NETANYA, Israel, Nov. 12, 2014 /PRNewswire/ --
THIRD QUARTER 2014 HIGHLIGHTS (compared to third quarter of 2013):
- Total Revenues decreased 6.7% to NIS 1,142 million ($309 million)
- Service revenues decreased 13.1% to NIS 880 million ($238 million)
- Equipment revenues increased by 24.2% to NIS 262 million ($71 million)
- EBITDA decreased 0.3% to NIS 346 million ($94 million)
- EBITDA excluding one-time effect decreased 13.0% to NIS 302 million ($82 million)
- EBITDA margin 30.3%, up from 28.3%
- EBITDA margin excluding one-time effect 26.4%, down from 28.3%
- Operating income increased by 9.8% to NIS 190 million ($52 million)
- Operating income excluding one-time effect decreased 15.6% to NIS 146 million ($40 million)
- Net income increased by 103.8% to NIS 106 million ($29 million)
- Net income excluding one-time effect increased by 42.3% to NIS 74 million ($20 million)
- Free cash flow2 decreased 22.1% to NIS 303 million ($82 million)
- Cellular subscriber base totaled approx. 3.010 million subscribers (at the end of September 2014)
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 2014. Revenues for the third quarter of 2014 totaled NIS 1,142 million ($309 million); EBITDA for the third quarter of 2014 totaled NIS 346 million1 ($94 million), or 30.3%1 of total revenues for the quarter; and net income for the third quarter of 2014 totaled NIS 106 million1 ($29 million). Basic earnings per share for the third quarter of 2014 totaled NIS 1.06 ($0.29).
Commenting on the results, Nir Sztern, the Company's Chief Executive Officer, said: "We are in the middle of several important processes for the Group's development as a communications group. The preparations for launching the television over the internet services are in the final stages and we will soon bring new tidings to the TV market. We continue with a rapid deployment of our 4.5G network supporting LTE Advanced technology, which will be able to provide Cellcom Israel's customers a very high speed internet surfing, subject to receiving additional frequencies and regulatory approvals. These days, our LTE network already operates in wide areas with hundreds of active cell-sites in the framework of the current operating approval, which was given by the Ministry of Communications, allowing our customers a taste of the next generation surfing experience. Completion of the regulation of the wholesale market will be a complementary layer and will allow us to offer a whole and attractive communication package. We are pleased with the results of our focus on equipment sales, which led to an increase of these revenues in the third quarter, compared with both the previous quarter and the third quarter of last year, as well as the results of the efficiency measures we implemented. On the other hand, the aggressive price competition, mainly in the cellular arena, continues, the effects of which are reflected in the decrease in EBITDA excluding a one-time effect, and the continued erosion in service revenues, which is expected to continue in the coming quarters as well."
Shlomi Fruhling, Chief Financial Officer, commented: "In this quarter, EBITDA totaled NIS 346 million, similar to the third quarter of last year, and excluding a one-time positive effect of NIS 44 million, EBITDA for the third quarter this year totaled NIS 302 million, a 13% decrease compared with the third quarter of last year. Most of the decrease resulted from the decrease in the Group's service revenues due to the continued price erosion in the communications market, which is expected to continue in the coming quarters and to adversely affect its results. Furthermore and as previously reported, in the third quarter this year there was a substantial decrease in revenues from hosting operators on the Company's communications networks (which are expected to gradually increase in the coming quarters). On the other hand, an increase in equipment sales and a decrease in operating expenses, resulting from the efficiency measures, somewhat mitigated these effects.
"In the third quarter this year, we generated a free cash flow of NIS 303 million and we continue to significantly strengthen the Company's balance sheet, as we decreased the Company's net debt by approximately NIS 720 million from the beginning of the year, to a level of NIS 3.1 billion.
"The Company's Board of Directors decided not to distribute a dividend for the third quarter of 2014, given the continued intensified competition in the market and its adverse effect on the Company's revenues 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."
MAIN CONSOLIDATED FINANCIAL RESULTS:
Q3/2014 3 | Q3/2013 | % | Q3/2014 | Q3/2013 | ||
NIS million | US$ million | |||||
Total revenues | 1,142 | 1,224 | (6.7%) | 309.1 | 331.3 | |
Operating Income | 190 | 173 | 9.8% | 51.4 | 46.8 | |
Net Income | 106 | 52 | 103.8% | 28.7 | 14.1 | |
Free cash flow | 303 | 389 | (22.1%) | 82.0 | 105.3 | |
EBITDA | 346 | 347 | (0.3%) | 93.6 | 93.9 | |
EBITDA, as percent of total revenues | 30.3% | 28.3% | 7.1% | |||
MAIN FINANCIAL DATA BY OPERATING SEGMENTS:
Cellcom Israel (*) | Netvision (**) | Consolidation | Consolidated results | |
Q3/2014 | ||||
NIS million | ||||
Total revenues | 930 | 241 | (29) | 1,142 |
Service revenues | 680 | 226 | (26) | 880 |
Equipment revenues | 250 | 15 | (3) | 262 |
Operating Income | 146 | 57 | (13) | 190 |
EBITDA | 268 | 78 | - | 346 |
EBITDA, as percent | 28.8% | 32.4% | - | 30.3% |
(*) | Cellcom Israel Ltd. and its subsidiaries, excluding Netvision Ltd. and its subsidiaries. |
(**) | Netvision Ltd. and its subsidiaries. |
(***) | Include elimination of inter-company revenues between Cellcom Israel and Netvision, and amortization expenses attributable to the merger. |
MAIN PERFORMANCE INDICATORS (data refers to cellular subscribers only):
Q3/2014 | Q3/2013 | Change | |
Cellular subscribers at the end | 3,010 | 3,156 | (4.6%) |
Churn Rate for cellular | 11.0% | 8.9% | 23.6% |
Monthly cellular ARPU (in NIS) | 70.6 | 79.6 | (11.3%) |
FINANCIAL REVIEW
Revenues for the third quarter of 2014 decreased 6.7% totaling NIS 1,142 million ($309 million), compared to NIS 1,224 million ($331 million) in the third quarter last year. The decrease in revenues is attributed to a 13.1% decrease in service revenues, which totaled NIS 880 million ($238 million) in the third quarter of 2014 as compared to NIS 1,013 million ($274 million) in the third quarter last year. This decrease was partially offset by a 24.2% increase in equipment revenues, which totaled NIS 262 million ($71 million) in the third quarter of 2014 as compared to NIS 211 million ($57 million) in the third quarter of 2013. Netvision's contribution to revenues for the third quarter of 2014 totaled NIS 212 million ($57 million) (excluding inter-company revenues) compared to NIS 230 million ($62 million) in the third quarter of 2013.
