation includes forward-looking statements within the meaning of Section 27A ofthe US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of1934, as amended, and the safe harbor provisions of the US Private Securities LitigationReform Act of 1995. Words such as "believe", "anticipate", "expect", "intend", "seek", "will","plan", "could", "may", "project", "goal", "target" and similar expressions often identify forward-looking statements but are not the only way we identify these statements. All statements otherthan statements of historical fact included in this press release regarding our futureperformance, plans to increase revenues or margins or preserve or expand market share inexisting or new markets, reduce expenses and any statements regarding other future eventsor our future prospects, are forward-looking statements.
We have based these forward-looking statements on our current knowledge and our presentbeliefs and expectations regarding possible future events. These forward-looking statementsare subject to risks, uncertainties and assumptions about Partner, consumer habits andpreferences in cellular telephone usage, trends in the Israeli telecommunications industry ingeneral, the impact of current global economic conditions and possible regulatory and legaldevelopments. For a description of some of the risks we face, see "Item 3D. Key Information -Risk Factors", "Item 4. - Information on the Company", "Item 5. - Operating and FinancialReview and Prospects", "Item 8A. - Consolidated Financial Statements and Other FinancialInformation - Legal and Administrative Proceedings" and "Item 11. - Quantitative andQualitative Disclosures about Market Risk" in the Company's 2012 Annual Report (20-F) filedwith the SEC on March 19, 2013. In light of these risks, uncertainties and assumptions, theforward-looking events discussed in this press release might not occur, and actual results maydiffer materially from the results anticipated. We undertake no obligation to publicly update orrevise any forward-looking statements, whether as a result of new information, future events orotherwise.
Safe Harbor Statement
33
1. Partner Highlights
2. The Israeli Telecommunications Market
3. Financial and Operational Performance
4. Partner’s Strategic Direction
Agenda
44
1. Partner Highlights
55
At a Glance
A leading communications group operating
under the “orange” and 012 Smile
brands
Strong brand and
market presence
29%estimated
cellular market share
Strong subscriber
base
Evolving intoa diversifiedMulti-Service
Communicationsand Media group
High Speed Network,
LTE Ready
66
Revenues of NIS 1,130 million ($ 312 million)
Service Revenues of NIS 950 million ($ 263 million)
Equipment Revenues of NIS 180 million ($ 50 million)
EBITDA* of NIS 280 million ($ 77 million), 25% of total revenues
Net profit of NIS 20 million ($ 6 million)
Free Cash Flow (before Interest): NIS 287million (US$ 79 million)
Cellular ARPU: NIS 83 ($23)
Cellular Churn: 9.4%
Q2 2013 Financial and Operational Highlights
* EBITDA – Adjusted EBITDA represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and share based compensation expenses) and impairment charges, as a measure of operating profit.
Please refer to the section “Use of Non-GAAP Financial Measures “ in the Company’s quarterly press release.
77
S.B. Israel Telecom Ltd. is an affiliate of Saban Capital Group, Inc. ("SCG"). SCG is a leading private investment firm based in Los Angeles specializing in the media, entertainment, and communication industries.
SCG was established by Mr. Haim Saban, co-founder of Fox Family Worldwide, a global television broadcasting, production, distribution and merchandising company owned in partnership with Rupert Murdoch and The News Corporation following its sale to The Walt Disney Company in October 2001. The firm currently makes both controlling and minority investments in public and private companies and takes an active role in its portfolio companies.
Ownership Structure
As of June 30, 2013
Partner’s Ownership Structure
88
2. The Israeli Telecommunications Market
9
Main Regulatory Actions*
Increasing competition - two
new operators and three MVNOs
Financial sanctions on licensees that
violate their license conditions
MOC has published a consultation
suggesting a tariff of 0.99 agora per minute
for fixed line interconnection.
MOC published the policy on fixed
line wholesale market
Reduction in cellular royalty rate to the Government for
2012 - 1.3%, 2013 - 0%
IEC fiber optic project-an agreement was
signed with ViaEuropafor the set-up of a FTTH infrastructure company
* Please also refer to the Company's 2012 Annual Report (20-F) filed with the SEC and the press release of March 19, 2013, and the Company’s Q2 2013 PR.
