Cellcom Israel Announces Second Quarter 2012 Results

NETANYA, Israel, August 14, 2012 /PRNewswire/ --

During the first half of 2012 the Company successfully completed further strategic steps in adjustment to the market conditions:

  • Successful merger of Cellcom Israel with Netvision - forming unified headquarters with substantial cost savings. The Company's subsidiary, Netvision, is retaining its profitability level, and presenting an EBITDA[1] of NIS 140 million for the first half of 2012, despite the increased competition in the ISP market
  • Efficiency measures - operational efficiency measures which will lead to savings at an annual run rate of NIS 300 million
  • Winning the Israeli Defense Force (IDF) tender for cellular services
  • Transition from a cellular company to a communications group - offering integrated communications packages such as "Cellcom Total"

For the second half of 2012:

  • The Company intends to cope with the changing market conditions by taking further significant operational efficiency measures
  • Strengthening Cellcom Israel's position as a communications group while laying the foundation for future opportunities and entry into new areas of activity such as the landline wholesale market, cellular credit card and the examination of entry into IPTV
  • The Company will add approx. 60,000 new IDF subscribers and will approach additional related potential subscribers

Second Quarter 2012 Highlights[2] (compared with the second quarter 2011):

  • Free cash flow[3] totaled NIS 284 million ($73 million), a 63.2% increase
  • Total Revenues totaled NIS 1,498 million ($382 million), a 5.7% decrease
  • Total Revenues from services totaled NIS 1,182 million ($301 million), a 4.5% increase
  • EBITDA totaled NIS 474 million ($121 million), a 16.3% decrease
  • EBITDA margin 31.6%, down from 35.6%
  • Operating profit totaled NIS 282 million ($72 million), a 29.0% decrease
  • Net income totaled NIS 121 million ($31 million), a 50.4% decrease
  • Cellular Subscriber base totaled approx. 3.333 million at the end of June 2012

Cellcom Israel Ltd. (NYSE: CEL TASE: CEL) ("Cellcom Israel", the "Company"), announced today its financial results for the second quarter of 2012. Revenues for the second quarter 2012 totaled NIS 1,498 million ($382 million); EBITDA for the second quarter 2012 totaled NIS 474 million ($121 million), or 31.6% of total revenues; and net income for the second quarter 2012 totaled NIS 121 million ($31 million). Basic earnings per share for the second quarter 2012 totaled NIS 1.22 ($0.31).

Ami Arel, Chairman of the Company's Board of Directors, said: "In the first half of 2012 a new management was formed, and the results demonstrate that this management, led by Nir Sztern, is working to achieve the required efficiency measures. I am pleased with the new management's function which is planning and executing the changes needed in order to adjust the Company to market conditions".

Commenting on the results, Nir Sztern, Chief Executive Officer, said: "In our second quarter 2012 results, we see the successful continued implementation of the Company's strategy: the Netvision merger, operational excellence and the transition into a communications group.

The Company completed the merger of Netvision and Cellcom Israel quickly and determinedly while maintaining similar levels of Netvision's profitability compared with the parallel period before the merger, despite the increased competition in the ISP market. The aggressive efficiency measures implemented by the Company through adjustments to the existing head count, a reduction in overhead expenses and improvement of work processes, have led, thus far, to savings at a run rate of NIS 300 million per year. In addition, unique marketing plans were launched, such as "Cellcom Total". A plan that combines an unlimited package for three cellular subscribers, internet and landline services, and which has been greatly successful among our customers and reflects the first step towards materializing our future growth potential as a communications group".

Regarding the competition in the market, Nir Sztern noted: "This quarter does not reflect the full impact of the increased market competition following the entry of the new competitors and the new pricing plans, characterized by unlimited packages at significantly lower prices, from mid May of this year, whose full impact we will see in the coming quarters. While we are witnessing an increase in churn rate, most of our customers are choosing to remain loyal to the Company thanks to our quality customer service.

In the coming quarters, the Company will continue to implement efficiency measures in order to achieve additional significant savings, and act to retain its customer base while recruiting new customers, including approximately 60,000 subscribers of the Israeli Defense Forces (IDF) and approaching additional potential subscribers related to them, following our winning the IDF's tender. We are encouraged by the success of "Cellcom Total" and estimate that the landline wholesale market together with entry into additional areas of activity such as cellular credit card and examination of the entry into IPTV, will be an opportunity to continue and establish our position as a leading communications group. In addition, we expect an increase in revenues from hosting services we provide Golan Telecom and Home Cellular, which begun operating during the second quarter".

Yaacov Heen, Chief Financial Officer, commented: "The efficiency measures we implemented had a positive impact on the second quarter results and demonstrate our continued efforts in adjusting our expense structure to the revenue level.

As we anticipated in the previous quarter, our financing expenses increased due to the increase in the Israeli Consumer Price Index (CPI), which resulted in a significant decrease in our net income for the second quarter of 2012 compared with the first quarter.

Due to the accumulated impact of customers transferring to the new price plans we expect additional erosion to the Company's revenues in the following quarters. Furthermore, we expect that the efficiency measures, which were realized in the first half of 2012 and their continuum in the coming quarters, will moderate this effect.

Our free cash flow for the second quarter of 2012 totaled NIS 284 million, an approximately 63% increase compared with the second quarter 2011, and approximately 97% increase compared with the previous quarter. The improvement in free cash flow is primarily due to a decrease in handset sales, which led to a decrease in purchase of handsets, as well as due to our continued efficiency measures.

