Partner Communications Company Ltd. ("Partner") (Nasdaq:PTNR)
(LSE:PCCD) (TASE:PTNR), a leading Israeli mobile communications
operator, today announced its results for the third quarter of 2006.
Partner reported revenues in Q3 2006 of NIS 1.5 billion (US$ 340
million), EBITDA of NIS 477 million (US$ 111 million), the equivalent
of 32.6% of total revenue, and net income of NIS 185 million (US$ 43
million).
Commenting on the results, Partner's CEO, Amikam Cohen, said: "We
are delighted that in the third quarter an additional 54,000
subscribers joined the orange(TM) 3G experience, and are now enjoying
the wide and continuously expanding range of 3G services and great
handsets. Our subscribers can also benefit from our introduction in
most populated areas around the country of HSDPA capabilities,
enabling a unique high-speed wireless internet access experience.
During the quarter, orange(TM) was named the leading
telecommunications brand in Israel for the fourth consecutive year and
awarded, for the second year running, as the mobile operator with the
best customer service by Globes, Israel's business daily. We expect
that our core strengths as providers of superb network quality,
excellent customer service, the strongest telecom brand and the most
advanced data and content services, will enable us to continue to grow
our subscriber base and drive value for our shareholders."
Q3 2006 vs. Q3 2005 Comparison
-0-
*T
Q3 2005 Q3 2006 Change
Revenues (NIS millions) 1,352.3 1,462.0 8.1%
EBITDA (NIS millions) 382.7 476.7 24.6%
Operating Profit (NIS millions) 211.2 319.5 51.3%
Net Income (NIS millions) 30.9 184.7 496.7%
Cash flow from operating activities net of
investing activities (NIS millions) 46.1 312.3 577.9%
Subscribers (thousands) 2,480 2,626 5.9%
Estimated Market Share (%) 32 32 -
Quarterly Churn Rate (%) 3.2 3.7 0.5
Average Monthly Usage per Subscriber
(minutes) 306 322 5.2%
Average Monthly Revenue per Subscriber (NIS) 162 164 1.2%
--------------------------------------------- -------- -------- ------
*T
Financial Review
Partner's revenues in Q3 2006 were NIS 1,462.0 million
(US$ 339.8 million), an increase of 8.1% compared with NIS 1,352.3
million in Q3 2005 and of 6.5% compared with NIS 1,372.9 million in Q2
2006. Both increases resulted primarily from growth in service revenue
which increased by NIS 107.5 million or 8.9% compared with Q3 2005,
from NIS 1,209.0 million to NIS 1,316.4 million (US$ 306.0 million) in
Q3 2006, and by NIS 71.9 million or 5.8% compared with
NIS 1,244.5 million in Q2 2006. Compared with Q3 2005, service
revenues were higher as a result of a larger subscriber base and
increased minutes of use, offset primarily by the impact of the
mandated reduction in interconnection tariffs which went into effect
in March 2006. This reduction is part of the Ministry of
Communications' program of mandated gradual reductions from 2005 to
2008. Compared with Q2 2006, the increase was driven by seasonal
growth in service revenues, increased minutes of use and the larger
subscriber base.
Equipment revenues in Q3 2006 were NIS 145.6 million (US$ 33.8
million), an increase of 1.5% from NIS 143.4 million in Q3 2005 and an
increase of 13.3% from NIS 128.5 million in Q2 2006. Compared with Q3
2005 the increase was primarily a result of the increase in the
proportion of 3G sales to new subscribers and upgrading subscribers
from 2G services. Compared with Q2 2006 the increase was primarily a
result of the increase in the total number of sales, as well as the
higher proportion of 3G sales to new and upgrading subscribers.
Content and data revenues accounted for 9.5% of total revenues in
Q3 2006 and 10.5% of service revenues, up from 8.0% of total revenues
and 8.9% of service revenues in Q3 2005, despite the mandated 49%
reduction in SMS interconnection tariffs which went into effect in
March 2006, and up from 8.9% of total revenues and 9.9% of service
revenues in Q2 2006. Non-SMS data and content revenues increased in Q3
2006 by 26.5% compared with Q3 2005.
