Partner Communications Reports Fourth Quarter And Annual 2020 Results[1]

ROSH HA'AYIN, Israel, March 25, 2021 /PRNewswire/ --

2020 Annual Highlights (compared with 2019)

• Total Revenues: NIS 3,189 million (US$ 992 million), a decrease of 1%
• Service Revenues: NIS 2,508 million (US$ 780 million), a decrease of 2%
• Equipment Revenues: NIS 681 million (US$ 212 million), an increase of 1%
• Total Operating Expenses (OPEX) ²: NIS 1,871 million (US$ 582 million), a decrease of 1%
• Adjusted EBITDA: NIS 822 million (US$ 256 million), a decrease of 4%
• Adjusted EBITDA Margin²: 26% of total revenues, unchanged from 2019
• Profit for the Year: NIS 17 million (US$ 5 million) a decrease of 11%
• Net Debt: NIS 657 million (US$ 204 million), a decrease of NIS 300 million
• Adjusted Free Cash Flow (before interest)²: NIS 72 million (US$ 22 million), an increase of NIS 23 million
• Cellular ARPU: NIS 51 (US$ 16), a decrease of 11%
• Cellular Subscriber Base: approximately 2.84 million at year-end, an increase of 179 thousand
• Fiber-Optic Subscriber Base: 139 thousand subscribers at year-end, an increase of 63 thousand
• Homes Connected (HC) to Partner's Fiber-Optic Infrastructure: 465 thousand at year-end, an increase of 141 thousand
• Infrastructure-Based Internet Subscriber Base: 329 thousand subscribers at year-end, an increase of 61 thousand
• TV Subscriber Base: 232 thousand subscribers at year-end, an increase of 44 thousand

Fourth quarter 2020 highlights (compared with fourth quarter 2019)

• Total Revenues: NIS 808 million (US$ 251 million), a decrease of 3%
• Service Revenues: NIS 632 million (US$ 197 million), a decrease of 1%
• Equipment Revenues: NIS 176 million (US$ 55 million), a decrease of 11%
• Total Operating Expenses (OPEX): NIS 480 million (US$ 149 million), an increase of 3%
• Adjusted EBITDA: NIS 203 million (US$ 63 million), a decrease of 6%
• Adjusted EBITDA Margin: 25% of total revenues compared with 26%
• Profit for the Period: NIS 5 million (US$ 2 million), a decrease of 29%
• Net Debt: NIS 657 million (US$ 204 million), a decrease of NIS 300 million
• Adjusted Free Cash Flow (before interest): negative NIS 3 million (US$ -1 million), a decrease of NIS 19 million
• Cellular ARPU: NIS 49 (US$ 15), a decrease of 11%
• Cellular Subscriber Base: approximately 2.84 million at quarter-end, an increase of 179 thousand since Q4 2019 and an increase of 74 thousand in the quarter
• Fiber-Optic Subscriber Base: 139 thousand subscribers at quarter-end, an increase of 63 thousand since Q4 2019 and an increase of 19 thousand in the quarter
• Homes Connected (HC) to Partner's Fiber-Optic Infrastructure: 465 thousand at quarter-end, an increase of 141 thousand since Q4 2019 and an increase of 33 thousand in the quarter
• Infrastructure-Based Internet Subscriber Base: 329 thousand subscribers at quarter-end, an increase of 61 thousand since Q4 2019 and an increase of 18 thousand in the quarter
• TV Subscriber Base: 232 thousand subscribers at quarter-end, an increase of 44 thousand since Q4 2019 and an increase of 8 thousand in the quarter

^[1] The quarterly financial results are unaudited.
^[2] For the definition of this and other Non-GAAP financial measures, see "Use of Non-GAAP Financial Measures" in this press release.

Partner Communications Company Ltd. ("Partner" or the "Company") (NASDAQ: PTNR) (TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter and year ended December 31, 2020.

