Cellcom Israel Announces First Quarter 2013 Results The results of the first quarter of 2013 reflect the continued impact of the heightened competition in the cellular market

Cellcom Israel presents an approximately 17% increase in free cash flow[1] for the first quarter of 2013 compared with the first quarter last year

NETANYA, Israel, May 13, 2013 /PRNewswire/ --  

First Quarter 2013 Highlights (compared to first quarter of 2012):

  • Free cash flow increased by 16.7% to NIS 168 million ($46 million)
  • Total Revenues decreased 20.6% to NIS 1,258 million ($345 million)
  • Service revenues decreased 16.9% to NIS 985 million ($270 million)
  • EBITDA1 decreased 33.9% to NIS 314 million ($86 million)
  • EBITDA margin 25%, down from 30%
  • Operating income decreased 49.5% to NIS 139 million ($38 million)
  • Net income decreased 61.3% to NIS 67 million ($18 million)
  • Cellular subscriber base totaled approx. 3.166 million subscribers (at the end of March 2013)

Cellcom Israel Ltd. (NYSE: CEL TASE: CEL) ("Cellcom Israel" or the "Company" or the "Group"), announced today its financial results for the first quarter of 2013. Revenues for the first quarter totaled NIS 1,258 million ($345 million); EBITDA for the first quarter of 2013 totaled NIS 314 million ($86 million), or 25% of total revenues; and net income for the first quarter of 2013 totaled NIS 67 million ($18 million). Basic earnings per share for the first quarter of 2013 totaled NIS 0.67 ($0.18).

1 Please see "Use of Non-IFRS financial measures" section in this press release.

Commenting on the results, Nir Sztern, the Company's Chief Executive Officer, said: "As we expected, the effects of the competition are also reflected in the results of the first quarter of 2013. The aggressive pricing competition during the past year has been fully reflected in the first quarter results. In this quarter we also saw a decline in revenues from cellular handsets, as a result of a decline in prices and a reduction in handset sales.

The Company continues to achieve impressive results in the area of operational excellence. In the first quarter of 2013 we also continued to streamline processes and extract the synergies from the merger with Netvision, and have reached savings at an annual rate of over 600 million NIS, compared to the end of 2011".

In regards to the competition, Nir Sztern noted: "In recent months, the pace of net portability of subscribers to the new operators decelerated significantly and churn of post-paid subscribers from Cellcom Israel decreased, despite the aggressive marketing campaigns in the market.

Cellcom Israel continues to be the cellular company with the best customer service, and the Ministry of Communications' report for 2012, published in April 2013, has nominated Cellcom Israel as the leader of customer service ranking in the cellular industry.

The Company also led the market in the innovations field with the "Cellcom Mobile Show" exhibition. In a short period of time, approximately 100,000 visitors experienced a taste of the most advanced technologies in the world, as they were presented in the cellular and electronic exhibitions in 2013, and personally experienced innovative devices and technologies in the fields of health, finance, photography, gaming and fitness.

Due to the high levels of customer service and the Company's advanced network, we are strengthening our position as the largest cellular company in Israel".

Yaacov Heen, Chief Financial Officer, commented: "In the first quarter of 2013, we generated free cash flow of NIS 168 million, an approximately 17% increase compared with the first quarter of 2012. The increase in free cash flow in the first quarter of 2013 is primarily a result of the decrease in purchase of cellular handsets, due to a significant decrease in sales of such handsets, and the efficiency measures we implemented during the past year.

Due to the capital market's forecast for high inflation in the second quarter, we expect a material increase in financing expenses, which if realized, will cause a material decrease in net income. Furthermore, we expect continued erosion of revenues in the second quarter, although in a more moderate rate than experienced in previous quarters. On the other hand, we expect an improvement in free cash flow in the second quarter compared with the first quarter of this year, mainly due to a continued decrease in the purchase of cellular handsets.