The cost of revenues related to services in Q3 2006 was NIS 794.2
million (US$ 184.6 million), representing an increase of 0.2% from NIS
792.8 million in Q3 2005, and an increase of 2.8% from NIS 772.5
million in Q2 2006, both increases being primarily due to higher
variable airtime costs resulting from the growth in airtime usage.
The cost of revenues related to equipment decreased in Q3 2006 by
8.9% compared with Q3 2005, from NIS 231.0 million to NIS 210.4
million (US$ 48.9 million), principally a reflection of the decrease
in the number of 2G handsets sold. Compared with Q2 2006, the cost of
revenues related to equipment increased by 24.2% from
NIS 169.4 million, principally reflecting the increase in the total
number of sales, and the higher proportion of 3G sales to new and
upgrading subscribers.
The gross profit from services in Q3 2006 was NIS 522.2 million
(US$ 121.4 million), an increase of 25.5% from NIS 416.1 million in Q3
2005, and an increase of 10.6% from NIS 472.0 million in Q2 2006.
Gross loss on equipment decreased to NIS 64.9 million
(US$ 15.1 million) in Q3 2006, 26.0% less than NIS 87.7 million in Q3
2005, but increased by 58.3% from NIS 41.0 million in Q2 2006
reflecting the increase in total sales and the higher proportion of 3G
handsets sales.
Overall, Q3 2006 gross profit totaled NIS 457.4 million
(US$ 106.3 million), the equivalent of 31.3% of total revenues, up
39.2% from NIS 328.5 million in Q3 2005 and up 6.1% from NIS 431.0
million in Q2 2006.
In Q3 2006 selling and marketing expenses were NIS 84.1 million
(US$ 19.6 million), an increase of 16.7% from NIS 72.1 million in Q3
2005 and an increase of 11.3% from NIS 75.6 million in Q2 2006.
Compared with Q3 2005, the increase was primarily due to higher
distribution costs, primarily commission expenses, and advertising
activity. Compared with Q2 2006, the increase was principally due to
distribution costs related to the growth of our 3G customer base.
General and administrative expenses in Q3 2006 amounted to NIS
53.7 million (US$ 12.5 million), representing an increase of 18.8%
from NIS 45.2 million in Q3 2005 and an increase of 22.2% from NIS
44.0 million in Q2 2006. Both increases are mainly a result of larger
provisions for doubtful accounts from receivables on handset sales and
from service revenues, reflecting the impact of the regional
hostilities on businesses in the north of the country, lower
collection activities and the impact of the implementation from July
1st 2006 of a new banking directive raising requirements for credit
arrangement in bank current accounts.
Q3 2006 operating profit overall was NIS 319.5 million
(US$ 74.3 million), or 21.9% of total revenues compared with NIS 211.2
million or 15.6% of total revenues in Q3 2005, an increase of 51.3%,
and compared with NIS 311.5 million or 22.7% of total revenues in Q2
2006, an increase of 2.6%.
Quarterly EBITDA in Q3 2006 increased by 24.6% to
NIS 476.6 million, or US$ 110.8 million, compared with NIS 382.7
million in Q3 2005 and increased by 0.7% from NIS 473.2 million in Q2
2006. The EBITDA margin in Q3 2006 was 32.6% of total revenues,
compared with 28.3% in Q3 2005 and 34.5% in Q2 2006.
Q3 2006 financial expenses totaled NIS 44.7 million (US$ 10.4
million), down 70.0% from NIS 148.8 million in Q3 2005. The decrease
compared with Q3 2005 resulted primarily from the one-off charge in Q3
2005 in the amount of NIS 63 million related to the redemption of the
US$ 175 million 13% Senior Subordinated Notes on August 15, 2005, as
well as interest charges in Q3 2005 related to both the redeemed Notes
and the new CPI-linked shekel-denominated Notes. Compared with
Q2 2006, financial expenses decreased by 26.9% from NIS 61.2 million,
primarily because of lower expenses in Q3 2006 resulting from an
increase of 0.2% in the CPI level in Q3, compared to an increase in
the CPI level of 1.2% in Q2 2006.
