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Cellcom Israel Announces First Quarter 2009 Results
Cellcom Israel Presents a Record Net Income - Increase of 27.5% and an Increase in Operating Income, EBITDA, EBITDA Margin, Despite the Economic Slowdown, Ongoing Price Erosions and Growing Competition
NETANYA, Israel, May 26 /PRNewswire-FirstCall/ --
- EBITDA(1) Up by 3.0%; Record EBITDA Margin of Over 39%
- Cellcom Israel Declares a First Quarter Dividend of NIS 3.36 per
Share (Totals Approx. NIS 330 Million)
First Quarter 2009 Highlights (compared to the first quarter 2008):
- Total Revenues from services increased 1.1% to NIS 1,373
million ($328 million)
- Revenues from content and value added services (including
SMS) increased 36.5%, reaching 14.7% of services revenues
- Total Revenues (including revenues from end-user equipment)
totaled NIS 1,561 million ($373 million), a 2.1% decrease resulting
from a 20.7% decrease in handset and accessories' revenues
- EBITDA increased 3.0% to NIS 611 million ($146 million);
EBITDA margin 39.1%, up from 37.2%
- Operating income increased 4.2% to NIS 442 million ($105
million)
- Net income increased 27.5% to NIS 348 million ($83 million)
- Subscriber base increased approx. 21,000 during the first
quarter; reaching approx. 3.208 million at the end of March 2009
- 3G subscribers reached approx. 833,000 at the end of March
2009, net addition of approx. 102,000 in the first quarter 2009
- The Company Declared first quarter dividend of NIS 3.36 per
share
Cellcom Israel Ltd. (NYSE: CEL, TASE: CEL) ("Cellcom Israel", the
"Company"), announced today its financial results for the first quarter of
2009. Revenues for the first quarter 2009 totaled
Commenting on the results,
This quarter, Cellcom Israel continued to show strong profitability, with
operating and net income increasing to new levels. These results are mainly
due to our focusing on our core business, efficiency measures and improvement
of our subscriber base. These achievements are especially noteworthy in light
of the current macroeconomic environment, driving a decline in roaming
revenues on inbound and outbound tourism, as well as an increase in allowance
for doubtful accounts which may also have been influenced by the global
economic slowdown, in addition to the challenging competitive landscape and
ongoing price erosions. I want to thank all our employees and managers for
the achievements this quarter, as well as for successfully implementing the
widespread efficiency measures in this fluid economic environment, further
enhancing our status as the leading cellular company in
"We at Cellcom Israel, the cellular company which serves the highest
number of cellular subscribers in
"We continue to grow and expand our 3G subscriber base, and in the first
quarter we once again witnessed an ongoing increase in 3G subscribers,
reaching 833,000 at the end of
Main Financial and Performance Indicators:
Q1/2009 Q1/2008 % Change Q1/2009 Q1/2008
million NIS million US$
(convenience
translation)
Total Services revenues 1,373 1,358 1.1% 327.8 324.3
Revenues from content and
value added services 202 148 36.5% 48.2 35.3
Handset and accessories
revenues 188 237 (20.7%) 44.9 56.6
Total revenues 1,561 1,595 (2.1%) 372.7 380.9
Operating Profit 442 424 4.2% 105.5 101.2
Net Income 348 273 27.5% 83.1 65.2
Cash Flow from Operating
Activities, net of
Investing Activities 393 71 453.5% 93.8 17.0
EBITDA 611 593 3.0% 145.9 141.6
EBITDA, as percent of
Revenues 39.1% 37.2% 5.1%
Subscribers end of period
(in thousands) 3,208 3,096 3.6%
Estimated Market Share(2) 34.8% 34.6%
Monthly ARPU 139.9 144.5 (3.2%) 33.4 34.5
Average Monthly MOU * 323.0 327.2 (1.3%)
* Following the regulatory requirement to change the basic airtime
charging unit from twelve-second to one-second units commencing
Financial Review
Revenues for the first quarter of 2009 totaled
Cost of revenues for the first quarter of 2009 totaled
Gross profit for the first quarter of 2009 incresed 5.4% reaching
Selling, Marketing, General and Administrative Expenses ("SG&A Expenses")
for the first quarter of 2009 totaled
Operating income for the first quarter 2009 increased 4.2%, reaching
EBITDA for the first quarter 2009 increased 3.0%, reaching
Financing Income, net for the first quarter 2009 totaled
Net Income for the first quarter 2009 increased 27.5%, reaching
Operating Review
New Subscribers - at the end of
In the first quarter of 2009, the Company added approximately 102,000 net
new 3G subscribers to its 3G subscriber base, reaching approximately 833,000
3G subscribers at the end of
The Churn Rate in the first quarter 2009 was 5.0%, compared to 5.3% in the first quarter last year. The churn for both quarters primarily consists from lower contribution pre-paid subscribers and subscribers with collection problems.