Commenting on the results for the fourth quarter and full year 2020, Mr. Isaac Benbenisti, CEO of Partner, noted:

"In summary of the year of COVID-19 and its operational complexity, Partner was able to maintain stability in revenues and to present a net profit. During the year 2020, hundreds of thousands of subscribers joined the Company's services, in cellular, internet and television. During the past year, Partner has expanded its growth engines – in cellular with the launch of the 5G network, 'Partner 5G', in internet with the further rollout of our independent fiber-optic infrastructure, 'Partner Fiber', and in TV, the fastest growing TV service in Israel, 'Partner TV', with the deepening of our cooperation with Netflix in a unique bundled offer.

In cellular, Partner's subscriber base grew by 179 thousand cellular subscribers, net, in 2020, to total approximately 2.84 million, alongside the continued increase in customer loyalty, with the lowest churn rates for over a decade.

In 2020, we made a big leap in the Group's activity in the internet sphere, with a 23% increase in the Company's infrastructure-based internet subscriber base, to total 329 thousand subscribers at year-end, the growth resulting from the joining of tens of thousands of new subscribers to services over 'Partner Fiber', the Company's independent fiber-optic infrastructure. Partner's independent fiber-optic infrastructure already reaches more than 760 thousand households as of today, of which more than 500 thousand reside in buildings already connected to the infrastructure and more than 150 thousand of which are already subscribed to internet services over Partner's fiber-optic infrastructure.

In 2020, Partner TV was again the fastest growing of all television services in Israel, with 44 thousand subscribers joining, net, during the year. As of today, 'Partner TV' is enjoyed by approximately 234 thousand subscribers, most of them also customers of the Company's internet services.

At the outset of the year 2021, Partner stands in an excellent position for growth in all areas of activity, thanks to the long-term preparations we have made in recent years, which have included both a significant reduction in debt and investment in independent communications infrastructures that enable us to increase profitability."

Mr. Tamir Amar, Partner's Chief Financial Officer & VP Fiber-Optics, commented on the results:

"The steps we've taken during the year, alongside the continued subscriber growth in the cellular and fixed-line segments lessened the impact of COVID-19 on our results. In the fourth quarter and during 2020 as a whole, the positive momentum in our growth engines continued, while accelerating the rollout of our fiber-optic infrastructure. Our success this year in the 5G frequencies tender and our compliance with the milestones in the deployment of 5G sites set by the Ministry of Communications will enable us to advance the rollout and connect more and more customers to the 5G network, and gradually expand the range of advanced services offered to Partner's growing subscriber base. In addition, the Company managed to position itself in first place, together with another operator, in bidding for a deployment grant in 5G, thus benefiting from additional financial support for the continued deployment of 5G sites, in addition to our eligibility for a significant discount on frequency fees, subject to certain tender conditions.

Our cellular subscriber base increased this year by 179 thousand. The increase included 74 thousand subscribers, net, who joined in the last quarter of the year, including 25 thousand subscribers to twelve-month data package for modems provided to students by the Ministry of Education as part of their COVID-19 crisis program. The churn rate in the fourth quarter amounted to 7.2%, similar to that in the corresponding quarter last year. ARPU in the fourth quarter totaled NIS 49 compared to NIS 55 in the fourth quarter last year, mainly reflecting the negative impact of the decline in roaming service revenues as a result of the sharp decline in international travel due to COVID-19.

In the fixed-line segment, our fiber-optic infrastructure already reaches more than 760 thousand households as of today. The number of Homes Connected (HC) within buildings connected to our fiber-optic infrastructure was 465 thousand at year-end 2020, an increase of 141 thousand in the year and 33 thousand in the fourth quarter. As of the end of 2020, Partner has 139 thousand fiber-optic subscribers, an increase of 63 thousand in the year, and 19 thousand in the fourth quarter. The number of fiber-optic subscribers from households within HC buildings reflects an HC penetration rate of approximately 30% as of the end of 2020, compared with approximately 23% at the end of 2019.