Net income in Q3 2006 was NIS 184.7 million (US$ 42.9 million), an
increase of 496.7% from NIS 30.9 million in Q3 2005, and an increase
of 6.0% from NIS 174.2 million in Q2 2006.
Based on the average number of shares outstanding during the
quarter, basic earnings per share or ADS in Q3 2006 were NIS 1.2 (28
US cents), an increase of 500.0% from NIS 0.20 in Q3 2005. Basic
earnings per share or ADS compared with Q2 2006 were up 5.3% in Q3
2006 from NIS 1.14 in Q2 2006. Fully diluted earnings per share or ADS
in Q3 2006 were NIS 1.19 (28 US cents), up from NIS 0.2 in Q3 2005 and
from NIS 1.13 in Q2 2006.
Funding and Investing Review
Cash flows generated from operating activities, net of cash flows
from investing activities, totaled NIS 312.3 million
(US$ 72.6 million) in Q3 2006, representing a 577.9% increase compared
with NIS 46.1 million in Q3 2005, and a 35.5% increase compared with
NIS 230.5 million in Q2 2006. Both increases resulted from higher
operating cash flows offset by higher payments for investments in
fixed assets. The increase in cash flows is primarily attributable to
the increase in net income as well as timing effects of payments to
suppliers, and interest charges.
On July 3rd, 2006, Partner completed the acquisition of the
transmission activity of MED1 I.C.-1 (1999) Ltd., including
approximately 900 kilometers of transmission fiber, for cash
consideration of approximately NIS 71.1 million (US$16.5 million).
Reflecting the MED1 transaction, net investment in fixed assets in
Q3 2006 increased by 77.4% from NIS 76.8 million in Q3 2005 to NIS
136.2 million (US$ 31.7 million), and by 77.8% from NIS 76.6 million
in Q2 2006.
The Board of Directors has approved the distribution of an interim
quarterly cash dividend for Q3 2006 of NIS 0.45 per share
(approximately NIS 70 million or US$ 16.3 million) to shareholders and
ADS holders on record as of November 22nd, 2006. The dividend will be
paid on December 6th, 2006.
Operational Review
At the end of Q3 2006, the Company had an active subscriber base
of approximately 2,626,000, including approximately 581,000 business
subscribers, accounting for 22.1% of the base, approximately 1,273,000
postpaid private subscribers, or 48.5% of the base, and approximately
772,000 prepaid subscribers, or 29.4% of the base. Of the Company's
subscriber base at the end of Q3 2006, approximately 219,000 were 3G
subscribers. Total market share at the end of Q3 2006 is estimated to
have been around 32%.
Q3 2006 net active subscriber base growth was approximately
41,000, including a net increase in active 3G subscribers of
approximately 54,000 (including both new subscribers and migrating
subscribers from 2G). The quarterly churn rate was 3.7%, up from 3.2%
in Q3 2005 but down from 3.8% in Q2 2006.
The average monthly minutes of use per subscriber in Q3 2006
increased to 322 minutes, compared with 306 minutes in Q3 2005 and
with 307 minutes in Q2 2006. The average revenue per user in Q3 2006
was approximately NIS 164 (US$ 38), compared with NIS 162 in Q3 2005
and with NIS 158 in Q2 2006.
Outlook and Guidance
Commenting on the Company's results, Emanuel Avner, Partner's
Chief Financial Officer, said: "This quarter we incurred an increased
handset subsidy of approximately NIS 30 million compared with the
previous quarter. This increase is in line with our strategy to
increase our 3G customer base, establishing additional 3G revenues.
Despite the additional handset subsidy costs, our bottom line
results continue to improve, and we are encouraged by the usage
patterns of our 2G and 3G customers."
Commenting on the Company's outlook, Emanuel Avner said, "We
reiterate our guidance for H2 2006 and expect the improved trends of
the first half to continue through the second half of the year,
bearing in mind that Q4 is seasonally slower than Q3".
Conference Call Details
Partner Communications will hold a conference call to discuss the
company's third-quarter results on Tuesday, October 31, 2006, at 17:00
Israel local time (10AM EST). This conference call will be broadcast
live over the Internet and can be accessed by all interested parties
through our investor relations web site at
http://www.investors.partner.co.il.