The decrease in third quarter 2014 service revenues resulted mainly from a decrease in cellular services revenues, due to the ongoing erosion in the price of these services as a result of the intensified competition in the cellular market. The decrease in service revenues also resulted from a decrease in revenues from internet services and long distance calls services due to intensified competition, a decrease in revenues from roaming services, as well as a decrease in revenues from hosting operators on the Company's communications networks. Netvision's contribution to service revenues for the third quarter of 2014 totaled NIS 200 million ($54 million) (excluding inter-company revenues) compared to NIS 224 million ($61 million) in the third quarter of 2013.
The increase in third quarter 2014 equipment revenues resulted mainly from an approximately 24% increase in the number of smartphones sold during the third quarter of 2014 as compared with the third quarter of 2013, as well as an approximately 8% increase in the average sale price of cellular handsets in the third quarter of 2014 as compared with the third quarter last year. Netvision's contribution to equipment revenues for the third quarter of 2014 totaled NIS 12 million ($3 million), compared to NIS 6 million ($2 million) in the third quarter of 2013.
Cost of revenues for the third quarter of 2014 totaled NIS 660 million ($178 million), compared to NIS 745 million ($202 million) in the third quarter of 2013, an 11.4% decrease. This decrease resulted mainly from a decrease in interconnect expenses, mainly due to a reduction in the interconnect tariffs, a decrease in payroll expenses and other expenses due to the efficiency measures implemented by the Company, as well as a one-time reduction of a provision for cell-sites rent expenses in the amount of NIS 44 million ($12 million) in the third quarter of 2014. These effects were partially offset by an increase in the cost of equipment sold, as a result of the increase in the number of smartphones sold during the third quarter of 2014 as compared with the third quarter of 2013.
Gross profit for the third quarter of 2014 totaled NIS 482 million ($131 million), compared to NIS 479 million ($130 million) in the third quarter of 2013, a 0.6% increase. Gross profit margin for the third quarter of 2014 amounted to 42.2%, up from 39.1% in the third quarter of 2013. The gross profit for the third quarter of 2014 includes the one-time positive effect of NIS 44 million ($12 million) described above. Excluding this one-time effect, gross profit for the third quarter of 2014 totaled NIS 438 million ($119 million), an 8.6% decrease compared to the third quarter of 2013.
Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for the third quarter of 2014 decreased 4.9% to NIS 289 million ($78 million), compared to NIS 304 million ($82 million) in the third quarter of 2013. This decrease is primarily the result of a decrease in depreciation and amortization expenses and doubtful accounts expenses, as well as the efficiency measures implemented by the Company, which led to a decrease in payroll expenses, rent and other expenses. The decrease in SG&A expenses was partially offset by an increase in sales commissions, as a result of an increase in the number of sales transactions, and an increase in advertising expenses.
Operating income for the third quarter of 2014 increased by 9.8% to NIS 190 million ($52 million) from NIS 173 million ($47 million) in the third quarter of 2013. Operating income for the third quarter of 2014 includes the one-time positive effect of NIS 44 million ($12 million) described above. Excluding this one-time effect, operating income for the third quarter of 2014 totaled NIS 146 million ($40 million), a 15.6% decrease compared with the third quarter of 2013.
EBITDA for the third quarter of 2014 decreased 0.3% totaling NIS 346 million ($94 million), compared to NIS 347 million ($94 million) in the third quarter of 2013. EBITDA for the third quarter 2014, as a percent of third quarter revenues, totaled 30.3%, up from 28.3% in the third quarter of 2013. Excluding the one-time effect described above, EBITDA for the third quarter of 2014 totaled NIS 302 million ($82 million), a 13.0% decrease compared with the third quarter of 2013. EBITDA for the third quarter 2014, as a percent of third quarter revenues, excluding the one-time effect totaled 26.4%, down from 28.3% in the third quarter of 2013. Netvision's contribution to the EBITDA for the third quarter of 2014 totaled NIS 78 million ($21 million), compared to NIS 61 million ($17 million) in the third quarter of 2013, a 27.9% increase.
Financing expenses, net for the third quarter of 2014 decreased 44.6% and totaled NIS 51 million ($14 million), compared to NIS 92 million ($25 million) in the third quarter of 2013. The decrease resulted mainly from a decrease in interest expenses, associated with the Company's debentures, due to a decrease of approximately NIS 800 million ($217 million) in the Company's debt level compared with the third quarter of 2013, and a decrease in Israeli Consumer Price Index (CPI) linkage expenses, associated with the Company's debentures, due to a lower inflation rate in the third quarter of 2014 compared with the third quarter of 2013, and due to a reduction in the level of the Company's CPI-linked debt.
Taxes on income for the third quarter of 2014 totaled NIS 33 million ($9 million), compared to NIS 29 million ($8 million) in the third quarter of 2013. The increase in taxes on income is mainly attributed to the increase in profit before taxes on income, which was partially offset by a one-time deferred tax expense, net, in the amount of NIS 7 million ($2 million), which was recorded in the third quarter of last year.