The second quarter results and the improvement in free cash flow demonstrate the Company's strength and ability to satisfy its obligations. With that, given the changing competitive environment and the desire to take precaution measures, the Company's board of directors decided not to distribute a dividend for the second quarter of 2012. The board of directors will re-evaluate its decision in the coming quarters."


Main Consolidated Financial Results (financial data for Q2/2012 only, includes Netvision's results):

                                  Q2/2012     Q2/2011 % Change Q2/2012 Q2/2011
                                                                 million US$
                                                                (convenience
                                           million NIS           translation)
    Total revenues                  1,498        1,589  (5.7%)   381.9   405.0
    Operating profit                  282          397 (29.0%)    71.9   101.2
    Net income                        121          244 (50.4%)    30.8    62.2
    Free cash flow                    284          174   63.2%    72.4    44.4
    EBITDA                            474          566 (16.3%)   120.8   144.3
    EBITDA, as percent of total
    revenues                        31.6%        35.6% (11.2%)
 


Main Financial Data by Companies:

                 Cellcom Israel without             Consolidation
                                                     adjustments  Consolidated
                       Netvision          Netvision      (*)        results
                                  Change
                Q2/2012  Q2/2011    (%)     Q2/2012                    Q2/2012
    Total
    revenues      1,239    1,589  (22.0%)       277          (18)        1,498
    Total
    service
    revenues
    [4]             942    1,131  (16.7%)       258          (18)        1,182
    Equipment
    revenues        297      458  (35.2%)        19             -          316
    Operating
    profit          256      397  (35.5%)        55          (29)          282
    EBITDA          399      566  (29.5%)        75             -          474
    EBITDA, as
    percent of
    total
    revenues      32.2%    35.6%   (9.6%)     27.1%             -        31.6%


(*)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):

                                              Change
                             Q2/2012 Q2/2011    (%)
    Cellular subscribers at
    the end of period (in
    thousands)                 3,333   3,366     (1.0%)
    Churn Rate for cellular
    subscribers (in %)          8.1%    6.4%     26.6%
    Monthly cellular ARPU
    (in NIS)                    90.3   108.2    (16.5%)
    Average Monthly cellular
    MOU (in minutes)             375     342      9.6%



Financial Review (financial data for Q2/2012 only in this section, includes Netvision's data)

Revenues for the second quarter of 2012 totaled NIS 1,498 million ($382 million), a 5.7% decrease compared to NIS 1,589 million ($405 million) in the second quarter last year. The decrease in revenues is attributed to a 31% decrease in equipment revenues, which totaled NIS 316 million ($81 million) in the second quarter 2012 as compared to NIS 458 million ($117 million) in the second quarter last year. This decrease was partially offset by a 4.5% increase in service revenues, which totaled NIS 1,182 million ($301 million) in the second quarter 2012 as compared to NIS 1,131 million ($288 million) in the second quarter last year. Netvision's contribution to total revenues for the second quarter of 2012 totaled NIS 259 million ($66 million) excluding inter-company revenues. Excluding Netvision's contribution, total revenues decreased by 22% compared with the second quarter last year.

The increase in service revenues is attributed to Netvision's contribution to service revenues for the second quarter of 2012 in the amount of NIS 240 million ($61 million) (excluding inter-company revenues). After elimination of Netvision's contribution to service revenues for the second quarter of 2012, service revenues decreased by 16.7% mainly due to the ongoing price erosion, resulting from the intensified competition in the market. The Company has ceased to detail separately the revenues from content, SMS and value added services, since most of the marketing plans, which are currently sold, include service packages which include unlimited air time minutes and SMS as well as cellular surfing.

Equipment revenues decreased by 31%, from NIS 458 million ($117 million) in the second quarter last year, to NIS 316 million ($81 million) in the second quarter 2012. Netvision's contribution to those revenues for the second quarter of 2012 totaled NIS 19 million ($5 million). After elimination of Netvision's contribution to equipment revenues for the second quarter of 2012, equipment revenues decreased by 35.2% compared to those revenues for the second quarter last year.

Cost of revenues for the second quarter of 2012 increased by 4.2% totaling NIS 838 million ($214 million). Netvision's contribution to cost of revenues for the second quarter of 2012 totaled NIS 176 million ($45 million) (after elimination of inter-company expenses of NIS 18 million ($5 million)). After elimination of Netvision's contribution, cost of revenues decreased by 17.7% and totaled NIS 662 million ($169 million) in the second quarter of 2012, compared to NIS 804 million ($205 million) in the second quarter last year. This decline in cost of revenues after elimination of Netvision's contribution primarily resulted from a significant decrease in cellular handsets cost due to a decrease in the number of handsets sold during the second quarter of 2012 compared with the second quarter last year. The decrease in cost of revenues also resulted from a decrease in cost of content services and in cost of cellular handsets repair services due to efficiency measures implemented in these areas, as well as a decrease in amortization expenses, attributable mainly to a decrease in amortization expenses associated with capitalized handsets subsidies, and a reversal of an accrual for compensation in the amount of approximately NIS 9 million ($2 million), which will not be paid, in light of the expected continued adverse effect on our results of operations, resulting from the intensified competition in the market.