To listen to the broadcast, please go to the web site at least 15
minutes prior to the start of the call to register, download and
install any necessary audio software. For those unable to listen to
the live broadcast, an archive of the call will be available via the
Internet (at the same location as the live broadcast) shortly after
the call ends, and until midnight of November 7, 2006.
About Partner Communications
Partner Communications Company Ltd. (Partner) is a leading Israeli
mobile communications operator providing GSM/ GPRS/ UMTS services and
wire free applications under the orange(TM) brand. The Company
commenced full commercial operations in January 1999 and, through its
network, provides quality service and a range of features to 2.626
million subscribers in Israel. The Company launched its 3G service in
2004. Partner's ADSs are quoted on The NASDAQ Global Select Market(TM)
and on the Tel Aviv Stock Exchange under the symbol PTNR. The shares
are also traded on the London Stock Exchange under the symbol PCCD.
Partner is a subsidiary of Hutchison Telecommunications
International Limited (Hutchison Telecom). Hutchison Telecom is a
leading listed telecommunications operator (SEHK: 2332; NYSE: HTX)
focusing on dynamic markets. It currently offers mobile and fixed-line
telecommunication services in Hong Kong, and operates or is rolling
out mobile telecommunication services in India, Israel, Macau,
Thailand, Sri Lanka, Ghana, Indonesia and Vietnam.
For more information about Partner, see
www.investors.partner.co.il
Note: This report 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. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to risks, uncertainties and
assumptions about Partner.
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 other
than statements of historical fact included in this quarterly report
regarding our future performance, plans to increase revenues or
margins or preserve or expand market share in existing or new markets,
reduce expenses and any statements regarding other future events or
our future prospects, are forward-looking statements.
Because such statements involve risks and uncertainties, actual
results may differ materially from the results currently expected.
Factors that could cause such differences include, but are not limited
to:
-- the effects of the high degree of regulation in the
telecommunications market in which we operate;
-- regulatory developments relating to tariffs, including
interconnect tariffs;
-- the difficulties associated with obtaining all permits
required for building and operating of antenna sites;
-- the requirement to indemnify planning committees in respect of
claims made against them relating to the depreciation of
property values or to alleged health damages resulting from
antenna sites;
-- alleged health risks related to antenna sites and use of
telecommunication devices;
-- the effects of vigorous competition in the market in which we
operate and for more valuable customers, which may decrease
prices charged, increase churn and change our customer mix,
profitability and average revenue per user, and the response
of competitors to industry and regulatory developments;
-- uncertainties about the degree of growth in the number of
consumers in Israel using wireless personal communications
services and the growth in the Israeli population;
-- the risks associated with the implementation of a third
generation (3G) network and business strategy, including risks
relating to the operations of new systems and technologies,
potential unanticipated costs, uncertainties regarding the
adequacy of suppliers on whom we must rely to provide both
network and consumer equipment and consumer acceptance of the
products and services to be offered, and the risk that the use
of internet search engines by our 3G customers will be
restricted;
-- the risks associated with technological requirements,
technology substitution and changes and other technological
developments;
-- the impact of existing and new competitors in the market in
which we compete, including competitors that may offer less
expensive products and services, desirable or innovative
products, technological substitutes, or have extensive
resources or better financing;
-- regulatory developments related to the implementation of
number portability;
-- fluctuations in foreign exchange rates;
-- the possibility of the market in which we compete being
impacted by changes in political, economic or other factors,
such as monetary policy, legal and regulatory changes or other
external factors over which we have no control;
-- the availability and cost of capital and the consequences of
increased leverage; and
-- the results of litigation filed or that may be filed against
us, as well as the risks discussed in Risk Factors,
Information on the Company and Operating and Financial Review
and Prospects in form 20-F filed with the SEC on May 18, 2006.
In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this report might not
occur.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
These financial results were prepared in accordance with U.S.
GAAP.
The convenience translations of the Nominal New Israeli Shekel
(NIS) figures into US Dollars were made at the rate of exchange
prevailing at September 30th, 2006: US $1.00 equals NIS 4.302. The
translations were made purely for the convenience of the reader.