As compared with the first quarter last year, we decreased the Company's gross debt by approximately NIS 700 million. Furthermore, the Company took measures to strengthen its balance sheet, as is reflected by an approximately NIS 300 million increase in the total equity, as compared with the first quarter of 2012.

The Company's Board of Directors decided not to distribute a dividend for the first quarter of 2013, in order to further strengthen the Company's balance sheet at this time of market uncertainty. 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:


Q1/2013

Q1/2012

% Change

Q1/2013

Q1/2012


million NIS

million US$
 (convenience translation)

Total revenues

1,258

1,585

(20.6%)

344.8

434.5

Operating Income

139

275

(49.5%)

38.1

75.4

Net Income

67

173

(61.3%)

18.4

47.4

Free cash flow

168

144

16.7%

46.1

39.5

EBITDA 

314

475

(33.9%)

86.1

130.2

EBITDA, as percent of total revenues

25.0%

30.0%

(16.7%)










 

Main Financial Data by Companies:


Cellcom Israel
without
Netvision

Netvision

Consolidation adjustments

(*)

Consolidated results

Q1/2013

million NIS

Total revenues

1,014

271

(27)

1,258

Service revenues

758

254

(27)

985

Equipment revenues

256

17

-

273

Operating Income

121

37

(19)

139

EBITDA 

251

63

-

314

EBITDA, as percent of total revenues

24.8%

23.2%

-

25.0%

(*) Include inter-company revenues between Cellcom Israel and Netvision, and amortization expenses attributable to the merger.

 

Main Performance Indicators (data refers to cellular subscribers only):


Q1/2013

Q1/2012

Change (%)

Cellular subscribers at the end of period (in thousands)

3,166

3,362

(5.8%)

Churn Rate for cellular subscribers (in %)

9.4%

6.3%

49.2%

Monthly cellular ARPU (in NIS)

75.9

90.5

(16.1%)

Average Monthly cellular MOU (in minutes)

432

365

18.4%

 

Financial Review

Revenues for the first quarter of 2013 decreased 20.6% totaling NIS 1,258 million ($345 million), compared to NIS 1,585 million ($434 million) in the first quarter last year. The decrease in revenues is attributed mainly to a 16.9% decrease in service revenues, which totaled NIS 985 million ($270 million) in the first quarter 2013 as compared to NIS 1,186 million ($325 million) in the first quarter last year. The decrease in revenues also resulted from a 31.6% decrease in equipment revenues, which totaled NIS 273 million ($75 million) in the first quarter of 2013 as compared to NIS 399 million ($109 million) in the first quarter of 2012. Netvision's contribution to revenues for the first quarter of 2013 totaled NIS 244 million ($67 million) (excluding inter-company revenues) compared to NIS 258 million ($71 million) in the first quarter of 2012.

The decrease in first quarter 2013 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 landline services, internet services and extended warranty services, which was partially offset by an increase in revenues from hosting operators on the Company's communications network. Netvision's contribution to service revenues for the first quarter of 2013 totaled NIS 227 million ($62 million) (excluding inter-company revenues) compared to NIS 241 million ($66 million) in the first quarter of 2012.

The decrease in first quarter 2013 equipment revenues resulted from an approximately 29% decrease in the number of cellular handsets sold during the first quarter of 2013 compared with the first quarter of 2012, as well as a decrease in the average cellular handset sale price in the first quarter of 2013 as compared to the first quarter of 2012. Netvision's contribution to equipment revenues for the first quarter of 2013 totaled NIS 17 million ($5 million), similar to the first quarter of 2012.

Cost of revenues for the first quarter of 2013 totaled NIS 784 million ($215 million), compared to NIS 899 million ($246 million) in the first quarter of 2012, a 12.8% decrease. This decrease resulted from a decrease in costs associated with the sale of cellular handsets, primarily as a result of a decrease in the number of cellular handsets sold during the first quarter of 2013 as compared with the first quarter of 2012. The decrease in cost of revenues also resulted from a decrease in payroll expenses, due to the efficiency measures implemented by the Company, and from a decrease in royalty expenses to the Ministry of Communications, due to cancellation of these royalty payments from January 1, 2013. These decreases were partially offset by an increase in interconnect expenses due to increased airtime usage.