Regarding television, the number of subscribers grew by 8 thousand in the last quarter of 2020, bringing the total increase this year to 44 thousand. As of today, the number of TV subscribers totals approximately 234 thousand. The rate of growth from the beginning of 2021 mainly reflects the temporary impact of the technical malfunction in the television broadcasts during the second week of January 2021.

As we expected, we finished the fourth quarter of 2020 with only a small decrease of 6% in Adjusted EBITDA compared to the corresponding quarter, in light of the continued cost-cutting measures along with growth in the fixed-line activity which partially offset the impact of the almost complete cessation of international travel due to COVID-19.

Looking ahead, the Company expects that, in the first quarter of 2021, the negative impact will continue as a result of the almost complete cessation of air travel and closure of stores for part of the quarter; however, the overall impact is not expected to differ materially from its scope in the preceding quarter.

The Adjusted Free Cash Flow (before interest and including lease payments) for 2020 totaled NIS 72 million. CAPEX totaled NIS 573 million. For the fourth quarter, the Adjusted Free Cash Flow (before interest and including lease payments) was negative and totaled approximately minus NIS 3 million, with CAPEX totaling NIS 156 million. The investments in 2020 reflect the continued efforts of the Company to expand the deployment of the fiber-optic infrastructure, for which we expect to complete the major rollout phase during the year 2023, and the continued penetration of the television market. These investments continue to be made possible as a result of Partner's financial stability and strong balance sheet, and they continue even during the challenging period of the COVID-19 crisis.

Net debt was NIS 657 million at the end of the year 2020, compared with NIS 957 million at the end of last year, a decrease of NIS 300 million, mainly reflecting the Company's successful capital raising in January 2020 in the amount of NIS 276 million, net. The Company's net debt to Adjusted EBITDA ratio stood at 0.8 at year-end 2020, which demonstrates the Company's financial strength."

Q4 2020 compared with Q3 2020

Key Financial Results 

* The Company adopted IFRS 15 from the beginning of 2017 and IFRS 16 from the beginning of 2019. For more information see the Company's Annual Report on Form 20-F for the year ended December 31, 2020.

Key Operating Indicators

* The Company adopted IFRS 15 from the beginning of 2017 and IFRS 16 from the beginning of 2019. For more information see the Company's Annual Report on Form 20-F for the year ended December 31, 2020.

Partner Consolidated Results

Financial Review

In 2020, total revenues were NIS 3,189 million (US$ 992 million), a decrease of 1% from NIS 3,234 million in 2019.

Annual service revenues in 2020 totaled NIS 2,508 million (US$ 780 million), a decrease of 2% from NIS 2,560 million in 2019.

Service revenues for the cellular segment in 2020 totaled NIS 1,663 million (US$ 517 million), a decrease of 8% from NIS 1,798 million in 2019. The decrease was mainly the result of the negative impact of the COVID-19 crisis which caused a significant reduction in revenues from roaming services, and the continued price erosion of cellular services due to on-going competitive market conditions. These decreases in service revenues were partially offset by an increase in interconnect revenues due to the significant increase in incoming call volumes related to the COVID-19 crisis, and an increase in revenues due to the growth of the cellular subscriber base.

Service revenues for the fixed-line segment in 2020 totaled NIS 993 million (US$ 309 million), an increase of 7% from NIS 925 million in 2019. This increase mainly reflected the growth in internet and TV services, which was partially offset by a decline in revenues from international calling services (including the market for wholesale international traffic) which continue to be adversely affected by the increased penetration of internet-based solutions.

In Q4 2020, total revenues were NIS 808 million (US$ 251 million), a decrease of 3% from NIS 834 million in Q4 2019.

Service revenues in Q4 2020 totaled NIS 632 million (US$ 197 million), a decrease of 1% from NIS 636 million in Q4 2019.