Earnings before interest, taxes, depreciation, amortization,
exceptional items and capitalization of intangible assets ('EBITDA')
is presented because it is a measure commonly used in the
telecommunications industry and is presented solely in order to
improve the understanding of the Company's operating results and to
provide further perspective on these results. EBITDA, however, should
not be considered as an alternative to operating income or net income
for the year as an indicator of the operating performance of the
Company. Similarly, EBITDA should not be considered as an alternative
to cash flows from operating activities as a measure of liquidity.
EBITDA is not a measure of financial performance under generally
accepted accounting principles and may not be comparable to other
similarly titled measures for other companies. EBITDA may not be
indicative of the historic operating results of the Company; nor is it
meant to be predictive of potential future results.
Reconciliation between our cash flows from operating activities
and EBIDTA is presented in the attached summary financial results.
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
-0-
*T
Convenience
translation into U.S.
New Israeli shekels dollars
---------------------- ----------------------
September December September December
30, 31, 30, 31,
2006 2005 2006 2005
----------- ---------- ----------- ----------
(Unaudited) (Audited) (Unaudited) (Audited)
----------- ---------- ----------- ----------
In thousands
---------------------------------------------
Assets
CURRENT ASSETS:
Cash and cash
equivalents 4,121 4,008 958 932
Accounts receivable:
Trade 935,192 795,156 217,385 184,834
Other 121,498 97,128 28,242 22,577
Inventories 155,898 209,323 36,238 48,657
Deferred income taxes 41,897 65,361 9,739 15,193
----------- ---------- ----------- ----------
Total current
assets 1,258,606 1,170,976 292,562 272,193
----------- ---------- ----------- ----------
INVESTMENTS AND LONG-
TERM RECEIVABLES:
Accounts receivables
- trade 272,225 189,013 63,279 43,936
Funds in respect of
employee rights upon
retirement 78,593 75,443 18,269 17,537
----------- ---------- ----------- ----------
350,818 264,456 81,548 61,473
----------- ---------- ----------- ----------
FIXED ASSETS, net of
accumulated
depreciation and
amortization 1,659,443 1,768,895 385,738 411,180
----------- ---------- ----------- ----------
LICENSE, DEFERRED
CHARGES AND INTANGIBLE
ASSETS,
net of amortization 1,270,695 1,321,167 295,373 307,105
----------- ---------- ----------- ----------
DEFERRED INCOME TAXES 78,873 86,505 18,334 20,108
----------- ---------- ----------- ----------
4,618,435 4,611,999 1,073,555 1,072,059
=========== ========== =========== ==========
*T
-0-
*T
Convenience
translation into U.S.
New Israeli shekels dollars
----------------------- ----------------------
September December September December
30, 31, 30, 31,
2006 2005 2006 2005
----------- ----------- ----------- ----------
(Unaudited) (Audited) (Unaudited) (Audited)
----------- ----------- ----------- ----------
In thousands
----------------------------------------------
Liabilities and
shareholders'
equity
CURRENT LIABILITIES:
Current maturities of
long-term liabilities 37,993 34,464 8,831 8,011
Accounts payable and
accruals:
Trade 709,318 665,542 164,881 154,705
Other 222,195 231,480 51,649 53,808
Related party - trade 19,403 10,513 4,510 2,444
Dividend payable 44,996 10,459
----------- ----------- ----------- ----------
Total current
liabilities 988,909 986,995 229,871 229,427
----------- ----------- ----------- ----------
LONG-TERM LIABILITIES:
Bank loans, net of
current maturities 306,483 665,974 71,242 154,806