1010
3. Financial and Operational Performance
1111
Q2 2013 Financial Highlights
in NIS millions Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Revenues 1,428 1,315 1,258 1,144 1,130
Cost of Revenues 1,000 934 969 901 878
Gross Profit 428 381 289 243 252
S,G&A 213 192 160 171 171
Other income 30 28 26 23 21
Operating Profit 245 217 155 95 102
Financial Costs, net 73 68 38 49 71
Income Taxes 52 39 15 15 11
Net Profit 120 110 102 31 20
EBITDA* 423 401 340 268 280
* EBITDA – Adjusted EBITDA represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and share based compensation expenses) and impairment charges, as a measure of operating profit.
Please refer to the section “Use of Non-GAAP Financial Measures “ in the Company’s quarterly press release.
1212
Cellular Subscribers (In thousands)
* Cellular subscribers at the end of the period
2,231 2,290 2,282 2,102 2,102 2,103
811 870 894874 830 818
3,042 3,160 3,176
2,976 2,932 2,921
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2009 2010 2011 2012 Q1'13 Q2'13
Post-paid Pre-paid
1313
Fixed Line Subscribers (In thousands)
292 295 292 285 281 282 288 293 294
632 632 632 618 609 594 587 581 572
0
100
200
300
400
500
600
700
800
Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13
Number of Fixed Lines ISP Subscribers
1414
151
122 111
97 101
83
364 366
397
450 437
532
250
300
350
400
450
500
-
25
50
75
100
125
150
2009 2010 2011 2012 Q2'12 Q2'13
MO
U (m
inut
es)
ARPU
(NIS
)
ARPU MOU
Cellular ARPU and MOU
* The ARPU for 2010 has been restated under the interconnect tariff of 2011, for purposes of comparison
MOU- the Company believes that reporting MOU is no longer beneficial to understanding the results of operation, and therefore the Company is considering ending reporting MOU as of the end of 2013.
*
1515
Quarterly Cellular Churn Rate
6.5%7.2%
8.2% 8.0%
8.9%
10.4%10.9%
10.4%
9.4%
0%
2%
4%
6%
8%
10%
12%
Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13
1616
Total Revenues (In million NIS)
Results include 012 Smile from March 2011
5,424 5,6625,224
4,640
1,213 950
6551,012 1,774
932
215180
6,079 6,674
6,998
5,572
1,428 1,130
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2009 2010 2011 2012 Q2'12 Q2'13
Service Revenues Equipment Revenues
1717
EBITDA* (In million NIS)
* EBITDA represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and share based compensation expenses) and impairment charges, as a measure of operating profit.Please refer to the section “Use of Non-GAAP Financial Measures “ in the Company’s quarterly press release Results include 012 Smile from March 2011
2,304
2,570
2,178
1,602
423 280
38% 39%
31%29% 30%
25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
-
500
1,000
1,500
2,000
2,500
2009 2010 2011 2012 Q2'12 Q2'13
% t
otal
reve
nues
NIS
mill
ions
EBITDA EBITDA margin
1818
OPEX (In million NIS)
OPEX includes cost of service revenues, and selling, marketing and administrative expenses, and excludes depreciation and amortization and impairment charges
913
952
889872
853
793
744720
700
500
600
700
800
900
Q2' 11 Q3' 11 Q4' 11 Q1' 12 Q2' 12 Q3' 12 Q4' 12 Q1' 13 Q2' 13
1919
Net Debt / EBITDA*
Net Debt at the end of the period, EBITDA for the last four quarters
2,102
3,395
4,639
3,812 3,622 3,446
0.9
1.3
2.12.4
2.52.7
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
2009 2010 2011 2012 Q1'13 Q2'13
Net D
ebt /
EBI
TDA
NIS
milli
ons
Net Debt Net debt / EBITDA
* EBITDA represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and share based compensation expenses) and impairment charges, as a measure of operating profit.Please refer to the section “Use of Non-GAAP Financial Measures “ in the Company’s quarterly press release
2020
EBITDA - CAPEX* (In million NIS)
* Cash capital expenditures in fixed assets including intangible assets but excluding capitalized subscriber acquisition and retention costs, net,
1,747
2,175