Gross profit for the second quarter of 2012 decreased 15.9% to NIS 660 million ($168 million), compared to NIS 785 million ($200 million) in the second quarter of 2011. Gross profit margin for the second quarter 2012 decreased to 44.1% from 49.4% in the second quarter last year.

Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for the second quarter of 2012 decreased 1.8% to NIS 381 million ($97 million), compared to NIS 388 million ($99 million) in the second quarter of 2011. SG&A Expenses for the second quarter of 2012 excluding Netvision's contribution decreased by 17.5%. The decrease in SG&A Expenses after elimination of Netvision's contribution mainly resulted from a decrease in payroll expenses, mainly due to efficiency measures and in amortization expenses related to capitalized sales commissions, as well as a decrease in advertising expenses and a reversal of an accrual for compensation in the amount of approximately NIS 15 million ($4 million), which will not be paid, as detailed above. Netvision's contribution to SG&A Expenses for the second quarter of 2012 amounted to NIS 61 million ($16 million), including amortization expenses of intangible assets, attributable to the merger, in the amount of NIS 29 million ($7 million).

Operating profit for the second quarter of 2012 totaled NIS 282 million ($72 million), compared to NIS 397 million ($101 million) in the second quarter last year, a 29% decrease.

EBITDA for the second quarter of 2012 decreased 16.3% to NIS 474 million ($121 million) representing 31.6% of total revenues, compared to NIS 566 million ($144 million) represented 35.6% of total revenues in the second quarter 2011. Netvision's contribution to EBITDA for the second quarter 2012 totaled NIS 75 million ($19 million). EBITDA as a percent of total revenues for the second quarter of 2012 after elimination of Netvision's contribution to EBITDA and total revenues totaled 32.2%.

Financing expenses, net for the second quarter of 2012 totaled NIS 117 million ($30 million), compared to NIS 75 million ($19 million) in the second quarter last year. This increase primarily resulted from an increase in Consumer Price Index (CPI) linkage expenses and interest expenses, associated with the Company's debentures, due to the higher debt level following the issuance of additional debentures in August 2011 and March 2012.

Net Income for the second quarter of 2012 totaled NIS 121 million ($31 million), compared to NIS 244 million ($62 million) in the second quarter last year, a 50.4% decrease.

Basic earnings per share for the second quarter of 2012 totaled NIS 1.22 ($0.31), compared to NIS 2.45 ($1.22) in the second quarter 2011.


Operating Review (data refers to cellular subscribers only)

New Cellular Subscribers - at the end of June 2012, the Company had approximately 3.333 million cellular subscribers. During the second quarter of 2012, the Company's cellular subscriber base decreased by approximately 29,000 net subscribers.

In the second quarter of 2012, the Company added approximately 42,000 net new 3G cellular subscribers to its 3G subscriber base, reaching approximately 1.430 million 3G subscribers at the end of June 2012, representing 42.9% of the Company's total cellular subscriber base, an increase from the 36.2% 3G subscribers represented of total subscribers at the end of June 2011.

The Churn Rate of cellular subscribers in the second quarter 2012 was 8.1%, compared to 6.4% in the second quarter last year. The increase in the churn rate mainly resulted from the increased competition in the market following the entrance of the new operators during the second quarter 2012.

Average monthly cellular Minutes of Use per subscriber ("MOU") in the second quarter 2012 totaled 375 minutes, compared to 342 minutes in the second quarter 2011, an increase of 9.6%.

The monthly cellular Average Revenue per User (ARPU) for the second quarter of 2012 decreased 16.5% and totaled NIS 90.3 ($23.0), compared to NIS 108.2 ($27.6) in the second quarter last year. The decrease is attributed to the ongoing price erosion.

Financing and Investment Review (financial data for Q2/2012 only, includes Netvision's data)

Cash Flow

Free cash flow for the second quarter of 2012 increased by 63.2% and totaled NIS 284 million ($73 million), compared to NIS 174 million ($44 million) generated in the second quarter 2011.  Cash flows from operating activities for the second quarter this year increased, compared with the second quarter last year, mainly as a result of a decrease in payments related to cellular handsets purchases due to the decrease in sales of these handsets. Net cash used in investing activities for the second quarter of 2012 (excluding changes in current investments, net) increased, compared with the second quarter last year, mainly due to an increased investment in the upgrade of the Company's UMTS and transmission networks during the first half of 2012.

Total Equity

Total Equity as of June 30, 2012 amounted to NIS 280 million ($71 million), primarily consisting of accumulated undistributed retained earnings.

Capital expenditure

The Company's accrual capital expenditure for the second quarter of 2012, totaled NIS 110 million ($28 million) (including, among others, investment in information systems and software), compared to NIS 80 million ($20 million) in the second quarter of 2011. The increase primarily resulted from an increased investment in the upgrade of the Company's UMTS and transmission networks during the second quarter of 2012 compared with the second quarter last year. Furthermore, the consolidated capital expenditure for the second quarter of 2012 includes Netvision's capital expenditure, whereas it was not consolidated in the second quarter last year.

Dividend

On August 13, 2012, the Company's board of directors decided not to declare a cash dividend for the second quarter of 2012. In making its decision, the board of directors considered the Company's dividend policy and business status and determined, that although the Company can satisfy its existing and foreseeable obligations, given the challenging regulatory environment, intensified competition and substantial changes in pricing and their current and expected adverse effect on the Company's results of operations, it would be prudent not to distribute dividends 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, 2011 on Form 20-F, under "Item 8 - Financial Information - Dividend Policy".