Notes payable 2,051,650 2,022,257 476,906 470,074
Liability for employee
rights upon
retirement 110,480 102,238 25,681 23,765
Other liabilities 16,849 19,184 3,917 4,459
----------- ----------- ----------- ----------
Total long-
term
liabilities 2,485,462 2,809,653 577,746 653,104
----------- ----------- ----------- ----------
Total
liabilities 3,474,371 3,796,648 807,617 882,531
----------- ----------- ----------- ----------
SHAREHOLDERS' EQUITY:
Share capital -
ordinary shares of
NIS 0.01 par value:
authorized -
December 31, 2005
and September 30,
2006 - 235,000,000
shares; issued and
outstanding -
December 31, 2005
152,528,288 shares
and September 30,
2006 153,995,177
shares 1,540 1,525 358 354
Capital surplus 2,435,771 2,388,425 566,195 555,190
Accumulated deficit (1,293,247) (1,574,599) (300,615) (366,016)
----------- ----------- ----------- ----------
Total
shareholders'
equity 1,144,064 815,351 265,938 189,528
----------- ----------- ----------- ----------
4,618,435 4,611,999 1,073,555 1,072,059
=========== =========== =========== ==========
*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-0-
*T
New Israeli shekels
---------------------------------------------------
9 month 3 month
period ended period ended
September 30, September 30,
---------------------------------------------------
2006 2005 2006 2005
------------ --------------------------------------
(Unaudited)
---------------------------------------------------
In thousands (except per share data)
---------------------------------------------------
REVENUES - net:
Services 3,745,120 3,487,020 1,316,420 1,208,953
Equipment 416,458 376,645 145,569 143,369
------------ --------------------------------------
4,161,578 3,863,665 1,461,989 1,352,322
------------ --------------------------------------
COST OF REVENUES:
Services 2,311,409 2,265,663 794,191 792,806
Equipment 587,319 570,464 210,446 231,022
------------ --------------------------------------
2,898,728 2,836,127 1,004,637 1,023,828
------------ --------------------------------------
GROSS PROFIT 1,262,850 1,027,538 457,352 328,494
SELLING AND
MARKETING
EXPENSES 216,953 194,910 84,124 72,105
GENERAL AND
ADMINISTRATIVE
EXPENSES 141,362 132,935 53,717 45,222
------------ --------------------------------------
OPERATING PROFIT 904,535 699,693 319,511 211,167
FINANCIAL EXPENSES
- net 144,515 282,462 44,710 148,782
------------ --------------------------------------
INCOME BEFORE
TAXES ON INCOME 760,020 417,231 274,801 62,385
TAXES ON INCOME 241,725 145,960 90,148 31,441
------------ --------------------------------------
INCOME BEFORE
CUMULATIVE EFFECT
OF A CHANGE IN
ACCOUNTING
PRINCIPLES 518,295 271,271 184,653 30,944
CUMULATIVE EFFECT,
AT BEGINNING OF
YEAR, OF A CHANGE
IN ACCOUNTING
PRINCIPLES 1,012
------------ --------------------------------------
NET INCOME FOR THE
PERIOD 519,307 271,271 184,653 30,944
============ ======================================
EARNINGS PER SHARE
("EPS") :
Basic:
Before
cumulative
effect 3.38 1.65 1.20 0.20
Cumulative
effect 0.01
------------ --------------------------------------
3.39 1.65 1.20 0.20
============ ======================================
Diluted:
Before
cumulative
effect 3.36 1.63 1.19 0.20
Cumulative
effect 0.01
------------ --------------------------------------
3.37 1.63 1.19 0.20
============ ======================================
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING:
Basic 153,391,479 164,847,982 153,916,260 151,907,587
============ ======================================
Diluted 154,266,141 166,665,935 154,740,926 153,538,181
============ ======================================
Convenience translation into U.S.