Net Income for the third quarter of 2014 totaled NIS 106 million ($29 million), compared to NIS 52 million ($14 million) in the third quarter of 2013, a 103.8% increase. This increase was the result of a reduction in operating expenses, mainly due to the efficiency measures implemented by the Company, the one-time reduction of the provision for cell-site rent expenses and a decrease in financing expenses, net. The increase in net income was offset in part by the erosion in service revenues resulting from the continued intensified competition in the cellular and landline communications market. Excluding the one-time effect, net income for the third quarter of 2014 totaled NIS 74 million ($20 million), a 42.3% increase compared with the third quarter of 2013.
Basic earnings per share for the third quarter of 2014 totaled NIS 1.06 ($0.29), compared to NIS 0.53 ($0.14) in the third quarter of last year.
OPERATING REVIEW (data refers to cellular subscribers only)
Cellular subscriber base – at the end of September 2014 the Company had approximately 3.010 million cellular subscribers. During the third quarter of 2014 the Company's cellular subscriber base decreased by approximately 19,000 net cellular subscribers, all of them pre-paid subscribers. Following a technical billing modification to some of our M2M subscribers, charged to a single account, we now look at data usage in addition to revenue generation for M2M subscribers count, which remained unchanged.
Cellular Churn Rate for the third quarter of 2014 totaled 11.0%, compared to 8.9% in the third quarter of 2013. The cellular churn rate was primarily affected by the intensified competition in the cellular market.
The monthly cellular Average Revenue per User ("ARPU") for the third quarter of 2014 totaled NIS 70.6 ($19.1), compared to NIS 79.6 ($21.5) in the third quarter of 2013. The decrease in ARPU resulted, among others, from the ongoing erosion in the price of cellular services, due to the intensified competition in the cellular market, as well as from the decrease in revenues from hosting operators on the Company's communications networks.
FINANCING AND INVESTMENT REVIEW
Cash Flow
Free cash flow for the third quarter of 2014, decreased 22.1% to NIS 303 million ($82 million), compared to NIS 389 million ($105 million) in the third quarter of 2013. The decrease in free cash flow was mainly due to a decrease in proceeds from customers following the decrease in revenues in the third quarter of 2014 compared with the third quarter of 2013, resulting from the intensified competition in the cellular market, and an increase in payments for capital expenditure. These effects were partially offset by a decrease in payroll and other operating expenses mainly due to the efficiency measures implemented by the Company.
Total Equity
Total Equity as of September 30, 2014 amounted to NIS 1,035 million ($280 million), primarily consisting of accumulated undistributed retained earnings of the Company.
Investment in Fixed Assets and Intangible Assets
During the third quarter of 2014, the Company invested NIS 123 million ($33 million) in fixed assets and intangible assets (including, among others, rights of use of communication lines and investments in information systems and software), compared to NIS 68 million ($18 million) in the third quarter of 2013. This increase is mainly attributed to investment in the 4G network (LTE) during the third quarter of 2014.
Dividend
On November 11, 2014, the Company's board of directors decided not to declare a cash dividend for the third quarter of 2014. 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 revenues, 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, 2013 on Form 20-F, 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, 2014, see "Disclosure for Debenture Holders" section in this press release.
OTHER DEVELOPMENTS DURING THE THIRD QUARTER OF 2014 AND SUBSEQUENT TO THE END OF THE REPORTING PERIOD
Network Sharing
In September 2014, following the previously reported network sharing agreements and the Israeli Ministry of Communications, or the MOC, requirements regarding network sharing, the Company entered the following agreements:
Updated agreements with Golan Telecom Ltd., or Golan
The parties' existing 2G and 3G IRU agreement and 4G network sharing agreement were updated, generally for a period of at least 10 years; and include stipulations as to ownership and mutual IRU in the 4G radio equipment as well as the establishment of a Joint Venture for the joint operation of the 4G radio network. The agreements, as updated, are subject to regulatory approvals.
As previously reported, the Company expects - if these agreements will be approved - its revenues from Golan to be at annual levels similar to those in 2013 and 2014, for the duration of the agreements term.
Passive infrastructure cooperation agreement with Pelephone Communications Ltd., or Pelephone
The Company and Pelephone entered a co-operation agreement regarding maintenance services for passive elements of cell sites, including unifying passive elements and streamlining costs, through a common contractor. The contractor to be selected by RFP process will enter a separate agreement with each of the company and Pelephone, generally for a period of at least 5 years. The agreement is subject to regulatory approvals. The Company expects, if this agreement is approved and if the Company and Pelephone enter agreements with such contractor, that the co-operation will gradually produce substantial savings in the Company's expenses for rental and maintenance of cell sites, for the duration of the agreements' term.
For additional details see the Company's most recent annual report for the year ended December 31, 2013 on Form 20-F, filed on March 6, 2014, or the Company's 2013 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 "Item 4. Information on The Company – B. Business Overview – Network and Technology - Network and Cell Sites Sharing Agreements", the Company's immediate report regarding the Company's results for the first quarter of 2014 on Form 6-K dated May 14, 2014 under "Other developments during the first quarter of 2014 and subsequent to the end of the reporting period - Network Sharing Agreements", and the Company's immediate report regarding the Company's results of operation in the second quarter of 2014 on form 6-K dated August 11, 2014, under "Other developments during the second quarter of 2014 and subsequent to the end of the reporting period— 4 Generation Network and Network Sharing".
4 Generation Network and frequencies
In November 2014, the Company submitted its basic offer to the 4G frequencies tender. The basic offer includes the information and documents required by the MOC as a prerequisite to participating in the tender process. Prior to that, the MOC has mostly retracted the previously proposed more severe coverage and quality requirements for the 4G network (such requirements are still under review in relation to the 2G and 3G networks and the Company has submitted its objection to such proposed changes).