Debentures

For information regarding the Company's summary of financial undertakings and details regarding the Company's outstanding debentures as of June 30, 2012, see "Disclosure for Debenture Holders" section in this press release.

Other developments during the second quarter of 2012 and subsequent to the end of the reporting period

Regulation

Royalties

Following previous reports as to the expected changes in royalties paid by the Company to the Ministry of Communications, following a petition filed by the Company and two other cellular operators, the Communications Regulations (Bezeq and Transmissions) (Royalties) 2001, were amended on August 1., as follows:

  • For cellular services - from January 1, 2012 to May 23, 2012 - 2.5%; from May 24, 2012 to July 31, 2012 - 1%; from August 1, 2012 to December 31, 2012 - 0.292% provided the 2012 annual rate shall be 1.3% and  as of January 1, 2013 - 0%.
  • For landline and long distance services (for which the Company pays 1% for 2012) - as of January 1, 2013 - 0%.

For additional details see the Company's most recent annual report on Form 20-F for the year ended December 31, 2011 under "Item 4. Information on the Company - Government Regulations - Royalties" and " - Tariff Supervision".

Long distance services or ILD services

In a hearing published by the Ministry of Communications on July 2012 regarding proposed changes to cooperation of cellular operators with ILD operators for prepaid calling cards, which, if adopted, would eliminate any such cooperation, the Ministry of Communications noted that a revised examination of the ILD market structure and its independence is required. The Company cannot estimate at this stage what changes, if any, would be introduced in relation to ILD services.

For additional details regarding ILD services see the Company's most recent annual report for the year ended December 31, 2011, on Form 20-F, under Item 4. Information on the Company - Government Regulations - Long Distance Services" and "Netvision - Telephony Business".  

Changes in the Board of Directors

Messrs. Shay Livnat, Tal Raz and Assaf Topaz concluded their term as directors of the Company in July and August 2012. Mr. Ari Bronshtein, a member of the Company's board of directors, was designated by Discount Investment Company Ltd. as its appointee to the Company's Board of Directors, as of August 1, 2012, instead of Mr. Topaz. Mr. Bronshtein'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 be appointed by Israeli citizens and residents from among the Company's founding shareholders.

For further details see the Company's most recent annual report on Form 20-F for the year ended December 31, 2011 under "Item 6. Directors, Senior Management and Employees - C. Board Practices- Board of Directors and Officers" and "External Directors - Israeli-Appointed Directors".

2006 Share Incentive Plan

In August 2012, our board of directors resolved to enlarge the pool of options or restricted stock units, or RSUs, of the Company's 2006 Share Incentive Plan, or the Plan, by 1 million options or RSUs and to grant 2,688,726 options to certain non director officers and senior employees, out of which 350,000 options to the Company's CEO, at an exercise price of US$ 5.91 per share. The board of directors further decided to annul the previous grant of 1,550,000 options to certain non-director officers and senior employees, including the Company's CEO, which the board had approved in May 2012, but was not carried out. The options granted will be vested in 2 equal installments on each of the first and second anniversary of the date of the board's decision. The options of the first installment may be exercised within 24 months from their vesting and the second installment may be exercised with 18 month from their vesting.

For additional details see the Company's annual report for the year ended December 31, 2011 on Form 20-F, under "Item 6 - Directors, Senior Management and Employees - Share Ownership - 2006 Share Incentive Plan" and the Company's current report on the Company's results of operations in the first quarter 2012, on Form 6-K filed on May 15, 2012  under "Other developments during the first quarter of 2012 and subsequent to the end of the reporting period - 2006 Share Incentive Plan".

Conference Call Details

The Company will be hosting a conference call on Tuesday, August 14, 2012 at 11:00 am EST, 8:00 am PST, 16:00 UK time, 18:00 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: 1-888-281-1167        UK Dial-in Number: 0-800-917-9141
Israel Dial-in Number: 03-918-0644       International Dial-in Number:  +972-3-918-0644
at: 11:00 am EST; 8:00 am PST; 16:00 UK time; 18:00 Israel Time


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 3.333 million subscribers (as at June 30, 2012) 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 http://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 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, new competition and changes in the competitive environment, 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 December 31, 2011.  

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 New Israeli Shekel (NIS)\US$ exchange rate of NIS 3.923 = US$ 1 as published by the Bank of Israel for June 30, 2012.

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 or proceeds from sales of such debentures and deposits. See the reconciliation note at the end of this Press Release.

Financial Tables Follow


Cellcom Israel Ltd.

(An Israeli Corporation)

Condensed Consolidated Interim Statements of Financial position

                                                         Convenience
                                                         translation
                                                            Into
                                                         U.S. dollar
                                                                     December
                                  June 30,    June 30,    June 30,      31,
                                    2011        2012        2012       2011
                                     NIS         NIS         US$        NIS
                                  millions    millions    millions   millions
                                 (Unaudited) (Unaudited) (Unaudited) (Audited)
    Assets
    Cash and cash equivalents          1,527         736         188       920
    Current investments,
    including derivatives                390         974         248       290
    Trade receivables                  1,571       1,922         490     1,859
    Other receivables                     70          93          24        93
    Inventory                            138         129          33       170
    Total current assets               3,696       3,854         983     3,332
 