dollars
------------------------------------
9 month 3 month
period ended period ended
September 30, September 30,
2006 2006
------------------------------------
(Unaudited)
------------------------------------
In thousands (except per share data)
------------------------------------
REVENUES - net:
Services 870,553 306,002
Equipment 96,806 33,838
------------------------------------
967,359 339,840
------------------------------------
COST OF REVENUES:
Services 537,287 184,610
Equipment 136,522 48,918
------------------------------------
673,809 233,528
------------------------------------
GROSS PROFIT 293,550 106,312
SELLING AND
MARKETING
EXPENSES 50,431 19,555
GENERAL AND
ADMINISTRATIVE
EXPENSES 32,860 12,487
------------------------------------
OPERATING PROFIT 210,259 74,270
FINANCIAL EXPENSES
- net 33,592 10,393
------------------------------------
INCOME BEFORE
TAXES ON INCOME 176,667 63,877
TAXES ON INCOME 56,189 20,955
------------------------------------
INCOME BEFORE
CUMULATIVE EFFECT
OF A CHANGE IN
ACCOUNTING
PRINCIPLES 120,478 42,922
CUMULATIVE EFFECT,
AT BEGINNING OF
YEAR, OF A CHANGE
IN ACCOUNTING
PRINCIPLES 235
------------------------------------
NET INCOME FOR THE
PERIOD 120,713 42,922
====================================
EARNINGS PER SHARE
("EPS") :
Basic:
Before
cumulative
effect 0.79 0.28
Cumulative
effect
------------------------------------
0.79 0.28
====================================
Diluted:
Before
cumulative
effect 0.78 0.28
Cumulative
effect
------------------------------------
0.78 0.28
====================================
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING:
Basic 153,391,479 153,916,260
====================================
Diluted 154,266,141 154,740,926
====================================
*T
* Representing an amount less than 0.01$
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-0-
*T
Convenience
translation into
New Israeli shekels U.S. dollars
---------------------- --------------------
9 month period 9 month period
ended September 30, ended September 30,
2006 2005 2006
---------- ----------- --------------------
(Unaudited)
-------------------------------------------
In thousands
-------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income for the
period 519,307 271,271 120,713
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 475,173 521,303 110,454
Amortization of deferred
compensation related to
employee stock option
grants, net 17,378 8,226 4,040
Liability for employee
rights upon retirement 8,242 6,495 1,916
Accrued interest and
exchange and linkage
differences on long-
term liabilities 34,124 90,062 7,932
Deferred income taxes 31,096 141,717 7,228
Income tax benefit in
respect of exercise of
option granted to
employees 4,243
Capital loss on sale of
fixed assets 318 420 74
Cumulative effect,
at beginning of
year, of a change
in accounting
principles (1,012) (235)
Changes in operating
assets and liabilities:
Increase in accounts
receivable:
Trade (223,248) (209,482) (51,894)
Other (24,370) (36,617) (5,665)
Increase (decrease) in
accounts payable and
accruals:
Related
Parties 8,890 2,066
Trade 65,105 112,349 15,134
Other (14,428) (93,423) (3,354)
Decrease (increase) in
inventories 53,425 (27,814) 12,419
Increase (decrease) in
asset retirement
obligations 895 (194) 208
Amount carried to
deferred charges (13,874)
---------- ----------- --------------------
Net cash provided by
operating activities 950,895 774,682 221,036
---------- ----------- --------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of fixed assets (218,970) (467,505) (50,900)
Acquisition of optic
fibers activity (71,125) (16,533)
Purchase of additional
spectrum (46,480) (41,539) (10,805)
Proceeds from sale of
fixed assets 34 16 8
Funds in respect of
employee rights upon
retirement (3,150) (4,989) (732)
---------- ----------- --------------------
Net cash used in
investing activities (339,691) (514,017) (78,962)
---------- ----------- --------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Financial lease
undertaken 15,832
Repayment of capital
lease (3,620) (964) (841)
Repurchase of company's
shares (1,091,841)
Issuance of notes
payable under a
prospects, net of
issuance costs 1,929,486
Redemption of notes
payable (793,100)
Proceeds from exercise
of stock options
granted to employees 30,995 30,442 7,205
Dividend Paid (277,808) - (64,576)
Long term bank loans
received 497,001
Repayment of long term
bank loans (360,658) (849,054) (83,836)
---------- ----------- --------------------
Net cash used in
financing activities (611,091) (262,198) (142,048)
---------- ----------- --------------------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 113 (1,533) 26
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 4,008 4,611 932
---------- ----------- --------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD 4,121 3,078 958
========== =========== ====================
*T
Supplementary information on investing not involving cash flows
At September 30, 2006, and 2005, trade payables include NIS 97
million ($ 23 million) (unaudited) and NIS 85 million (unaudited) in
respect of acquisition of fixed assets (in 2005 including additional
spectrum), respectively.