For additional details see the Company's 2013 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", "- We may be adversely affected by significant technological and other changes in the cellular communications industry; network sharing agreements, if approved, may have material adverse effects on our business" and "Item 4. Information on The Company – B. Business Overview – Network and Technology - Network and Technology", and the company's immediate report regarding the Company's results for the second quarter of 2014 on Form 6-K dated August 11, 2014 under "Other developments during the second quarter of 2014 and subsequent to the end of the reporting period - 4 Generation Network and Network Sharing".
Network Malfunction
In November 6, 2014, the Company suffered a network malfunction that impaired part of the Company's (as well as other operators receiving hosting services from the Company) subscribers' ability to fully utilize cellular services. The Company has since resumed full service.
Regulation
In August 2014, the MOC published a hearing regarding roaming services provided to subscribers. The hearing proposes, in order to increase competition and reduce roaming payments by subscribers, among others, to allow other Israeli telecommunication operators, including other cellular operators, mobile virtual network operators, international calls operators and landline operators to offer roaming services to a cellular subscriber of another cellular operator, while abroad, using the subscriber's usual cellular number as well as change the way payments for roaming services are calculated, such as by requiring a 1 second unit or 1 KB unit (as applicable) for billing of roaming services while abroad and not charging for certain intervals of the call. The Company estimates that some of the proposed changes, if implemented, would have a material adverse effect on the Company's results of operations, but at this time cannot estimate which of the proposed changes will be adopted, if any. The company submitted its objection to some of the proposed changes.
Also, in August 2014, the MOC published a hearing regarding call centers services provided to subscribers of Israeli telecommunications operators. The hearing proposes, in order to improve the quality of call centers services, to, among others, set new or more severe criteria to such service, including with regards to response time and manner. In addition, the MOC proposes to amend the Israeli Communications Law and set fixed compensation in case of failure to meet the response time proposed, as well as a fixed compensation in case a subscriber was wrongfully overcharged (more severe than the existing provision to that effect in the Israeli Consumer Protection Law). The Company estimates that the proposed changes, if adopted as proposed, would have a material adverse effect on the Company's results of operations. The Company submitted its objection to the proposed changes.
For additional details see the Company's 2013 annual report under "Item 3. Key Information – D. Risk Factors – Risks Related to our Business – We operate in a heavily regulated industry, which can harm our results of operations. In recent years, regulation in Israel has materially adversely affected our results" and "– We face intense competition in all aspects of our business" and under "Item 4. Information on The Company – B. Business Overview – Government Regulations – Our principal license".
Outstanding Share Capital
In August 2014, employees and members of senior management of the Company sold an aggregate of 933,348 shares of the Company, constituting approximately 0.93% of the Company's issued share capital, to financial institutions. The shares had been issued by the Company to such employees and senior management upon their exercise of vested options granted by the Company under its 2006 Share Incentive Plan. The Company understood that the purchasers intend to place such shares for sale outside the United States to non-US investors.
The shares have not been and will not be registered under the U.S. Securities Act of 1933. Accordingly, the shares may not be offered or sold in the United States or to, or for the account or benefit of, a U.S. person (as defined in Regulation S under the U.S. Securities Act of 1933).
For additional details on the Company's Share Incentive Plan, see the Company's 2013 annual report under "Item 5. Operating and Financial Review and Prospects – A. Operating Results – Overview – 2006 Share Incentive Plan" and under "Item 6. Directors, Senior Management and Employees - E. Share Ownership – 2006 Share Incentive Plan".
Changes in Board of Directors
In September 2014, following the previously reported board composition requirements set by the Israeli law for the promotion of competition and the mitigation of concentration, in regards to reporting corporations that are third layer and up in a pyramid structure, such as the Company, (in effect during a transition period ending no later than December 2019) and in order to meet such requirements, Messrs. Rafi Bisker, Haim Gavrieli, Raanan Cohen and Edith Lusky resigned from their office as members of the Company's board of directors, effective September 21, 2014.
Discount Investment Corporation Ltd., or DIC, the Company's controlling shareholder, designated Mr. Ami Erel, the Company's chairman of the board of directors, as its appointee, effective September 21, 2014, replacing Mr. Raanan Cohen. Mr. Erel's appointment is in accordance with the requirement of the Company's telecommunications license and articles of association that at least 20% of the Company directors shall be appointed by Israeli citizens and residents from among the Company's founding shareholders, as defined in the Company's license and articles of association, namely DIC.
Following such changes the Company's board of directors meets the said composition requirements.
For further details see the Company's 2013 annual report under "Item 3. Key Information – D. Risk Factors - Risks Relating to Our Ordinary Shares - Legislation in Israel affecting corporate conglomerates, could adversely affect us" and "Item 6. Directors, Senior Management and Employees – C. Board Practices– Board of Directors and Officers" and "External Directors – Israeli-Appointed Directors" and the Company's current report of its results of operation for the second quarter of 2014 on form 6-K dated August 11, 2014 under "Other developments during the second quarter of 2014 and subsequent to the end of the reporting period - The law for the promotion of competition and the mitigation of concentration".
CONFERENCE CALL DETAILS
The Company will be hosting a conference call on Wednesday, November 12, 2014 at 9:00 am EST, 06:00 am PST, 14:00 GMT, 16:00 Israel time. On the call, management will review and discuss the results for the third quarter of 2014, 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: 1 888 281 1167 UK Dial-in Number: 0 800 917 9141
Israel Dial-in Number: 03 918 0644 International Dial-in Number: +972 3 918 0644
at: 9:00 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 3.010 million subscribers (as at September 30, 2014) with a broad range of value added services including cellular and landline 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 a 4 Generation LTE network (currently partially deployed) 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 through its wholly owned subsidiaries internet connectivity services and international calling services, as well as landline telephone communication services in Israel, in addition to data communication 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 www.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, 2013.
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 3.695 = US$ 1 as published by the Bank of Israel for September 30, 2014.
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; 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 for Non-IFRS Measures" below.
Free cash flow is a non-IFRS measure and is defined as the net cash provided by operating activities 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 for Non-IFRS Measures" below.