    Trade and other receivables          858       1,355         345     1,337
    Property, plant and
    equipment, net                     1,961       2,120         541     2,168
    Intangible assets, net               672       1,597         407     1,680
    Deferred tax assets                    -          56          14        40
    Total non-current assets           3,491       5,128       1,307     5,225
 
    Total assets                       7,187       8,982       2,290     8,557
 
    Liabilities
    Short-term credit and
    current maturities of
    long-term loans and
    debentures                           594         758         193       674
    Trade payables and accrued
    expenses                             767         835         213     1,026
    Current tax liabilities               82         108          28        69
    Provisions                           101         157          40       148
    Other payables, including
    derivatives                          397         528         135       547
    Dividend declared                    292         130          33       189
    Total current liabilities          2,233       2,516         642     2,653
 
    Long-term loans from banks             -          15           4        19
    Debentures                         4,575       5,929       1,512     5,452
    Provisions                            18          21           5        21
    Other long-term liabilities            2          44          11        41
    Liability for employee
    rights upon retirement, net            -          15           4        10
    Deferred tax liabilities              61         162          41       174
    Total non- current
    liabilities                        4,656       6,186       1,577     5,717
 
    Total liabilities                  6,889       8,702       2,219     8,370
 
    Equity attributable to
    owners of the Company
    Share capital                          1           1           -         1
    Cash flow hedge reserve             (20)           8           2         7
    Retained earnings                    317         270          69       175
 
    Non-controlling interest               -           1           -         4
 
    Total equity                         298         280          71       187
 
    Total liabilities and equity       7,187       8,982       2,290     8,557



Cellcom Israel Ltd.

(An Israeli Corporation)

Condensed Consolidated Interim Statements of Income

                                                                            Year
                                                   Three-month period       ended
                      Six-month period ended              ended
                                                                          December
                             June 30,                   June 30,             31,
                                    Convenience               Convenience
                                    translation               translation
                                      into US                   into US
                                      dollar                    dollar
                     2011    2012      2012      2011   2012     2012       2011
                                        US$                       US$        NIS
                     NIS millions    millions   NIS millions   millions   millions
                      (Unaudited)   (Unaudited)  (Unaudited)  (Unaudited) (Audited)
 
    Revenues          3,176   3,083         786  1,589  1,498         382     6,506
    Cost of
    revenues        (1,554) (1,737)       (443)  (804)  (838)       (214)   (3,408)
 
    Gross profit      1,622   1,346         343    785    660         168     3,098
 
    Selling and
    marketing
    expenses          (441)   (456)       (116)  (232)  (220)        (56)     (990)
    General and
    administrative
    expenses          (313)   (333)        (85)  (156)  (161)        (41)     (685)
    Other income
    (expenses), net       -       -           -      -      3           1       (1)
 
    Operating
    profit              868     557         142    397    282          72     1,422
 
    Financing
    income               61      83          21     45     45          11       116
    Financing
    expenses          (203)   (236)        (60)  (120)  (162)        (41)     (409)
    Financing
    expenses, net     (142)   (153)        (39)   (75)  (117)        (30)     (293)
 
    Profit before
    taxes on income     726     404         103    322    165          42     1,129
    Taxes on income   (176)   (110)        (28)   (78)   (44)        (11)     (304)
 
    Profit for the
    period              550     294          75    244    121          31       825
 
    Profit for the
    period
    attributable
    to:
    Owners of the
    Company             550     294          75    244    121          31       824
    Non-controlling
    interests             -       -           -      -      -           -         1
    Profit for the
    period              550     294          75    244    121          31       825
 
    Earnings per
    share
    Basic earnings
    per share in
    NIS                5.53    2.96        0.75   2.45   1.22        0.31      8.28
 
    Diluted
    earnings per
    share in NIS       5.53    2.96        0.75   2.45   1.22        0.31      8.28
 


Cellcom Israel Ltd.

(An Israeli Corporation)

Condensed Consolidated Interim Statements of Cash Flows

                                                                           Year
                                                                           ended
                  Six-month period ended     Three-month period ended
                                                                         December
                         June 30,                    June 30,               31,
                               Convenience               Convenience
                               translation               translation
                                  into                       into
 
                                US dollar                 US dollar
                  2011   2012     2012     2011  2012        2012          2011
                                   US$                           US$        NIS
                 NIS millions   millions     NIS millions     millions   millions
                  (Unaudited)  (Unaudited)    (Unaudited)    (Unaudited) (Audited)
    Cash flows
    from
    operating
    activities
 
    Profit for
    the period      550    294          75   244  121                 31       825
 
    Adjustments
    for:
    Depreciation
    and
    Amortization    336    389          99   168  193                 49       738
    Share based
    payment           1      3           1     1    2                  1         6
    Loss on sale
    of property,
    plant and
    equipment         -      1           -     -    -                  -         -
    Income tax
    expense         176    110          28    78   44                 11       304
    Financing
    expenses,
    net             142    153          39    75  117                 30       293
    Other
    expenses          -      1           -     -    -                  -         2
 
    Changes in
    operating
    assets and
    liabilities:
    Change in
    inventory      (38)     38          10  (19)   31                  8      (67)
    Change in
    trade
    receivables
    (including
    long-term
    amounts)      (326)   (34)         (8) (209)   24                  6     (585)
    Change in
    other
    receivables
    (including
    long-term
    amounts)        (6)   (42)        (11)   (2) (24)                (6)        61
    Change in
    trade
    payables,
    accrued
    expenses and
    provisions      117   (89)        (23)   (5) (20)                (5)       146
    Change in
    other
    liabilities
    (including
    long-term
    amounts)         12     16           4   (6)  (3)                (1)      (52)
    Proceeds
    from
    (payments
    for)
    derivative
    hedging
    contracts,
    net             (9)      8           2   (6)    5                  1      (14)
    Income tax
    paid          (206)  (117)        (30)  (86) (55)               (14)     (325)
    Income tax
    received          -     15           4     -    8                  2         -
    Net cash
    from
    operating
    activities      749    746         190   233  443                113     1,332
 



Cellcom Israel Ltd.