Average monthly subscriber Minutes of Use ("MOU") in the first quarter
2009 totaled 323 minutes, compared to 327.2 minutes in the first quarter
2008, a decrease of 1.3%. The decline in usage level is mainly due to fewer
working days in the first quarter of 2009 than in the first quarter last
year. Following the regulatory requirement to change the basic airtime
charging units from twelve-second to one-second units commencing
The monthly Average Revenue per User (ARPU) for the first quarter 2009
decreased 3.2% and totaled
Financing and Investment Review
Cash Flow
Free cash flow (Cash provided by operating activities, net of cash used
in investing activities) for the first quarter of 2009 totaled
Shareholders' Equity
Shareholders' Equity as of
Investment in Fixed Assets and Intangible Assets
During the first quarter 2009, the Company invested
Subscriber acquisition and retention costs
Under the Company's current accounting policies, capitalized customer acquisition and retention costs include only those deferred costs in respect of sales commissions related to the acquisition and retention of subscribers, if the costs can be measured reliably and are directly attributable to obtaining a specific subscriber.
The Company's current accounting policy is to recognize subsidies on
handset sales as an expense in the period incurred. Management is evaluating
certain subsidies, related to handsets sold together with a service agreement
with guaranteed minimum future revenue, as additional costs that might be
eligible for capitalization. If the Company were to defer and capitalize such
subsidies, management estimates that the Company's retained earnings as of
Dividend
On
Other developments
Shelf Prospectus and Issuance of Debentures
In
In
For additional details on the Company's debentures see the Company's
annual report for the year ended
These reports are available on the Company's website at: http://www.cellcom.co.il
Conference Call Details
The Company will be hosting a conference call on
US Dial-in Number: 1-866-527-8676 UK Dial-in Number: 0-800-917-4613
Israel Dial-in Number: 03-918-0691 International Dial-in Number: +972-3-918-0691
at:
To access the live webcast of the conference call, please access the investor relations section of Cellcom Israel's website: http://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 leading Israeli cellular
provider; Cellcom Israel provides its approximately 3.208 million subscribers
(as at
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 us, may include
projections of our future financial results, our anticipated growth
strategies and anticipated trends in our business. These statements are only
predictions based on our current expectations and projections about future
events. There are important factors that could cause our 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 our license, new
legislation or decisions by the regulator affecting our operations, the
outcome of legal proceedings to which we are a party, particularly class
action lawsuits, our ability to maintain or obtain permits to construct and
operate cell sites, and other risks and uncertainties detailed from time to
time in our filings with the U.S. Securities and Exchange Commission,
including under the caption "Risk Factors" in our Annual Report for the year
ended
Although we believe the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We assume no duty to update any of these forward-looking statements after the date hereof to conform our 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 US$\New Israeli Shekel (NIS) conversion
rate of
Use of non-GAAP financial measures
EBITDA is a non-GAAP measure and is defined as income before financing income (expenses), net; other income (expenses), net; income tax; depreciation and amortization. This is an accepted measure in the communications industry. The Company presents this measure as an additional performance measure as the Company believes that it enables us to compare operating performance between periods and companies, net of any potential differences which may result from differences in capital structure, taxes, age of fixed assets and related depreciation expenses. EBITDA should not be considered in isolation, or as a substitute for operating income, any other performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as measures of profitability or liquidity. EBITDA does not take into account debt service requirements, or other commitments, including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company's use. In addition, EBITDA may not be comparable to similarly titled measures reported by other companies, due to differences in the way these measures are calculated. See the reconciliation between the net income and the EBITDA presented at the end of this Press Release.