Gross profit for the first quarter of 2013 decreased 30.9% to NIS 474 million ($130 million), compared to NIS 686 million ($188 million) in the first quarter of 2012. Gross profit margin for the first quarter 2013 amounted to 37.7%, down from 43.3% in the first quarter of 2012.

Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for the first quarter of 2013 decreased 18.1% to NIS 334 million ($92 million), compared to NIS 408 million ($112 million) in the first quarter of 2012. This decrease is primarily the result of the efficiency measures implemented by the Company, which led to a decrease in payroll expenses, sales commissions and other expenses. The decrease in SG&A expenses also resulted from a decrease in depreciation and amortization expenses.

Operating income for the first quarter 2013 decreased 49.5% to NIS 139 million ($38 million) from NIS 275 million ($75 million) in the first quarter of 2012.

EBITDA for the first quarter of 2013 decreased 33.9% totaling NIS 314 million ($86 million) compared to NIS 475 million ($130 million) in the first quarter of 2012. Netvision's contribution to the EBITDA for the first quarter of 2013 totaled NIS 63 million ($17 million), a slight decrease compared with the first quarter of 2012. EBITDA for the first quarter 2013, as a percent of first quarter revenues, totaled 25%, down from 30% in the first quarter of 2012.

Financing expenses, net for the first quarter of 2013 increased by 27.8% and totaled NIS 46 million ($13 million), compared to NIS 36 million ($10 million) in the first quarter of 2012. The increase resulted mainly from loss on Israeli Consumer Price Index (CPI) hedging transactions in the first quarter of 2013, compared with gain from such transactions in the first quarter of 2012.

Net Income for the first quarter of 2013 totaled NIS 67 million ($18 million), compared to NIS 173 million ($48 million) in the first quarter of 2012, a 61.3% decrease. This decrease is primarily the result of the ongoing erosion in the price of cellular services, as well as the significant decrease in equipment revenues.

Basic earnings per share for the first quarter 2013 totaled NIS 0.67 ($0.18), compared to NIS 1.74 ($0.48) in the first quarter last year.

Operating Review (data refers to cellular subscribers only)

Cellular subscriber base – at the end of March 2013 the Company had approximately 3.166 million cellular subscribers. During the first quarter of 2013 the Company's cellular subscriber base decreased by approximately 33,000 net cellular subscribers, all of them pre-paid subscribers.

Cellular Churn Rate for the first quarter 2013 totaled to 9.4%, compared to 6.3% in the first quarter of 2012. The cellular churn rate was primarily affected by the intensified competition in the cellular market, especially following the entry of the new operators to the cellular market during the second quarter of 2012.

Average monthly cellular Minutes of Use per subscriber ("MOU") for the first quarter 2013 totaled 432 minutes, compared to 365 minutes in the first quarter of 2012, an increase of 18.4%. The increase in MOU primarily resulted from subscribers' transition to marketing plans, which include unlimited air time minutes.

The monthly cellular Average Revenue per User ("ARPU") for the first quarter 2013 totaled NIS 75.9 ($20.8), compared to NIS 90.5 ($24.8) in the first quarter of 2012. The decrease in ARPU resulted, among others, from the ongoing erosion in the price of cellular services, resulting from the intensified competition in the cellular market.

Financing and Investment Review

Cash Flow

Free cash flow for the first quarter of 2013, increased by 16.7% to NIS 168 million ($46 million), compared to NIS 144 million ($39 million) in the first quarter of 2012. The increase in free cash flow was mainly due to a decrease in payments for acquisition of fixed assets and a decrease in payments to vendors for cellular handset purchases, as a result of the decrease in sales of such handsets. These decreases were partially offset by a decrease in proceeds from customers due to the decrease in revenues in the first quarter of 2013 compared with the first quarter of 2012, resulting from the intensified competition in the cellular market.