Service revenues for the cellular segment in Q4 2020 totaled NIS 416 million (US$ 129 million), a decrease of 5% from NIS 438 million in Q4 2019. The decrease was mainly the result of the negative impact of the COVID-19 crisis on roaming service revenues and the continued price erosion of cellular services due to the continued competitive market conditions, which were partially offset by an increase in interconnect revenues and by an increase in revenues due to the growth of the cellular subscriber base.

Service revenues for the fixed-line segment in Q4 2020 totaled NIS 252 million (US$ 78 million), an increase of 6% from NIS 238 million in Q4 2019. The increase mainly reflected higher revenues from the growth in internet and TV services, which were partially offset by a decline in revenues from international calling services.

Equipment revenues in 2020 totaled NIS 681 million (US$ 212 million), an increase of 1% from NIS 674 million in 2019, principally reflecting significant increases in cellular equipment sales to wholesale customers and in sales of fixed-line equipment for both business and private customers, partially offset by lower volumes of retail sales of cellular equipment following the closure of some sales points at certain COVID-19-related lockdown periods during the year.

Gross profit from equipment sales in 2020 was NIS 145 million (US$ 45 million), compared with NIS 144 million in 2019, an increase of 1%. The increase mainly reflected an increase in gross profit from sales of fixed-line equipment, partially offset by a decrease in gross profit from sales of cellular equipment. 

Equipment revenues in Q4 2020 totaled NIS 176 million (US$ 55 million), a decrease of 11% from NIS 198 million in Q4 2019, mainly reflecting a decrease in equipment sales in the cellular segment, largely a result of the adverse impact of the COVID-19 crisis on retail customer sales, partially offset by increased sales in the fixed-line segment.

Gross profit from equipment sales in Q4 2020 was NIS 40 million (US$ 12 million), compared with NIS 37 million in Q4 2019, an increase of 8%, mainly reflecting a change in the product mix which led to an increase in the average profit per sale.

Total operating expenses ('OPEX') totaled NIS 1,871 million (US$ 582 million) in 2020, a decrease of 1% or NIS 14 million from 2019. The decrease mainly reflected a reduction in workforce and related expenses as part of the cost-cutting measures taken to mitigate the impact of the COVID-19 crisis on revenues, a decrease in wholesale internet infrastructure access expenses following receipt of a government-mandated refund from Bezeq of approximately NIS 20 million of surplus payments for access to the wholesale internet infrastructure in previous years and a decrease in international calling services expenses. The decreases in these expenses were partially offset by increases in interconnect expenses due to the significant increase in outgoing call volumes related to the COVID-19 crisis. Including depreciation, amortization and other expenses (mainly amortization of employee share-based compensation), OPEX in 2020 decreased by 2% compared with 2019.

Total operating expenses ('OPEX') totaled NIS 480 million (US$ 149 million) in Q4 2020, an increase of 3% or NIS 13 million from Q4 2019, mainly reflecting an increase in interconnect expenses, partially offset by a decrease in workforce and related expenses and in international calling services expenses. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q4 2020 increased by 2% compared with Q4 2019.

Operating profit for 2020 totaled NIS 96 million (US$ 30 million), an increase of 10% compared with NIS 87 million in 2019. The increase in operating profit mainly reflected the decrease in operating expenses including depreciation and amortization expenses, which more than offset the decrease in service revenues.

Adjusted EBITDA in 2020 totaled NIS 822 million (US$ 256 million), a decrease of 4% from NIS 853 million in 2019. As a percentage of total revenues, Adjusted EBITDA in 2020 was 26%, unchanged from 2019.

Adjusted EBITDA for the cellular segment was NIS 533 million (US$ 166 million) in 2020, a decrease of 16% from NIS 635 million in 2019, largely reflecting the decrease in cellular segment service revenues and the decrease in gross profit from equipment sales which were partially offset by the decrease in operating expenses. The decrease in operating expenses for the cellular segment was principally due to a decrease in workforce and related expenses which were partially offset by an increase in interconnect expenses due to the significant increase in outgoing call volumes related to the COVID-19 crisis. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment in 2020 was 24% compared with 27% in 2019.