1,707
1,110
310 158
-
400
800
1,200
1,600
2,000
2,400
2009 2010 2011 2012 Q2'12 Q2'13
* EBITDA represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and share based compensation expenses) and impairment charges, as a measure of operating profit.Please refer to the section “Use of Non-GAAP Financial Measures “ in the Company’s quarterly press release
2121
557 395 471 492 113 122
6,079 6,674
6,998
5,572
1,428 1,130
9%
6%7%
9%8%
11%
2%
4%
6%
8%
10%
12%
14%
16%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2009 2010 2011 2012 Q2'12 Q2'13
Cap
ex a
s %
Tot
al R
even
ues
NIS
mill
ions
CAPEX Revenues CAPEX margin
CAPEX* / Revenues
* Cash capital expenditures in fixed assets including intangible assets but excluding capitalized subscriber acquisition and retention costs,, net,
2222
Free Cash Flow (In million NIS)
Free Cash Flow- Cash flows generated from operating activities before interest payments, net of cash flows used for investments activities, after elimination of cash flows used for the acquisition of 012 Smile
1,021
1,502
1,082
1,234
313 287
-
200
400
600
800
1,000
1,200
1,400
1,600
2009 2010 2011 2012 Q2'12 Q2'13
2323
EBITDA Evolution Q1’13-Q2’13 (In million NIS)
268
280
Q1 2013 Q2 2013
EBITDA represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and share based compensation expenses) and impairment charges, as a measure of operating profit. Please refer to the section "Use of Non-GAAP Measures" in the Company's quarterly press release.
The analysis presented includes intersegment revenues and expenses.
2424
EBITDA Evolution Q2’12-Q2’13 (In million NIS)
423
280
Q2 2012 Q2 2013
EBITDA represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and share based compensation expenses) and impairment charges, as a measure of operating profit. Please refer to the section "Use of Non-GAAP Measures" in the Company's quarterly press release.
The analysis presented includes intersegment revenues and expenses.
2525
Balance Sheet, June 30, 2013 (In million NIS)
Assets Liabilities and Equity
Cash and cash equivalents 513 Current maturities of Notes payables and loans 332 Trade receivables and other 1,334 Trade payables 765 Inventories 106 Other current liabilities 288 Total Current Assets 1,953 Total Current Liabilities 1,385
Trade receivables and other 509 Long term borrowings 3,627 Property and equipment 1,846 Other liabilities 87 Goodwill 407 Total Long-term Liabilities 3,714 Intangible assets 1,180 Total Long-term Assets 3,942
Equity 796 Total Assets 5,895 Total Liabilities and Equity 5,895
2626
Dividend Distribution
No decision regarding dividend distribution was made in the second quarter of 2013.
187 410
752 841 1,059
1,220
350 160
-
1,091 351
1,400
53%
60%
80%
80%93%
98%
79%
33%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
-
500
1,000
1,500
2,000
2,500
3,000
2005 2006 2007 2008 2009 2010 2011 2012 2013
Dividend distributed Buy back One Time
2727
4. Partner’s Strategic Direction
2828
Our Strategy
Customer centric
strategy
StrongBranding
OperationalExcellence
Growth in mobile
broadband
Innovation and technological
leadership
Excellence in customer experience
Advancedquality service
High level of customer service
Customer value management
Focused marketing strategy
Focus on service, innovation & advanced technology
Integration with 012 Smile
Realizing the full marketing and product potential
Cost savings
Capitalizing on the rapid increase in demand for ubiquitous mobile data services and devices
Innovative products and services
Commitment to network quality
Preparing for 4G network
2929
In Summary- Why Partner
Advanced networkCustomer centric
Strategy
Strong Brand Innovation
3030
Ziv Leitman, CFO
+972 54 781 4951
Yaffa Cohen-Ifrah,
Head of Investor Relations
+972 54 909 9039
Investors’ website: http://www.orange.co.il/en/Investors-Relations/lobby/
The future is bright. The future is Orange.