Total Equity

Total Equity as of March 31, 2013 amounted to NIS 565 million ($155 million), primarily consisting of accumulated undistributed retained earnings of the Company.

Investment in Fixed Assets and Intangible Assets

During the first quarter of 2013, the Company invested NIS 82 million ($22 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 188 million ($52 million) in the first quarter of 2012. The decrease resulted mainly from an extensive investment in the upgrade of the Company's UMTS and transmission networks during the first quarter of last year.

Dividend

On May 13, 2013, the Company's board of directors decided not to declare a cash dividend for the first quarter of 2013. In making its decision, the board of directors considered the Company's dividend policy and business status and determined, that given the continued intensified competition and substantial changes in pricing and their continued current and expected adverse effect on the Company's results of operations, the Company should wait for the competitive situation to clarify, to strengthen the Company's balance sheet and not distribute a dividend at this time. 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, 2012 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 March 31, 2013, see "Disclosure for Debenture Holders" section in this press release.

Other developments during the first quarter of 2013 and subsequent to the end of the reporting period

End User Equipment Agreement

In May 2013, the Company entered an additional agreement with Apple Distribution International, for the purchase and distribution of  iPhone products in Israel, following the lapse of the previous agreement term for the purchase and distribution of iPhone products in Israel, in the agreement executed in 2009. Under the terms of the new agreement, the Company has committed to purchase a minimum quantity of iPhone products over a period of three years, which is expected to represent a significant portion of the Company's expected cellular phones purchase amount over that period. The total amount of the purchases will depend on the iPhone products purchase price at the time of purchase.

Changes in Management – Netvision Vice President of Sales and Service

In April 2013, following a unification of the Sales and Service division and Netvision Sales and Service division, Ms. Liat Straus concluded her service as Netvision VP of Sales and Service. Mr. Amos Maor, VP of Sales and Service is responsible for the unified division as of that time.

Primary Organization of Employees

In April 2013, the Group received a notice from the Histadrut, an Israeli labor union, of a primary organization of Cellcom Israel and Netvision's employees under a labor union. To date, no notification was received of the joining of the required minimum number of employees for the organization to be recognized as a representing labor union.

Conference Call Details

The Company will be hosting a conference call on Monday, May 13, 2013 at 9:00 am EDT, 06:00 am PDT, 14:00 GMT, 16:00 Israel time. On the call, management will review and discuss the results, and will be available to answer questions. To participate, please either access the live webcast on the Company's website, or call one of the following teleconferencing numbers below. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number: 1 866 652 8972    

UK Dial-in Number: 0 800 917 9141

Israel Dial-in Number: 03 918 0692     

International Dial-in Number:  +972 3 918 0692

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 leading Israeli cellular provider; Cellcom Israel provides its approximately 3.166 million subscribers (as at March 31, 2013) 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 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, 2012. 

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 3.648 = US$ 1 as published by the Bank of Israel for March 31, 2013.

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 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-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 the reconciliation note in this Press Release.

Company Contact

Yaacov Heen

Chief Financial Officer

investors@cellcom.co.il

Tel: +972 52 998 9755

IR Contacts

Porat Saar

CCG Investor Relations Israel & US

cellcom@ccgisrael.com  

Tel: +1 646 233 2161


Financial Tables Follow

 

Cellcom Israel Ltd.
(An Israeli Corporation)











Condensed Consolidated Interim Statements of Financial Position










Convenience










translation










into US dollar






March 31,


March 31,


March 31,


December 31,




2012


2013


2013


2012




NIS millions


US$ millions


NIS millions












Assets










Cash and cash equivalents


588


846


232


1,414


Current investments, including derivatives


902


492


135


493


Trade receivables


1,868


1,828


501


1,856


Other receivables


110


83


23


67


Inventory


163


118


32


112












Total current assets


3,631


3,367


923


3,942












Trade and other receivables


1,419


1,119


307


1,219


Property, plant and equipment, net


2,155


2,023


554


2,077


Intangible assets, net


1,643


1,482


406


1,515


Deferred tax assets


37


32


9


34












Total non- current assets


5,254


4,656


1,276


4,845












Total assets


8,885


8,023


2,199


8,787












Liabilities










Short term credit and current maturities of long        term loans and debentures