Free cash flow is a non-GAAP measure and is defined as the net cash provided by operating activities minus the net cash used in investing activities. See the reconciliation note at the end of this Press Release.
Financial Tables Follow
Cellcom Israel Ltd.
(An Israeli Corporation)
Condensed Consolidated Balance Sheets
Convenience
translation
into US
dollar
March 31, March 31, March 31, December
31,
2009 2009 2008 2008
NIS millions US$ NIS millions NIS
millions millions
(Unaudited) (Unaudited) (Unaudited) (Audited)
Assets
Cash and cash equivalents 152 36 826 275
Trade receivables 1,518 362 1,438 1,478
Other receivables,
including derivatives 138 33 125 112
Inventory 128 31 236 119
Total current assets 1,936 462 2,625 1,984
Trade and other
receivables 612 146 579 602
Property, plant and
equipment, net 2,100 502 2,265 2,159
Intangible assets, net 665 159 681 675
Total non- current assets 3,377 807 3,525 3,436
Total assets 5,313 1,269 6,150 5,420
Liabilities
Debentures current
maturities 327 78 280 329
Trade payables and
accrued expenses 686 164 709 677
Current tax liabilities 102 24 49 65
Provisions 52 13 91 47
Other current
liabilities, including
derivatives 318 76 341 385
Dividend declared - - 700 -
Total current liabilities 1,485 355 2,170 1,503
Debentures 3,213 767 3,425 3,401
Provisions 18 4 14 17
Other long-term
liabilities - - 2 1
Deferred taxes 158 38 143 156
Total non- current
liabilities 3,389 809 3,584 3,575
Total liabilities 4,874 1,164 5,754 5,078
Shareholders' equity
Share capital 1 - 1 1
Cash flow hedge reserve 8 2 (51) (11)
Retained earnings 430 103 446 352
Total shareholders'
equity 439 105 396 342
Total liabilities and
shareholders' equity 5,313 1,269 6,150 5,420
Cellcom Israel Ltd.
(An Israeli Corporation)
Condensed Consolidated Statements of Income
Year
Three-month period ended ended
March 31, December 31,
Convenience
translation
into US
dollar
2009 2009 2008 2008
NIS millions US$ NIS millions NIS
millions millions
(Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues 1,561 373 1,595 6,417
Cost of revenues 806 193 879 3,402
Gross profit 755 180 716 3,015
Selling and marketing
expenses 157 38 156 701
General and administrative
expenses 154 37 154 659
Other (income) expenses,
net 2 - (18) (29)
Operating income 442 105 424 1,684
Financing income 60 14 62 83
Financing expenses (32) (7) (107) (393)
Financing costs, net 28 7 (45) (310)
Income before income tax 470 112 379 1,374
Income tax 122 29 106 389
Net income 348 83 273 985
Earnings per share
Basic earnings per share
in NIS 3.54 0.85 2.80 10.08
Diluted earnings per share
in NIS 3.51 0.84 2.76 9.92
Cellcom Israel Ltd.