(An Israeli Corporation)

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

                                                                            Year
                                                                            ended
                  Six-month period ended      Three-month period ended
                                                                          December
                         June 30,                     June 30,               31,
                               Convenience                Convenience
                               translation                translation
                                  into                        into
 
                                US dollar                  US dollar
                  2011   2012     2012     2011  2012         2012          2011
                                   US$                            US$        NIS
                 NIS millions   millions      NIS millions     millions   millions
                  (Unaudited)  (Unaudited)    (Unaudited)     (Unaudited) (Audited)
    Cash flows
    from
    investing
    activities
    Acquisition
    of property,
    plant, and
    equipment     (135)  (284)        (73)  (53) (149)               (38)     (333)
    Acquisition
    of
    intangible
    assets         (52)   (52)        (13)  (18)  (25)                (6)      (99)
    Acquisition
    of
    subsidiary,
    net of cash
    acquired          -      -           -     -     -                  -   (1,458)
    Change in
    current
    investments,
    net               8  (672)       (171)     6  (51)               (13)       197
    Proceeds
    from
    (payments
    for) other
    derivative
    contracts,
    net             (9)      3           1   (6)     1                  -         1
    Proceeds
    from sale of
    property,
    plant and
    equipment         2      1           -     1     1                  -         3
    Interest
    received         20      8           2    17     6                  2        33
    Loan to
    equity
    accounted
    investee          -    (1)           -     -     -                  -         -
    Proceeds
    from sale of
    subsidiary        -      7           2     -     7                  2         -
    Net cash
    used in
    investing
    activities    (166)  (990)       (252)  (53) (210)               (53)   (1,656)
 
    Cash flows
    from
    financing
    activities
    Proceeds
    from
    (payments
    for)
    derivative
    contracts,
    net              10    (6)         (2)     6   (5)                (2)        11
    Repayment of
    long-term
    loans from
    banks             -    (4)         (1)     -   (4)                (1)       (4)
    Repayment of
    debentures    (175)  (479)       (122)     -     -                  -     (354)
    Proceeds
    from
    issuance of
    debentures,
    net of
    issuance
    costs         1,033    992         253     -     -                  -     2,165
    Dividend
    paid          (334)  (261)        (67) (303)  (72)               (18)     (858)
    Interest
    paid          (123)  (182)        (46)     -   (1)                  -     (245)
    Net cash
    provided
    from (used
    in)
    financing
    activities      411     60          15 (297)  (82)               (21)       715
 
    Cash balance
    presented
    under assets
    held for
    sales/ Cash
    outflow due
    to sale of
    assets held
    for sale          -      -           -     -   (3)                (1)       (4)
 
    Changes in
    cash and
    cash
    equivalents     994  (184)        (47) (117)   148                 38       387
    Cash and
    cash
    equivalents
    at beginning
    of the
    period          533    920         235 1,644   588                150       533
    Cash and
    cash
    equivalents
    at end of
    the period    1,527    736         188 1,527   736                188       920
 


Cellcom Israel Ltd.

(An Israeli Corporation)

Reconciliation for Non-IFRS Measures

EBITDA

The following is a reconciliation of net income to EBITDA:

                                                                       Year
                                                                      ended
                                       Three-month period ended
                                                                     December
                                               June 30,                31,
                                                         Convenience
 
                                                         translation
 
                                                           into US
                                                           dollar
 
                                     2011        2012       2012       2011
 
                                      NIS        NIS         US$       NIS
                                   millions    millions   millions   millions
 
    Profit for the period                 244        121          31      825
    Taxes on income                        78         44          11      304
    Financing income                     (45)       (45)        (11)    (116)
    Financing expenses                    120        162          41      409
    Other expenses (income)                 -        (3)         (1)        1
    Depreciation and amortization         168        193          49      738
    Share based payments                    1          2           1        6
    EBITDA                                566        474         121    2,167


Free Cash Flow

The following table shows the calculation of free cash flow:

                                                                        Year
                                                                       ended
                                       Three-month period ended
                                                                      December
                                               June 30,                 31,
                                                          Convenience
 
                                                          translation
 
                                                            into US
                                                            dollar
 
                                     2011        2012        2012       2011
 
                                      NIS         NIS         US$       NIS
                                   millions    millions    millions   millions
 
    Cash flows from operating
    activities                            233         443         113    1,332
    Cash flows from investing                                              
    activities                            (53)       (210)        (53) (*)(198)
    Short-term Investment in
    (sale of) tradable debentures
    and deposits                           (6)         51          13     (197)
    Free cash flow                        174         284          73      937


(*) After elimination of the net cash flows used for the acquisition of Netvision in the amount of NIS 1,458 million (net of cash acquired in the amount of NIS 120 million).

Cellcom Israel Ltd.