752


1,087


298


1,129


Trade payables and accrued expenses


930


676


185


827


Current tax liabilities


84


75


21


87


Provisions


149


178


49


175


Other payables, including derivatives


471


386


106


492


Dividend declared


72


-


-


-












Total current liabilities


2,458


2,402


659


2,710












Long-term loans from banks


19


10


3


10


Debentures


5,879


4,845


1,328


5,368


Provisions


21


20


5


21


Other long-term liabilities


46


20


5


21


Liability for employee rights upon retirement, net


15


16


4


12


Deferred tax liabilities


165


145


40


145












Total non- current liabilities


6,145


5,056


1,385


5,577












Total liabilities


8,603


7,458


2,044


8,287












Equity attributable to owners of the Company










Share capital


1


1


-


1


Cash flow hedge reserve


-


(17)


(5)


(12)


Retained earnings


277


579


159


509












Non-controlling interest


4


2


1


2












Total equity


282


565


155


500












Total liabilities and equity


8,885


8,023


2,199


8,787
































Cellcom Israel Ltd.
(An Israeli Corporation)











Condensed Consolidated Interim Statements of Income
















Convenience










translation 










into US dollar






Three-month
 period ended
  March 31,


Three- month
period ended
  March 31,


Year ended
December 31,




2012


2013


2013


2012




NIS millions


US$ millions


NIS millions












Revenues


1,585


1,258


345


5,938


Cost of revenues


(899)


(784)


(215)


(3,463)












Gross profit


686


474


130


2,475












Selling and marketing expenses


(236)


(181)


(50)


(865)


General and administrative expenses


(172)


(153)


(42)


(629)


Other income (expenses), net


(3)


(1)


-


4












Operating profit


275


139


38


985












Financing income


45


41


11


181


Financing expenses


(81)


(87)


(24)


(440)


Financing expenses, net


(36)


(46)


(13)


(259)












Profit before taxes on income


239


93


25


726












Taxes on income


(66)


(26)


(7)


(195)


Profit for the period


173


67


18


531


Attributable to:










Owners of the Company


173


67


18


530


Non-controlling interests


-


-


-


1


Profit for the period


173


67


18


531












Earnings per share










Basic earnings per share (in NIS)


1.74


0.67


0.18


5.34












Diluted earnings per share (in NIS)


1.74


0.67


0.18


5.33






















 

Cellcom Israel Ltd.
(An Israeli Corporation)










Condensed Consolidated Interim Statements of Cash Flows















Convenience









translation









into US dollar





Three-month
 period ended
March 31,


Three- month
 period ended
  March 31,


Year ended
December 31,







2012


2013


2013


2012



NIS millions


US$ millions


NIS millions










Cash flows from operating activities









Profit for the period


173


67


18


531

Adjustments for: 









Depreciation and amortization


196


171


47


765

Share based payments


1


3


1


7

Loss on sale of property, plant and equipment


1


1


-


2

Gain on sale of shares in an associate 


-


-


-


(6)

Income tax expense


66


26


7


195

Financing expenses, net


36


46


13


259

Other expenses


1


-


-


2










Changes in operating assets and liabilities:









Change in inventory


7


(7)


(2)


52

Change in trade receivables (including long-term amounts)


(58)


150


41


183

Change in other receivables (including long-term amounts)


(18)


(20)


(5)


6

Change in trade payables, accrued expenses and provisions


(69)


(112)


(31)


(89)

Change in other liabilities (including long-term amounts)


19


(11)


(3)


(92)

Proceeds from (payments for) derivative hedging contracts, net


3


(1)


-


20

Income tax paid


(55)


(35)


(10)


(209)