Adjusted EBITDA for the fixed-line segment was NIS 289 million (US$ 90 million) in 2020, an increase of 33% from NIS 218 million in 2019, mainly reflecting the growth in TV and internet services and the increase in gross profit from fixed-line equipment sales, which were partially offset by the increase in total operating expenses. The increase in total operating expenses for the fixed-line segment principally reflected increased workforce and related expenses related to the growth in fixed-line segment services and an increase in interconnect expenses, partially offset by the receipt of a government mandated refund from Bezeq of approximately NIS 20 million of surplus payments for access to the wholesale internet infrastructure in previous years and a decrease in international calling services expenses. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment was 26% in 2020, compared with 21% in 2019.

Operating profit for Q4 2020 was 20 million (US$ 6 million), a decrease of 33% compared with NIS 30 million in Q4 2019.

Adjusted EBITDA in Q4 2020 totaled NIS 203 million (US$ 63 million), a decrease of 6% from NIS 217 million in Q4 2019. As a percentage of total revenues, Adjusted EBITDA in Q4 2020 was 25% compared with 26% in Q4 2019.

Adjusted EBITDA for the cellular segment was NIS 138 million (US$ 43 million) in Q4 2020, a decrease of 12% from NIS 156 million in Q4 2019, largely reflecting the decrease in cellular service revenues mainly as a result of the COVID-19 crisis, the increase in interconnect expenses and the decrease in gross profit from equipment sales, partially offset by a decrease in various cellular operating expenses including in workforce expenses and other cost-cutting measures. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment was 25% in Q4 2020, compared with 26% in Q4 2019.

Adjusted EBITDA for the fixed-line segment was NIS 65 million (US$ 20 million) in Q4 2020, an increase of 7% from NIS 61 million in Q4 2019, mainly reflecting the increase in fixed-line segment service revenues and the increase in gross profit from equipment sales, which were partially offset by an increase in fixed-line operating expenses, including in workforce and related expenses related to the growth in fixed-line segment services.  As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment was 22% in Q4 2020, compared with 23% in Q4 2019.

Finance costs, net in 2020 were NIS 69 million (US$ 22 million), an increase of 1% compared with NIS 68 million in 2019. The increase mainly reflected the one-time expense in an amount of approximately NIS 7 million relating to the partial early repayment of the Company's Notes Series F during the year, partially offset by a decrease in lease interest and an increase in interest from cash and deposits.

Finance costs, net in Q4 2020 were NIS 13 million (US$ 4 million), a decrease of 35% compared with NIS 20 million in Q4 2019. The decrease mainly reflected lower interest expenses due to the lower average debt level in Q4 2020 compared with Q4 2019.

Income tax expenses for 2020 were NIS 10 million (US$ 3 million), compared with no income tax expenses in 2019. In 2019, a one-time income of NIS 6 million was recorded in income tax expenses.

Income tax expenses in Q4 2020 were NIS 2 million (US$ 1 million), a decrease of 33% compared with NIS 3 million in Q4 2019.

Overall, the Company's profit in 2020 totaled NIS 17 million (US$ 5 million), a decrease of 11% compared with profit of NIS 19 million in 2019.

Based on the weighted average number of shares outstanding during 2020, basic earnings per share or ADS, was NIS 0.09 (US$ 0.03) a decrease of 25% compared with basic earnings per share of NIS 0.12 in 2019.

Profit in Q4 2020 was NIS 5 million (US$ 2 million), a decrease of 29% compared with NIS 7 million in Q4 2019. The profit in Q4 2019 included an increase of NIS 12 million as a result of the change in the estimated useful life of the cellular license.  

Based on the weighted average number of shares outstanding during Q4 2020, basic earnings per share or ADS, was NIS 0.03 (US$ 0.01) compared with basic earnings per share or ADS, of NIS 0.05 in Q4 2019.