Company Contact Shlomi Fruhling Chief Financial Officer Tel: +972 52 998 9755 | Investor Relations Contact Ehud Helft GK Investor & Public Relations in partnership with LHA Tel: +1 617 418 3096 |
____________________ | |
1 | See details regarding a one-time positive effect in the amount of NIS 44 million (NIS 32 million net of tax) in "Cost of revenues" section in this press release. |
2 | See "Use of Non-IFRS financial measures" section in this press release. |
3 | The results for the third quarter of 2014 include a one-time positive effect of NIS 44 million (NIS 32 million net of tax). EBITDA for the third quarter of 2014 excluding this one-time effect totaled NIS 302 million, a 13.0% decrease compared with the third quarter of 2013 and EBITDA margin totaled 26.4%. Operating income for the third quarter of 2014 excluding this one-time effect totaled NIS 146 million, a 15.6% decrease compared with the third quarter of 2013, and net income for the third quarter of 2014 totaled NIS 74 million, a 42.3% increase compared with the third quarter of 2013. For details regarding the one-time effect see "Cost of revenues" section in this press release. |
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, | |||||
2013 | 2014 | 2014 | 2013 | |||||
NIS millions | US$ millions | NIS millions | ||||||
Assets | ||||||||
Cash and cash equivalents | 827 | 989 | 268 | 1,057 | ||||
Current investments, including derivatives | 511 | 531 | 144 | 513 | ||||
Trade receivables | 1,790 | 1,473 | 398 | 1,731 | ||||
Other receivables | 76 | 75 | 20 | 63 | ||||
Inventory | 89 | 91 | 25 | 84 | ||||
Total current assets | 3,293 | 3,159 | 855 | 3,448 | ||||
Trade and other receivables | 904 | 797 | 216 | 854 | ||||
Property, plant and equipment, net | 1,907 | 1,793 | 485 | 1,865 | ||||
Intangible assets, net | 1,418 | 1,317 | 356 | 1,390 | ||||
Deferred tax assets | 25 | 18 | 5 | 22 | ||||
Total non- current assets | 4,254 | 3,925 | 1,062 | 4,131 | ||||
Total assets | 7,547 | 7,084 | 1,917 | 7,579 | ||||
Liabilities | ||||||||
Current maturities of debentures and long term | 1,101 | 1,094 | 296 | 1,100 | ||||
Trade payables and accrued expenses | 608 | 714 | 193 | 582 | ||||
Current tax liabilities | 69 | 83 | 23 | 99 | ||||
Provisions | 181 | 97 | 26 | 187 | ||||
Other payables, including derivatives | 361 | 321 | 87 | 398 | ||||
Total current liabilities | 2,320 | 2,309 | 625 | 2,366 | ||||
Long-term loans from banks | 5 | - | - | 5 | ||||
Debentures | 4,337 | 3,553 | 961 | 4,332 | ||||
Provisions | 21 | 21 | 6 | 21 | ||||
Other long-term liabilities | 12 | 9 | 3 | 10 | ||||
Liability for employee rights upon retirement, net | 16 | 12 | 3 | 13 | ||||
Deferred tax liabilities | 146 | 145 | 39 | 122 | ||||
Total non- current liabilities | 4,537 | 3,740 | 1,012 | 4,503 | ||||
Total liabilities | 6,857 | 6,049 | 1,637 | 6,869 | ||||
Equity attributable to owners of the Company | ||||||||
Share capital | 1 | 1 | - | 1 | ||||
Cash flow hedge reserve | (15) | (6) | (2) | (13) | ||||
Retained earnings | 701 | 1,026 | 278 | 719 | ||||
Non-controlling interests | 3 | 14 | 4 | 3 | ||||
Total equity | 690 | 1,035 | 280 | 710 | ||||
Total liabilities and equity | 7,547 | 7,084 | 1,917 | 7,579 |
Cellcom Israel Ltd. | ||||||||||||||
(An Israeli Corporation) | ||||||||||||||
Condensed Consolidated Interim Statements of Income | ||||||||||||||
For the nine | Convenience translation into US dollar For the nine |
For the three | Convenience translation into US dollar For the three |
For the | ||||||||||
2013 | 2014 | 2014 | 2013 | 2014 | 2014 | 2013 | ||||||||
NIS millions | US$millions | NIS millions | US$millions | NIS millions | ||||||||||
Revenues | 3,718 | 3,430 | 928 | 1,224 | 1,142 | 309 | 4,927 | |||||||
Cost of revenues | (2,278) | (1,995) | (540) | (745) | (660) | (178) | (2,990) | |||||||
Gross profit | 1,440 | 1,435 | 388 | 479 | 482 | 131 | 1,937 | |||||||
Selling and marketing expenses | (522) | (505) | (137) | (166) | (171) | (46) | (717) | |||||||
General and administrative expenses | (438) | (356) | (96) | (138) | (118) | (32) | (570) | |||||||
Other income (expenses), net | 1 | (43) | (12) | (2) | (3) | (1) | 1 | |||||||
Operating profit | 481 | 531 | 143 | 173 | 190 | 52 | 651 | |||||||
Financing income | 118 | 86 | 23 | 36 | 33 | 9 | 156 | |||||||
Financing expenses | (334) | (228) | (61) | (128) | (84) | (23) | (402) | |||||||
Financing expenses, net | (216) | (142) | (38) | (92) | (51) | (14) | (246) | |||||||
Profit before taxes on income | 265 | 389 | 105 | 81 | 139 | 38 | 405 | |||||||
Taxes on income | (79) | (90) | (24) | (29) | (33) | (9) | (117) | |||||||
Profit for the period | 186 | 299 | 81 | 52 | 106 | 29 | 288 | |||||||
Attributable to: | ||||||||||||||
Owners of the Company | 185 | 298 | 81 | 52 | 105 | 29 | 287 | |||||||