Income tax received


-


-


-


15

Net cash from operating activities


303


278


76


1,641










Cash flows from investing activities









Acquisition of property, plant, and equipment


(135)


(88)


(24)


(457)

Acquisition of intangible assets


(27)


(26)


(7)


(97)

Change in current investments, net


(621)


(4)


(1)


(212)

Proceeds from (payments for) other derivative contracts, net


2


(3)


(1)


9

Proceeds from sale of property, plant and equipment


-


5


1


7

Interest received 


2


11


3


35

Proceeds from sale of shares in a consolidated company 


-


-


-


7

Loan to equity accounted investee


(1)


-


-


-

Net cash used in investing activities


(780)


(105)


(29)


(708)



















 

Cellcom Israel Ltd.
(An Israeli Corporation)










Condensed Consolidated Interim Statements of Cash Flows (cont'd)















Convenience









translation









into US dollar





Three-month
 period ended
March 31,


Three- month
 period ended
  March 31,


Year ended
December 31,







2012


2013


2013


2012



NIS millions


US$ millions


NIS millions










Cash flows from financing activities









Payments for derivative contracts, net


(1)


-


-


(12)

Repayment of long term loans from banks


-


-


-


(16)

Repayment of debentures


(479)


(561)


(154)


(660)

Proceeds from issuance of debentures, net of issuance costs


992


-


-


992

Dividend paid


(189)


-


-


(391)

Interest paid


(181)


(180)


(49)


(352)










Net cash from (used in) financing activities


142


(741)


(203)


(439)










Cash balance presented under assets held for sale


3


-


-


-










Changes in cash and cash equivalents


(332)


(568)


(156)


494










Cash and cash equivalents as at the beginning of the period


920


1,414


388


920










Cash and cash equivalents as at the end of the period


588


846


232


1,414

 

 

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

March 31,

Year ended

December 31,


2012

NIS millions

2013

NIS millions

Convenience

translation

into US dollar

2013

US$ millions

2012

NIS millions

Profit for the period

173

67

18

531

Taxes on income

66

26

7

195

Financing income

(45)

(41)

(11)

(181)

Financing expenses

81

87

24

440

Other expenses (income)

3

1

-

(4)

Depreciation and amortization

196

171

47

765

Share based payments

1

3

1

7

EBITDA

475

314

86

1,753

 

Free cash flow






The following table shows the calculation of free cash flow:




Three-month period ended

March 31,

Year ended

December 31,


2012

NIS millions

2013

NIS millions

Convenience

translation

into US dollar

2013

US$ millions

2012

NIS millions

Cash flows from operating activities

303

278

76

1,641

Cash flows from investing activities

(780)

(105)

(29)

(708)

Short-term Investment in (sale of) tradable debentures and deposits(*)

621

(5)

(1)

197

Free cash flow

144

168

46

1,130

 (*) Net of interest received in relation to tradable debentures.

 

Cellcom Israel Ltd.
(An Israeli Corporation)









Key financial and operating indicators (unaudited)
















NIS millions unless otherwise stated

Q1-2012

Q2-2012

Q3-2012

Q4-2012

Q1-2013

FY-2011

FY-2012









Cellcom service revenues

945

942

902

828

758

4,420

3,617

Netvision service revenues

258

258

276

260

254

365

1,052









Cellcom equipment revenues

382

297

285

310

256

1,712

1,274

Netvision equipment revenues

17

19

15

31

17

35

82









Consolidation adjustments

(17)

(18)

(30)

(22)

(27)

(26)

(87)

Total revenues

1,585

1,498

1,448

1,407

1,258

6,506

5,938









Cellcom EBITDA

410

399

355

306

251

2,084

1,470

Netvision EBITDA

65

75

75

68

63

83

283

Total EBITDA

475

474

430

374

314

2,167

1,753









Operating profit

275

282

239

189

139

1,422

985

Financing expenses, net

36

117

64

42

46

293

259

Profit for the period

173

121

124

113

67

825

531









Free cash flow

144

284

414

288

168

937

1,130









Cellular subscribers at the end of period (in 000's)

3,362

3,333

3,338

* 3,199

3,166

3,349

3,199

Monthly cellular ARPU (in NIS)

90.5

90.3

86.7

82.4

75.9

106

87.5

Average monthly cellular MOU (in minutes)

365

375

399

428

432

346

390

Churn rate for cellular subscribers (%)

6.3%

8.1%

8.6%

8.7%

9.4%

25.1%

31.5%

* After removal of approximately 138,000 data applications subscribers (M2M) from the Company's cellular subscriber base.