Cellular Segment Operational Review

At the end of 2020, the Company's cellular subscriber base (including mobile data, 012 Mobile subscribers and M2M subscriptions) was approximately 2.84 million, including approximately 2.50 million Post-Paid subscribers or 88% of the base, and 341 thousand Pre-Paid subscribers, or 12% of the subscriber base.

Over the year 2020, the cellular subscriber base increased by 179 thousand subscribers. The Post-Paid subscriber base increased by 129 thousand subscribers, and the Pre-Paid subscriber base increased by 50 thousand subscribers. The increase in the Post-Paid subscriber base included approximately 25 thousand subscribers to a time-limited 12 month data package for modems provided to students by the Ministry of Education as part of their COVID-19 crisis program. As part of the same program, a further approximate 42,000 subscribers are expected to join the Post-Paid subscriber base during the first half of 2021.

Total cellular market share (based on the number of subscribers) at the end of 2020 was estimated to be approximately 27%, compared with 25% in 2019.

The annual churn rate for cellular subscribers in 2020 was 30%, compared with 31% in 2019 and with 35% in 2018.

The monthly Average Revenue Per User ("ARPU") for cellular subscribers in 2020 was NIS 51 (US$ 16), a decrease of 11% from NIS 57 in 2019. The decrease resulted from the impact of the COVID-19 crisis on roaming service revenues and the continued price erosion of cellular services due to the continued competitive market conditions, which were partially offset by an increase in interconnect revenues due to the significant increase in incoming call volumes related to the COVID-19 crisis and the contribution of Partner's value strategy, Partner More.

During the fourth quarter of 2020, the cellular subscriber base increased net by 74 thousand subscribers. The Post-Paid subscriber base increased by 58 thousand subscribers and the Pre-Paid subscriber base increased by 16 thousand subscribers. The increase in the Post-Paid subscriber base included approximately 25 thousand subscribers to a time-limited 12-month data package for modems provided to students by the Ministry of Education as part of their COVID-19 crisis program.

The quarterly churn rate for cellular subscribers in Q4 2020 was 7.2%, unchanged from Q4 2019.

The monthly Average Revenue Per User ("ARPU") for cellular subscribers in Q4 2020 was NIS 49 (US$ 15), a decrease of 11% from NIS 55 in Q4 2019, largely for the same reasons as the annual decrease in ARPU.

Fixed-Line Segment Operational Review

At the end of 2020, the Company's fiber-optic subscriber base was 139 thousand subscribers, an increase, net, of 63 thousand subscribers in the year, and of 19 thousand subscribers during the fourth quarter of 2020.

At the end of 2020, the Company's infrastructure-based internet subscriber base was 329 thousand subscribers, an increase, net, of 61 thousand subscribers in the year, and of 18 thousand subscribers during the fourth quarter of 2020.

At the end of 2020, households in buildings connected to our fiber-optic infrastructure (HC) totaled 465 thousand, an increase of 141 thousand in the year, and of 33 thousand subscribers during the fourth quarter of 2020.

At the end of 2020, the Company's TV subscriber base totaled 232 thousand subscribers, an increase, net, of 44 thousand subscribers in the year, and of 8 thousand subscribers during the fourth quarter of 2020.

Funding and Investing Review

In 2020, Adjusted Free Cash Flow (including lease payments) totaled NIS 72 million (US$ 22 million), an increase of 47% from NIS 49 million in 2019.

Cash generated from operating activities decreased by 6% to NIS 786 million (US$ 244 million) in 2020 from NIS 837 million in 2019, mainly reflecting the decrease in Adjusted EBITDA. 

Lease payments (principal and interest), recorded in cash flows from financing activities under IFRS 16 totaled NIS 147 million (US$ 46 million) in 2020, a decrease of 8% from NIS 159 million in 2019.

Cash capital expenditures (Capex payments), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 573 million (US$ 178 million) in 2020, a decrease of 9% from NIS 629 million in 2019.

In Q4 2020, Adjusted Free Cash Flow (including lease payments) was negative and totaled minus NIS 3 million (US$ -1 million), a decrease of NIS 19 million compared with NIS 16 million in Q4 2019.