Disclosure for debenture holders as of June30, 2012
Aggregation of the information regarding the debenture series issued by the company(1), in million NIS

                     Principal
           Original  on the
           Issuance  Date of
    Series Date      Issuance  As of 30.06.2012
                               Principal                       Debenture
                                         Linked    Interest    Balance
                               Balance   Principal Accumulated Value in  Market
                               on Trade  Balance   in Books    Books(2)  Value
    A(4)   22/12/05
    (6)    10/01/06*
           31/05/06* 1,065     118.333   139.756   3.398       143.154   143.005

    B(4)   22/12/05
    **     02/01/06*
           05/01/06*
           10/01/06*    
           31/05/06* 925.102   925.102   1,092.582 28.004      1,120.586 1,140.559

    C      07/10/07
           03/02/08* 326       72.444    83.479    1.263       84.742    84.832

    D**    07/10/07
           03/02/08*
           06/04/09*
           30/03/11*
           18/08/11* 2,423.075 2,423.075 2,792.153 144.517     2,936.670 2,840.571

    E**    06/04/09
           30/03/11*
           18/08/11* 1,798.962 1,499.135 1,499.135 45.179      1,544.314 1,530.617

    F(4)
    (5) **
           20/03/12  714.802   714.802   723.737   8.900       732.637   655.902
    G(4)
    (5)    20/03/12  285.198   285.198   285.198   5.410       290.608   267.173

    Total            7,538.139 6,038.089 6,616.039 236.671     6,852.711 6,662.659


(Table continues)

                                            Principal
               As of 14.08.2012 Interest    Repayment Dates
    Series                      Rate(fixed) (3)
            Principal Linked
            Balance   Principal
            on Trade  Balance               From      To
    A(4)
    (6)     -         -         5.00%       05.07.08  05.07.12
    B(4) ** 925.102   1,089.486 5.30%       05.01.13  05.01.17
    C       72.444    83.241    4.60%       01.03.09  01.03.13
    D **    2,423.075 2,784.198 5.19%       01.07.13  01.07.17
    E **    1,499.135 1,499.135 6.25%       05.01.12  05.01.17
    F(4)
    (5) **
            714.802   721.675   4.35%       05.01.17  05.01.20
    G(4)
    (5)     285.198   285.198   6.74%       05.01.17  05.01.19
    Total   5,919.756 6,462.933


(Table continues)

            Interest             Trustee
            Repayment
    Series  Dates      Linkage   Contact Details
 
                                 Reznik, Paz,
                                 Nevo Trusts Ltd.
                                 Accountant Yossi
                                 Reznik. 14 Yad
            January 5            Haruzim St., Tel
    A(4)               Linked to Aviv. Tel:
    (6)     and July 5 CPI       03-6393311.

                                 Hermetic Trust
                                 (1975) Ltd.
                                 Meirav Ofer
                                 Oren. 113
                                 Hayarkon St.,
                       Linked to Tel Aviv. Tel:
    B(4) ** January 5  CPI       03-5274867.

                                 Reznik, Paz,
                                 Nevo Trusts Ltd.
                                 Accountant Yossi
            March 1              Reznik. 14 Yad
            and                  Haruzim St., Tel
            September  Linked to Aviv. Tel:
    C       1          CPI       03-6393311.

                                 Hermetic Trust
                                 (1975) Ltd.
                                 Meirav Ofer
                                 Oren. 113
                                 Hayarkon St.,
                       Linked to Tel Aviv. Tel:
    D **    July 1     CPI       03-5274867.

                                 Hermetic Trust
                                 (1975) Ltd.
                                 Meirav Ofer
                                 Oren. 113
                                 Hayarkon St.,
                       Not       Tel Aviv. Tel:
    E **    January 5  linked    03-5274867.

                                 Strauss Lazar
                                 Trust Company
                                 (1992) Ltd
    F(4)    January 5            17 Yizhak Sadeh
    (5) **             Linked to St., Tel Aviv.
            and July 5 CPI       Tel: 03- 6237777

                                 Strauss Lazar
                                 Trust Company
                                 (1992) Ltd
            January 5            17 Yizhak Sadeh
    G(4)               Not       St., Tel Aviv.
    (5)     and July 5 linked    Tel: 03- 6237777
    Total


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 June 30, 2012 the net leverage (net debt to EBITDA ratio- see definition in the Company's annual report for the year ended December 31, 2011 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources - Debt Service - Shelf prospectus") was 2.60. (2) Including interest accumulated in books. (3) Annual payments, excluding series A, C, F and G debentures in which the payments are semi annual. (4) Regarding Debenture series A, 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, 2011 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects- B. Liquidity and Capital Resources - Debt Service - Shelf prospectus"). (6) At 05/07/2012 Debenture series A fully repaid.

(*) 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 June 30, 2012 (cont.)