Non-controlling interests | 1 | 1 | - | - | 1 | - | 1 | |||||||
Profit for the period | 186 | 299 | 81 | 52 | 106 | 29 | 288 | |||||||
Earnings per share | ||||||||||||||
Basic earnings per share (in NIS) | 1.87 | 3.00 | 0.81 | 0.53 | 1.06 | 0.29 | 2.89 | |||||||
Diluted earnings per share (in NIS) | 1.85 | 2.97 | 0.80 | 0.52 | 1.05 | 0.28 | 2.86 |
Cellcom Israel Ltd. | ||||||||||||||
(An Israeli Corporation) | ||||||||||||||
Condensed Consolidated Interim Statements of Cash Flows | ||||||||||||||
For the nine | Convenience translation into US dollar For the nine | For the three | Convenience translation into US dollar For the three 2014 | For the | ||||||||||
2013 | 2014 | 2014 | 2013 | 2014 | 2013 | |||||||||
NIS millions | US$ millions | NIS millions | US$millions | NIS millions | ||||||||||
Cash flows from operating activities | ||||||||||||||
Profit for the period | 186 | 299 | 81 | 52 | 106 | 29 | 288 | |||||||
Adjustments for: | ||||||||||||||
Depreciation and amortization | 513 | 462 | 125 | 171 | 152 | 41 | 676 | |||||||
Share based payment | 7 | 3 | 1 | 1 | 1 | - | 9 | |||||||
Loss on sale of property, plant and | 2 | 4 | 1 | 1 | 2 | 1 | 2 | |||||||
Income tax expense | 79 | 90 | 24 | 29 | 33 | 9 | 117 | |||||||
Financing expenses, net | 216 | 142 | 38 | 92 | 51 | 14 | 246 | |||||||
Other expenses | (3) | - | - | - | - | - | (3) | |||||||
Changes in operating assets and | ||||||||||||||
Change in inventory | 22 | (7) | (2) | 11 | (3) | (1) | 27 | |||||||
Change in trade receivables (including | 434 | 367 | 99 | 160 | 72 | 19 | 576 | |||||||
Change in other receivables (including | (29) | (32) | (8) | 19 | 51 | 14 | (34) | |||||||
Changes in trade payables, accrued | (141) | (7) | (2) | (38) | (33) | (9) | (185) | |||||||
Change in other liabilities (including | (15) | 46 | 13 | (8) | (20) | (5) | (33) | |||||||
Payments for derivative hedging | (10) | (6) | (2) | (4) | - | - | (17) | |||||||
Income tax paid | (87) | (87) | (23) | (26) | (32) | (9) | (119) | |||||||
Income tax received | 6 | 6 | 2 | - | 6 | 2 | 6 | |||||||
Net cash from operating activities | 1,180 | 1,280 | 347 | 460 | 386 | 105 | 1,556 | |||||||
Cash flows from investing activities | ||||||||||||||
Acquisition of property, plant, and | (228) | (197) | (54) | (57) | (70) | (19) | (275) | |||||||
Acquisition of intangible assets | (64) | (60) | (16) | (16) | (16) | (4) | (90) | |||||||
Change in current investments, net | (16) | (18) | (5) | (6) | (4) | (1) | (16) | |||||||
Proceeds from (payments for) other | (7) | (1) | - | (2) | 1 | - | (10) | |||||||
Proceeds from sale of property, plant | 12 | 4 | 1 | 2 | 1 | - | 17 | |||||||
Interest received | 24 | 21 | 6 | 5 | 4 | 1 | 29 | |||||||
Dividend received | 1 | - | - | - | - | - | 1 | |||||||
Net cash used in investing | (278) | (251) | (68) | (74) | (84) | (23) | (344) |
Cellcom Israel Ltd. | |||||||||||||
(An Israeli Corporation) | |||||||||||||
Condensed Consolidated Interim Statements of Cash Flows (cont'd) | |||||||||||||
For the nine | Convenience translation into US dollar For the nine | For the three | Convenience into US dollar For the three |
For the | |||||||||
2013 | 2014 | 2014 | 2013 | 2014 | 2014 | 2013 | |||||||
NIS millions | US$ millions | NIS millions | US$millions | NIS millions | |||||||||
Cash flows from financing activities | |||||||||||||
Payments for derivative contracts, net | (5) | (21) | (6) | (1) | (7) | (2) | (8) | ||||||
Repayment of long term loans from | (6) | (12) | (3) | (6) | (1) | - | (6) | ||||||
Repayment of debentures | (1,124) | (1,092) | (295) | (563) | (569) | (154) | (1,124) | ||||||
Proceeds from issuance of debentures, | - | 326 | 88 | - | 326 | 88 | - | ||||||
Dividend paid | - | (4) | (1) | - | - | - | (81) | ||||||
Interest paid | (354) | (294) | (80) | (174) | (145) | (39) | (350) | ||||||
Net cash used in financing | (1,489) | (1,097) | (297) | (744) | (396) | (107) | (1,569) | ||||||
Changes in cash and cash equivalents | (587) | (68) | (18) | (358) | (94) | (25) | (357) | ||||||
Cash and cash equivalents as at the | 1,414 | 1,057 | 286 | 1,185 | 1,083 | 293 | 1,414 | ||||||
Cash and cash equivalents as at the | 827 | 989 | 268 | 827 | 989 | 268 | 1,057 |
Cellcom Israel Ltd. | ||||
(An Israeli Corporation) | ||||
Reconciliation for Non-IFRS Measures | ||||
EBITDA | ||||
The following is a reconciliation of net income to EBITDA: | ||||
Three-month period ended September 30, | Year ended December 31, | |||
2013 NIS millions
| 2014 NIS millions
| Convenience translation into US dollar 2014 US$ millions
| 2013 NIS millions
| |
Profit for the period | 52 | 106 | 29 | 288 |
Taxes on income | 29 | 33 | 9 | 117 |
Financing income | (36) | (33) | (9) | (156) |
Financing expenses | 128 | 84 | 23 | 402 |
Other expenses (income) | 2 | 3 | 1 | (1) |
Depreciation and amortization | 171 | 152 | 41 | 676 |