Cash generated from operating activities totaled NIS 182 million (US$ 57 million) in Q4 2020, an increase of 2% from NIS 178 million in Q4 2019.

Lease payments (principal and interest), recorded in cash flows from financing activities under IFRS 16, totaled NIS 32 million (US$ 10 million) in Q4 2020, a decrease of 9% from Q4 2019.

Cash capital expenditures (CAPEX payments), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 156 million (US$ 49 million) in Q4 2020, an increase of 23% from NIS 127 million in Q4 2019.

The level of net debt at the end of 2020 amounted to NIS 657 million (US$ 204 million), compared with NIS 957 million at the end of 2019, a decrease of NIS 300 million. The decrease mainly reflected the Company's share issuance in January 2020 for which the total net consideration received was approximately NIS 276 million.

Conference Call Details
Partner will host a conference call to discuss its financial results on Thursday, March 25, 2021 at 11.00 a.m. Eastern Time / 5.00 p.m. Israel Time.

Please dial the following numbers (at least 10 minutes before the scheduled time) in order to participate:

International: +972.3.918.0687
North America toll-free: +1.866.860.9642
A live webcast of the call will also be available on Partner's Investors Relations website at:
http://www.partner.co.il/en/Investors-Relations/lobby 

If you are unavailable to join live, the replay of the call will be available from March 25, 2021 until April 8, 2021, at the following numbers:

International: +972.3.925.5921
North America toll-free: +1.888.326.9310
In addition, the archived webcast of the call will be available on Partner's Investor Relations website at the above address for approximately three months.

Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Words such as "estimate", "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "project", "goal", "target" and similar expressions often identify forward-looking statements but are not the only way we identify these statements. In particular, this press release communicates our belief that (i) we are in an excellent position for growth in all areas of activity and to increase profitability, (ii) we will be able to advance the rollout and connect more customers to our 5G network and gradually expand the range of services offered, and we may benefit from additional financial support for the continued deployment of 5G sites and a significant discount on frequency fees, subject to certain conditions, (iii) the overall negative impact of COVID-19 will not differ materially from its scope in the preceding quarter, and (iv) we will further expand the deployment of the fiber optic infrastructure, for which we expect to complete the major rollout phase during the year 2023, and continue to penetrate the television market. In addition, all statements other than statements of historical fact included in this press release regarding our future performance are forward-looking statements.

We have based these forward-looking statements on our current knowledge and our present beliefs and expectations regarding possible future events. These forward-looking statements are subject to risks, uncertainties and assumptions, including in particular (i) the severity and duration of the impact on our business of the current health crisis, including employee absences and disruptions in our equipment supply chain (ii) unexpected technical issues which may arise as we rollout our 5G network and expand the range of services, and as we deploy the fiber optic infrastructure, and (iii) currently unanticipated demands on our financial resources which could limit our ability to pursue our strategic objectives.  In light of the current unreliability of predictions as to the ultimate severity and duration of the health crisis, as well as the specific regulatory and business risks facing our business, future results may differ materially from those currently anticipated. For further information regarding risks, uncertainties and assumptions about Partner, trends in the Israeli telecommunications industry in general, the impact of current global economic conditions and possible regulatory and legal developments, and other risks we face, see "Item 3. Key Information - 3D. Risk Factors", "Item 4. Information on the Company", "Item 5. Operating and Financial Review and Prospects", "Item 8. Financial Information - 8A. Consolidated Financial Statements and Other Financial Information - 8A.1 Legal and Administrative Proceedings" and "Item 11. Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Reports on Form 20-F filed with the SEC, as well as its immediate reports on Form 6-K furnished to the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The quarterly financial results presented in this press release are unaudited financial results.

The results were prepared in accordance with IFRS, other than the non-GAAP financial measures presented in the section, "Use of Non-GAAP Financial Measures".