Cellcom Israel Ltd.

Disclosure for debenture holders as of March 31, 2013

Aggregation of the information regarding the debenture series issued by the company (1), in million NIS

Series

Original Issuance Date

Principal on the Date of Issuance

As of 31.03.2013

As of 12.05.2013

Interest Rate(fixed)

Principal Repayment Dates (3)

Interest Repayment Dates

Linkage

Trustee

Contact Details

Principal

Balance on Trade

Linked Principal Balance

Interest Accumulated in Books

Debenture Balance   Value in Books(2)

Market Value

Principal Balance on Trade

Linked Principal Balance

From

To

B(4) **

22/12/05

02/01/06*

05/01/06*

10/01/06*

31/05/06*

925.102

740.081

875.855

10.810

886.665

967.065

740.081

877.601

5.30%

05.01.13

05.01.17

  January 5

Linked to CPI

Hermetic Trust (1975) Ltd.
Meirav Ofer Oren. 113
Hayarkon St., Tel Aviv.
Tel: 03-5274867.

D **

07/10/07

03/02/08*

06/04/09*

30/03/11*

18/08/11*

2,423.075

2,423.075

2,797.870

108.609

2,906.478

3,160.417

2,423.075

2,803.449

5.19%

01.07.13

01.07.17

July 1

Linked to CPI

Hermetic Trust (1975) Ltd. Meirav Ofer Oren. 113 Hayarkon St., Tel Aviv.
Tel: 03-5274867.

E **

06/04/09

30/03/11*

18/08/11*

1,798.962

1,199.308

1,199.308

17.456

1,216.764

1,288.777

1,199.308

1,199.308

6.25%

05.01.12

05.01.17

January 5

Not linked

Hermetic Trust (1975) Ltd. Meirav Ofer Oren. 113 Hayarkon St., Tel Aviv.
Tel: 03-5274867.

F(4) (5) **

 

20/03/12

714.802

714.802

725.218

7.347

732.565

807.941

714.802

726.665

4.35%

05.01.17

05.01.20

January 5

and July 5

Linked to CPI

Strauss Lazar Trust Company (1992) Ltd

Ori Lazar

17 Yizhak Sadeh St., Tel Aviv.
Tel: 03- 6237777

G(4) (5)

20/03/12

285.198

285.198

285.198

4.559

289.757

321.133

285.198

285.198

6.74%

05.01.17

05.01.19

January 5

and July 5

Not linked

Strauss Lazar Trust Company (1992) Ltd

Ori Lazar

17 Yizhak Sadeh St., Tel Aviv.
Tel: 03- 6237777

Total


6,147.139

5,362.464

5,883.449

148.780

6,032.230

6,545.333

5,362.464

5,892.221







Comments:

(1) In the reported period, the company fulfilled all terms of the debentures. The company also fulfilled all terms of the Indentures. Debentures F and G financial covenants  - as of March 31, 2013  the net leverage (net debt to EBITDA ratio- see definition in the Company's annual report for the year ended December 31, 2012 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Debt Service – Shelf prospectus") was 2.9. In the reported period, no cause for early repayment occurred. (2) Including interest accumulated in the books. (3) Annual payments, excluding series F and G debentures in which the payments are semi annual. (4) Regarding Debenture series  B, F and G- 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 and G - the company has the right for early redemption under certain terms (see the Company's annual report for the year ended December 31, 2012 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects– B. Liquidity and Capital Resources – Debt Service – Shelf prospectus").