Debentures rating details*

                                                               Rating
                                                               assigned
                                                               upon
                               Rating as of    Rating as of    issuance of
    Series      Rating Company 30.6.2012 (1)   14.08.2012      the Series
 
    A           S&P Maalot     AA-             AA-             AA-
    B           S&P Maalot     AA-             AA-             AA-
    C           S&P Maalot     AA-             AA-             AA-
    D           S&P Maalot     AA-             AA-             AA-
    E           S&P Maalot     AA-             AA-             AA
    F           S&P Maalot     AA-             AA-             AA
    G           S&P Maalot     AA-             AA-             AA


                                 Additional ratings
                                 between original
            Recent date of       issuance and the
            rating as of         recent date of rating
    Series  14.08.2012           as of 14.08.2012 (2)

                                       Date                  Rating
                                       5/2006, 9/2007,
                                       1/2008, 10/2008,
                                       3/2009, 9/2010,
                                       8/2011, 1/2012,
    A     05/2012                      3/2012, 5/2012        AA-, AA,AA- (2)

                                       5/2006, 9/2007,
                                       1/2008, 10/2008,
                                       3/2009, 9/2010,
                                       8/2011, 1/2012,
    B     05/2012                      3/2012, 5/2012        AA-, AA,AA- (2)

                                       1/2008, 10/2008,
                                       3/2009, 9/2010,
                                       8/2011, 1/2012,
    C     05/2012                      3/2012, 5/2012        AA-, AA,AA- (2)

                                       1/2008, 10/2008,
                                       3/2009, 9/2010,
                                       8/2011, 1/2012,
    D     05/2012                      3/2012, 5/2012        AA-, AA,AA- (2)

                                       9/2010, 8/2011,
                                       1/2012, 3/2012,
    E     05/2012                      5/2012                AA,AA- (2)

    F     05/2012                      5/2012                AA,AA- (2)

    G     05/2012                      5/2012                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". For details regarding the rating of the debentures see the Company's current report dated May 31, 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 June 30, 2012

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).


                                                              Gross
                                                              interest
                                                              payments
                                                              (without
                                                              deduction
                                Principal payments            of tax)
                                  ILS not
                      ILS linked  linked to Euro
                      to CPI      CPI            Dollar Other
    First year          420,584    291,052   -     -      -     328,806
    Second year         738,224    291,052   -     -      -     303,309
    Third year          738,224    291,052   -     -      -     246,576
    Fourth year         738,224    291,052   -     -      -     189,844
    More than five
    years              1,957,237   571,350   -     -      -     235,460
    Total              4,592,494  1,735,556  -     -      -    1,303,995


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).


                                                              Gross
                                                              interest
                                                              payments
                                                              (without
                                                              deduction
                                Principal payments            of tax)
                                  ILS not
                      ILS linked  linked to Euro
                      to CPI      CPI            Dollar Other
    First year          420,584    291,052   -     -      -     328,806
    Second year         738,224    291,052   -     -      -     303,309
    Third year          738,224    291,052   -     -      -     246,576
    Fourth year         738,224    291,052   -     -      -     189,844
    More than five
    years              1,957,237   571,350   -     -      -     235,460
    Total              4,592,494  1,735,556  -     -      -    1,303,995


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



Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of June 30, 2012 (cont.)

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).


                                                            Gross
                                                            interest
                                                            payments
                                                            (without
                                                            deduction
                               Principal payments           of tax)
                                 ILS not
                      ILS linked linked   Euro
                      to CPI     to CPI        Dollar Other
    First year            -       16,366   -     -      -      1,394
    Second year           -       5,041    -     -      -       756
    Third year            -       5,041    -     -      -       453
    Fourth year           -       5,036    -     -      -       150
    More than five
    years                 -         -      -     -      -        -
    Total                 -       31,484   -     -      -      2,752


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).


                                                            Gross
                                                            interest
                                                            payments
                                                            (without
                                                            deduction
                               Principal payments           of tax)
                                 ILS not
                      ILS linked linked   Euro
                      to CPI     to CPI        Dollar Other
    First year            -         12     -     -      -        4
    Second year           -         12     -     -      -        3
    Third year            -         12     -     -      -        2
    Fourth year           -         12     -     -      -        1
    More than five
    years                 -         12     -     -      -        1
    Total                 -         58     -     -      -       11


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).


                                                            Gross
                                                            interest
                                                            payments
                                                            (without
                                                            deduction
                               Principal payments           of tax)
                                 ILS not
                      ILS linked linked   Euro
                      to CPI     to CPI        Dollar Other
    First year          21,168    8,764    -     -      -     14,653
    Second year         38,723    8,764    -     -      -     13,588
    Third year          38,723    8,764    -     -      -     11,018
    Fourth year         38,723    8,764    -     -      -      8,448
    More than five
    years              101,878    13,664   -     -      -     10,465
    Total              239,213    48,720   -     -      -     58,172



Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of June 30, 2012 (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)


                                                            Gross
                                                            interest
                                                            payments
                                                            (without
                                                            deduction
                               Principal payments           of tax)
                                 ILS not
                      ILS linked linked   Euro
                      to CPI     to CPI        Dollar Other
    First year            -         -      -     -      -      1,234
    Second year           -       26,371   -     -      -      1,234
    Third year            -         -      -     -      -        -
    Fourth year           -         -      -     -      -        -
    More than five
    years                 -         -      -     -      -        -
    Total                 -       26,371   -     -      -      2,468


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

2. The Company consolidated financial results for the second quarter 2012 include the results of Netvision Ltd., or Netvision, while the consolidated financial results for the second quarter 2011 do not include Netvision's results (due to the completion of Netvision's acquisition by the Company on August 31, 2011).

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

4. Including revenues from content, SMS and value added services. The Company has ceased to detail separately the revenues from content, SMS and value added services, since most of the marketing plans which are sold nowadays include service packages which include unlimited air time minutes and SMS as well as cellular surfing.


    
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

.


SOURCE Cellcom Israel Ltd.



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