These balances will be given recognition in these statements upon
payment.
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
RECONCILIATION BETWEEN OPERATING CASH FLOWS AND EBITDA
-0-
*T
Convenience
New Israeli shekels translation into
U.S. dollars
--------------------- -------------------
9 Month Period Ended 9 Month Period
September 30, Ended September 30,
2006 2005 2006
------------ -------- -------------------
(Unaudited)
-----------------------------------------
In thousands
-----------------------------------------
Net cash provided by
operating activities 950,895 774,682 221,036
Liability for employee
rights upon retirement (8,242) (6,495) (1,916)
Accrued interest and
exchange and linkage
differences on long-term
liabilities (34,124) (90,062) (7,932)
Amount carried to differed
charges 13,874
Increase in accounts
receivable:
Trade 223,248 209,482 51,894
Other (excluding tax
provision) 234,999 36,617 54,626
Decrease (Increase) in
accounts payable and
accruals:
Trade (65,105) (112,349) (15,134)
Shareholder - current
account (8,890) (2,066)
Other 14,428 93,423 3,354
Increase (decrease) in
inventories (53,425) 27,814 (12,419)
Decrease (increase) in
Assets Retirement
Obligation (895) 194 (208)
Financial expenses (i) 135,558 256,958 31,510
---------- ---------- -------------------
EBITDA 1,388,447 1,204,138 322,745
---------- ---------- -------------------
*T
* The convenience translation of the New Israeli Shekel (NIS)
figures into US dollars was made at the exchange prevailing at
September 30, 2006 : US $1.00 equals 4.302 NIS.
(i) Financial expenses excluding any charge for the amortization
of pre-launch financial costs.
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
-0-
*T
New Israeli shekels
------------------------------------------------------
3 month period ended
------------------------------------------------------
September December September
30 31, March 31, June 30, 30,
2005 2005 2006 2006 2006
---------- ---------- ---------- ---------- ----------
(Unaudited)
------------------------------------------------------
In thousands
------------------------------------------------------
Revenues - net 1,352,322 1,259,274 1,326,644 1,372,945 1,461,989
Cost of
Revenues 1,023,828 930,225 952,177 941,914 1,004,637
---------- ---------- ---------- ---------- ----------
Gross Profit 328,494 329,049 374,467 431,031 457,352
Selling and
Marketing
Expenses 72,105 77,990 57,250 75,579 84,124
General and
Administrative
Expenses 45,222 47,846 43,682 43,963 53,717
---------- ---------- ---------- ---------- ----------
Operating
Profit 211,167 203,213 273,535 311,489 319,511
Financial
Expenses - net 148,782 62,986 38,629 61,176 44,710
---------- ---------- ---------- ---------- ----------
Income Before
Taxes on
Income 62,385 140,227 234,906 250,313 274,801
Taxes on Income 31,441 56,938 75,501 76,076 90,148
---------- ---------- ---------- ---------- ----------
Income Before
Cumulative
Effect of a
Change in
Accounting
Principles 30,944 83,289 159,405 174,237 184, 653
Cumulative
Effect, at the
Beginning of
the Year, of a
Change in
Accounting
Principles 1,012
Net Income for
the Period 30,944 83,289 160,417 174,237 184,653
========== ========== ========== ========== ==========
*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
SUMMARY OPERATING DATA
-0-
*T
Q3 2005 Q3 2006
----------------------------------------------------------- ----------
Subscribers (in thousands) 2,480 2,626
----------------------------------------------------------- ----------
Estimated share of total Israeli mobile telephone
subscribers 32% 32%
----------------------------------------------------------- ----------
Churn rate in quarter 3.2% 3.7%
----------------------------------------------------------- ----------
Average monthly usage in quarter per subscriber
(minutes) 306 322
----------------------------------------------------------- ----------
Average monthly revenue in year per subscriber,
including in-roaming revenue (NIS) 162 164
----------------------------------------------------------- ----------
Number of 2G operational base stations (in
parenthesis number of micro sites out of total
number of base stations) 2,244(723) 2,317(683)
----------------------------------------------------------- ----------
*T