Share based payments | 1 | 1 | - | 9 |
EBITDA | 347 | 346 | 94 | 1,335 |
Free cash flow | ||||
The following table shows the calculation of free cash flow: | ||||
Three-month period ended September 30, | Year ended December 31, | |||
2013 NIS millions
| 2014 NIS millions
| Convenience translation into US dollar 2014 US$ millions
| 2013 NIS millions
| |
Cash flows from operating | 460 | 386 | 105 | 1,556 |
Cash flows from investing | (74) | (84) | (23) | (344) |
Short-term Investment in (sale of) | 3 | 1 | - | (2) |
Free cash flow | 389 | 303 | 82 | 1,210 |
(*) Net of interest received in relation to tradable debentures. |
Cellcom Israel Ltd. | |||||||||||
(An Israeli Corporation) | |||||||||||
Key financial and operating indicators (unaudited) | |||||||||||
NIS millions unless | Q3-2012 | Q4-2012 | Q1-2013 | Q2-2013 | Q3-2013 | Q4-2013 | Q1-2014 | Q2-2014 | Q3-2014 | FY-2012 | FY-2013 |
Cellcom service revenues | 902 | 828 | 758 | 790 | 789 | 774 | 728 | 728 | 680 | 3,617 | 3,112 |
Netvision service revenues | 276 | 260 | 254 | 246 | 251 | 229 | 223 | 220 | 226 | 1,052 | 979 |
Cellcom equipment revenues | 285 | 310 | 256 | 213 | 205 | 208 | 188 | 221 | 250 | 1,274 | 882 |
Netvision equipment revenues | 15 | 31 | 17 | 13 | 6 | 24 | 15 | 14 | 15 | 82 | 60 |
Consolidation adjustments | (30) | (22) | (27) | (26) | (27) | (26) | (24) | (25) | (29) | (87) | (106) |
Total revenues | 1,448 | 1,407 | 1,258 | 1,236 | 1,224 | 1,209 | 1,130 | 1,158 | 1,142 | 5,938 | 4,927 |
Cellcom EBITDA | 355 | 306 | 251 | 271 | 286 | 258 | 265 | 224 | 268 | 1,470 | 1,066 |
Netvision EBITDA | 75 | 68 | 63 | 68 | 61 | 77 | 75 | 90 | 78 | 283 | 269 |
Total EBITDA | 430 | 374 | 314 | 339 | 347 | 335 | 340 | 314 | 346 | 1,753 | 1,335 |
Operating profit | 239 | 189 | 139 | 169 | 173 | 170 | 185 | 156 | 190 | 985 | 651 |
Financing expenses, net | 64 | 42 | 46 | 78 | 92 | 30 | 27 | 64 | 51 | 259 | 246 |
Profit for the period | 124 | 113 | 67 | 67 | 52 | 102 | 114 | 79 | 106 | 531 | 288 |
Free cash flow | 414 | 288 | 168 | 345 | 389 | 308 | 366 | 361 | 303 | 1,130 | 1,210 |
Cellular subscribers at the end | 3,338 | *3,199 | 3,166 | 3,151 | 3,156 | **3,092 | 3,049 | 3,029 | 3,010 | 3,199 | 3,092 |
Monthly cellular ARPU (in NIS) | 86.7 | 82.4 | 75.9 | 79.7 | 79.6 | 78.7 | 74.7 | 75.4 | 70.6 | 87.5 | 78.5 |
Churn rate for cellular | 8.6% | 8.7% | 9.4% | 9.0% | 8.9% | 9.9% | 11.1% | 11.1% | 11.0% | 31.5% | 36.8% |
* | After a removal of approximately 138,000 data applications subscribers (M2M) from the Company's cellular subscriber base following a change to the subscribers counting mechanism. |
** | After a removal of approximately 64,000 pre-paid subscribers from the Company's cellular subscriber base following a change to the subscribers counting mechanism. |
Cellcom Israel Ltd. | |||||||||||||||
Disclosure for debenture holders as of September 30, 2014 | |||||||||||||||
Aggregation of the information regarding the debenture series issued by the company (1), in million NIS | |||||||||||||||
Series | Original | Principal | As of 30.09.2014 | As of 11.11.2014 | Interest Rate | Principal Repayment | Interest | Linkage | Trustee | ||||||
Principal | Linked | Interest | Debenture | Market | Principal | Linked | From | To | |||||||
B(4) ** | 22/12/05 02/01/06* 05/01/06* 10/01/06* 31/05/06* | 925.102 | 555.061 | 669.990 | 26.072 | 696.062 | 729.795 | 555.061 | 668.025 | 5.30% | 05/01/13 | 05/01/17 | January 5 | Linked to CPI | Hermetic Trust (1975) |
D ** | 07/10/07 03/02/08* 06/04/09* 30/03/11* 18/08/11* | 2,423.075 | 1,453.846 | 1,712.196 | 22.155 | 1,734.351 | 1,866.010 | 1,453.846 | 1,707.175 | 5.19% | 01/07/13 | 01/07/17 | July 1 | Linked to CPI | Hermetic Trust (1975) |
E ** | 06/04/09 30/03/11* 18/08/11* | 1,798.962 | 899.481 | 899.481 | 41.278 | 940.759 | 996.985 | 899.481 | 899.481 | 6.25% | 05/01/12 | 05/01/17 | January 5 | Not linked | Hermetic Trust (1975) |
F(4)(5)(6)**
| 20/03/12 | 714.802 | 714.802 | 739.679 | 8.110 | 747.789 | 856.619 | 714.802 | 737.511 | 4.60% | 05/01/17 | 05/01/20 | January 5 and July 5 | Linked to CPI | Strauss Lazar Trust |
G(4)(5)(6) | 20/03/12 | 285.198 | 285.198 | 285.198 | 4.752 | 289.950 | 336.933 | 285.198 | 285.198 | 6.99% | 05/01/17 | 05/01/19 | January 5 and July 5 | Not linked | Strauss Lazar Trust |
H(4)(5) | 08/07/14 | 105.962 | 105.962 | 106.274 | 0.490 | 106.764 | 110.582 | 105.962 | 105.962 | 1.98% | 05/07/18 | 05/07/24 | January 5 and July 5 | Linked to CPI | Mishmeret Trust |
I(4)(5) | 08/07/14 | 222.667 | 222.667 | 222.667 | 2.147 | 224.814 | 237.897 | 222.667 | 222.667 | 4.14% | 05/07/18 | 05/07/25 | January 5 and July 5 | Not linked | Mishmeret Trust |
Total | 6,475.768 | 4,237.017 | 4,635.485 | 105.004 | 4,740.489 | 5,134.821 | 4,237.017 | 4,626.018 |
Comments: | |