(*) 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 March 31, 2013 (cont.)


Debentures Rating Details*

Series

Rating Company

Rating as of 31.03.2013  (1)

Rating as of 12.05.2013

Rating assigned upon  issuance of the Series

 Recent date of rating as of  12.05.2013

Additional ratings between original issuance and the recent date of rating as of 12.05.2013 (2)


Rating

B

S&P Maalot

AA-

AA-

AA-

Nov-12

5/2006, 9/2007, 1/2008, 10/2008, 3/2009, 9/2010, 8/2011, 1/2012, 3/2012, 5/2012, 11/2012

AA-, AA,AA- (2)

D

S&P Maalot

AA-

AA-

AA-

Nov-12

1/2008, 10/2008, 3/2009, 9/2010, 8/2011, 1/2012, 3/2012, 5/2012,11/2012

A-, AA,AA- (2)

E

S&P Maalot

AA-

AA-

AA

Nov-12

9/2010, 8/2011, 1/2012, 3/2012, 5/2012,11/2012

 

AA,AA- (2)

F

S&P Maalot

AA-

AA-

AA

Nov-12

5/2012,11/2012

AA,AA- (2)

G

S&P Maalot

AA-

AA-

AA

Nov-12

5/2012,11/2012     

 

AA,AA- (2)

(1)     In May 2012, S&P Maalot updated the Company's rating from an "ilAA/negative" to an "ilAA-/negative".

(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". For details regarding the rating of the debentures see the S&P Maalot report dated November 4, 2012.

* 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 March 31, 2013

a.       Debentures issued to the public by the Company and held by the public, excluding such debentures held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company,  based on the Company's "solo" financial data (in thousand NIS).

 


Principal payments

Gross interest
payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

735,651

290,049

-

-

-

303,275

Second year

735,651

290,049

-

-

-

246,739

Third year

735,651

290,049

-

-

-

190,204

Fourth year

805,839

346,884

-

-

-

133,804

Fifth year and on

1,160,531

227,342

-

-

-

103,473

Total

4,173,322

1,444,372

-

-

-

977,495

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
payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

735,651

290,049

-

-

-

303,275

Second year

735,651

290,049

-

-

-

246,739

Third year

735,651

290,049

-

-

-

190,204

Fourth year

805,839

346,884

-

-

-

133,804

Fifth year and on

1,160,531

227,342

-

-

-

103,473

Total

4,173,322

1,444,372

-

-

-

977,495

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 March 31, 2013 (cont.)

 


Principal payments

Gross interest
payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

-

8,681

-

-

-

949

Second year

-

5,041

-

-

-

452

Third year

-

5,041

-

-

-

150

Fourth year

-

4

-

-

-

-

Fifth year and on

-

-

-

-

-

-

Total

-

18,767

-

-

-

1,550

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).

 


Principal payments

Gross interest
payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

-

12

-

-

-

3

Second year

-

12

-

-

-

2

Third year

-

12

-

-

-

1

Fourth year

-

12

-

-

-

1

Fifth year and on

-

-

-

-

-

-

Total

-

46

-

-

-

7

j.        Total balances of credit granted to the Company by companies held by the parent company or the controlling shareholder, which are not controlled by the Company, and balances of debentures offered by the Company held by companies held by the parent company or the controlling shareholder, which are not controlled by the Company (in thousand NIS).

 


Principal payments

Gross interest
payments
(without deduction of tax)

ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

42,887

9,767

-

-

-

14,078

Second year

42,887

9,767

-

-

-

11,228

Third year

42,887

9,767

-

-

-

8,378

Fourth year

45,221

9,971

-

-

-

5,532

Fifth year and on

51,740

817

-

-

-

3,498

Total

225,622

40,088

-

-

-

42,714

 


Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of March 31, 2013 (cont.)

 

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.



RELATED LINKS
http://investors.ircellcom.co.il/events.cfm

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.