(An Israeli Corporation)
Condensed Consolidated Statements of Cash Flows
Three- month period ended Year
March 31, ended
December
31,
Convenience
translation
into US
dollar
2009 2009 2008 2008
NIS millions US$ NIS millions NIS
millions millions
(Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flows from operating
activities
Net income for the period 348 83 273 985
Adjustments to reconcile
net income to funds
generated from operations:
Depreciation 121 29 144 570
Amortization 46 11 43 181
Capital gain on sale of
land - - (9) (9)
Loss (gain) on sale of
assets 2 1 (9) (9)
Income tax expense 122 29 106 389
Financial (income) costs,
net (28) (7) 45 310
Share based payments - - 4 28
Changes in operating
assets and liabilities:
Changes in inventories (9) (2) 9 112
Changes in trade
receivables (including
long-
term amounts) (39) (9) (87) (117)
Changes in other
receivables (including
long-
term amounts) (25) (6) (9) (34)
Changes in trade payables
and accrued expenses 66 15 (177) (271)
Changes in other
liabilities (including
long-term
amounts) 9 2 30 99
Payments for inventory
hedging contracts, net 5 1 (9) (38)
Proceeds from (payments
for) derivative
contracts, net 24 6 (5) 18
Income tax paid (90) (21) (161) (451)
Net cash from operating
activities 552 132 188 1,763
Cash flows from investing
activities
Acquisition of property,
plant, and equipment (112) (27) (118) (429)
Acquisition of intangible
assets (47) (11) (54) (175)
Payments for derivative
hedging contracts, net - - (5) (17)
Proceeds from sales of
property, plant and
equipment - - 13 19
Interest received - - 10 17
Proceeds from sale of long
term receivables - - 37 39
Net cash used in investing
activities (159) (38) (117) (546)
Cellcom Israel Ltd.
(An Israeli Corporation)
Condensed Consolidated Statements of Cash Flows (cont'd)
Three-month period ended Year
March 31, ended
December
31,
Convenience
translation
into US
dollar
2009 2009 2008 2008
NIS millions US$ NIS millions NIS
millions millions
(Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flows from financing
activities
Proceeds from derivative
contracts, net 4 1 7 31
Repayment of long-term
loans from banks - - (648) (648)
Repayment of Debentures (164) (39) - (125)
Proceeds from issuance of
debentures, net of
issuance costs - - 589 589
Dividend paid (270) (64) (16) (1,525)
Interest paid (86) (21) (88) (175)
Net cash used in financing
activities (516) (123) (156) (1,853)
Changes in cash and cash
equivalents (123) (29) (85) (636)
Balance of cash and cash
equivalents at
beginning of the period 275 65 911 911
Balance of cash and cash
equivalents at end of
the period 152 36 826 275
Cellcom Israel Ltd.
(An Israeli Corporation)
Reconciliation for Non-GAAP Measures
EBITDA
The following is a reconciliation of net income to EBITDA:
Year
Three-month period ended ended
March 31, December 31,
Convenience
translation
into US
dollar
2009 2009 2008 2008
NIS US$ NIS NIS
millions millions millions millions
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net income...............348 83 273 985
Income taxes.............122 29 106 389
Financing income.........(60) (14) (62) (83)
Financing expenses........32 7 107 393
Other expenses (income)....2 - (18) (29)
Depreciation and
amortization.............167 40 187 751
EBITDA...................611 146 593 2,406
Free Cash Flow
The following table shows the calculation of free cash flow:
Year
Three-month period ended ended
March 31, December 31,
Convenience
translation
into US
dollar
2009 2009 2008 2008
NIS US$ NIS NIS
millions millions millions millions
(Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flows from operating
activities...................552 132 188 1,763
Cash flows from investing
activities..................(159) (38) (117) (546)
Free Cash Flow...............393 94 71 1,217
(1) Please see "Use of Non-GAAP financial measures" section at the end of this press release.
(2) In order to estimate the Company's market share, the Company was
required to estimate the number of subscribers of one additional Israeli
cellular operator Mirs Communications Ltd. ("Mirs"), as at
Company Contact
Shiri Israeli
Investor Relations Coordinator
investors@cellcom.co.il
Tel: +972-52-998-9755
Investor Relations Contact
Ehud Helft / Ed Job
CCGK Investor Relations
ehud@gkir.com / ed.job@ccgir.com
Tel: (US) +1-866-704-6710 / +1-646-213-1914
SOURCE Cellcom Israel Ltd.
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