(1) In the reporting period, the company fulfilled all terms of the debentures. The company also fulfilled all terms of the Indentures. Debentures F through I financial covenants - as of September 30, 2014 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, 2013 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Debt Service ") was 2.39 (the net leverage without excluding one-time events was 2.34). In the reporting period, no cause for early repayment occurred. (2) Including interest accumulated in the books and excluding net balance of premium on debentures and deferred issuance expenses. (3) Annual payments, excluding series F through I debentures in which the payments are semi-annual. (4) Regarding Debenture series B and F through I - the company undertook not to create any pledge on its assets, as long as debentures are not fully repaid, subject to certain exclusions. (5) Regarding Debenture series F through I- the company has the right for early redemption under certain terms (see the Company's annual report for the year ended December 31, 2013 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects– B. Liquidity and Capital Resources – Debt Service"). (6) Regarding Debenture series F and G - in June 2013, following a second 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. |
(*) | On these dates, additional debentures of the series were issued. The information in the table refers to the full series. |
(**) | Series B, D, E and F 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, 2014 (cont.) | ||||||||
Debentures rating details* | ||||||||
Series | Rating | Rating as of | Rating as of | Rating assigned | Recent date of rating | Additional ratings between original issuance and the recent date | ||
Rating | ||||||||
B | S&P Maalot | A+ | A+ | AA- | 08/2014 | 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 | AA-,AA,AA-,A+ (2) | |
D | S&P Maalot | A+ | A+ | AA- | 08/2014 | 1/2008, 10/2008, 3/2009, 9/2010, 8/2011, 1/2012, 3/2012, 5/2012,11/2012, 6/2013, 6/2014, 8/2014 | AA-, AA,AA-,A+ (2) | |
E | S&P Maalot | A+ | A+ | AA | 08/2014 | 9/2010, 8/2011, 1/2012, 3/2012, 5/2012,11/2012, 6/2013, 6/2014, 8/2014 | AA,AA-,A+ (2) | |
F | S&P Maalot | A+ | A+ | AA | 08/2014 | 5/2012,11/2012, 6/2013, 6/2014, 8/2014 | AA,AA-,A+ (2) | |
G | S&P Maalot | A+ | A+ | AA | 08/2014 | 5/2012,11/2012, 6/2013, 6/2014, 8/2014 | AA,AA-,A+ (2) | |
H | S&P Maalot | A+ | A+ | A+ | 08/2014 | 08/2014 | A+ (2) | |
I | S&P Maalot | A+ | A+ | A+ | 08/2014 | 08/2014 | A+ (2) |
(1) | In August 2014, 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, S&P Maalot Issued a notice of "ilA+" ranking for new series H and I debentures issued in July 2014. For details regarding the rating of the debentures see the S&P Maalot report dated August 18, 2014. |
* 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, 2014 | |
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 | |||||
ILS linked | ILS not | Euro | Dollar | Other | ||
First year | 752,789 | 292,235 | - | - | - | 236,493 |
Second year | 752,789 | 292,235 | - | - | - | 178,980 |
Third year | 824,109 | 348,643 | - | - | - | 117,800 |
Fourth year | 226,713 | 163,286 | - | - | - | 46,771 |
Fifth year and on | 521,442 | 285,012 | - | - | - | 64,489 |
Total | 3,077,841 | 1,381,410 | - | - | - | 644,534 |
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) – None |
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 |
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 | |||||
ILS linked | ILS not | Euro | Dollar | Other | ||
First year | 752,789 | 292,235 | - | - | - | 236,493 |
Second year | 752,789 | 292,235 | - | - | - | 178,980 |
Third year | 824,109 | 348,643 | - | - | - | 117,800 |
Fourth year | 226,713 | 163,286 | - | - | - | 46,771 |
Fifth year and on | 521,442 | 285,012 | - | - | - | 64,489 |
Total | 3,077,841 | 1,381,410 | - | - | - | 644,534 |
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). |
Cellcom Israel Ltd. |
Summary of Financial Undertakings (according to repayment dates) as of September 30, 2014 (cont.) |
Principal payments | Gross interest | |||||
ILS | ILS not | Euro | Dollar | Other | ||
First year | - | 25 | - | - | - | - |
Second year | - | - | - | - | - | - |
Third year | - | - | - | - | - | - |
Fourth year | - | - | - | - | - | - |
Fifth year and on | - | - | - | - | - | - |
Total | - | 25 | - | - | - | - |
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 | |||||
ILS | ILS not | Euro | Dollar | Other | ||
First year | 41,273 | 7,592 | - | - | - | 9,325 |
Second year | 41,273 | 7,592 | - | - | - | 6,696 |
Third year | 43,921 | 8,224 | - | - | - | 3,985 |
Fourth year | 7,943 | 1,580 | - | - | - | 1,035 |
Fifth year and on | 15,887 | 948 | - | - | - | 764 |
Total | 150,298 | 25,936 | - | - | - | 21,805 |
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 |
SOURCE Cellcom Israel Ltd.