The financial information is presented in NIS millions (unless otherwise stated) and the figures presented are rounded accordingly. The convenience translations of the New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at December 31, 2020: US $1.00 equals NIS 3.215. The translations were made purely for the convenience of the reader.

Use of Non-GAAP Financial Measures
The following non-GAAP measures are used in this report. These measures are not financial measures under IFRS and may not be comparable to other similarly titled measures for other companies. Further, the measures may not be indicative of the Company's historic operating results nor are meant to be predictive of potential future results.

About Partner Communications

Partner Communications Company Ltd. is a leading Israeli provider of telecommunications services (cellular, fixed-line telephony, internet services and TV services). Partner's ADSs are quoted on the NASDAQ Global Select Market™ and its shares are traded on the Tel Aviv Stock Exchange (NASDAQ and TASE: PTNR). 

For more information about Partner, see: http://www.partner.co.il/en/Investors-Relations/lobby

*    Net of treasury shares.
**  Including restricted shares in an amount of 1,247,583 and 1,008,735 as of December 31, 2019 and December 31, 2020, respectively, held by a trustee under the Company's Equity Incentive Plan, such shares may become outstanding upon completion of vesting conditions.

*   Representing an amount of less than 1 million.
** See report 20-F regarding the adoption of IFRS 16 – Leases, from the beginning of 2019.

*   Representing an amount of less than 1 million.
** See report 20-F regarding the adoption of IFRS 16 – Leases, from the beginning of 2019.

*   Representing an amount of less than 1 million.

*   Representing an amount of less than 1 million.
(1) Mainly amortization of employee share based compensation.
(2) Adjusted EBITDA as reviewed by the CODM represents Earnings Before Interest (finance costs, net), Taxes, Depreciation and Amortization (including amortization of intangible assets, deferred expenses-right of use and impairment charges) and Other expenses (mainly amortization of share based compensation). Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures for other companies. Adjusted EBITDA may not be indicative of the Group's historic operating results nor is it meant to be predictive of potential future results. The usage of the term "Adjusted EBITDA" is to highlight the fact that the Amortization includes amortization of deferred expenses – right of use and amortization of employee share based compensation and impairment charges.  
(3) Operating expenses include selling and marketing expenses, general and administrative expenses and credit losses. 

*   Representing an amount of less than 1 million.
** See report 20-F regarding the adoption of IFRS 16 – Leases, from the beginning of 2019.

*   Representing an amount of less than 1 million.
** See report 20-F regarding the adoption of IFRS 16 – Leases, from the beginning of 2019.

At December 31, 2018, 2019 and 2020, trade and other payables, net include NIS 157 million, NIS 115 million and NIS 139 million (US$ 43 million), respectively, in respect of acquisition of intangible assets and property and equipment; payments in respect thereof are presented in cash flows from investing activities.

These balances are recognized in the cash flow statements upon payment. Cost of inventory used as fixed assets during 2019 and 2020 were NIS 24 million and NIS 8 million (US$ 2 million), respectively.

Reconciliation of Non-GAAP Measures:

*     Representing an amount of less than 1 million.
(1)  Mainly amortization of employee share based compensation.

Key Financial and Operating Indicators (unaudited) ***

Comments:

*    Figures from 2019 include impact of adoption of IFRS 16 - Leases (see also report 20-F).
**  From 2019, the number of employees (FTE) also includes the number of FTE of PHI on a proportional basis of Partner's share in the subsidiary (50%). Excluding employees on unpaid leave in 2020.
***See footnote 2 regarding use of non-GAAP measures.

Disclosure for notes holders as of December 31, 2020
Information regarding the notes series issued by the Company, in million NIS

(1)  In April 2019, the Company issued in a private placement 2 series of untradeable option warrants that are exercisable for the Company's Series G debentures. The exercise period of the first series is between July 1, 2019 and May 31, 2020 and of the second series is between July 1, 2020 and May 31, 2021. The Series G debentures that will be allotted upon the exercise of an option warrant will be identical in all their rights to the Company's Series G debentures immediately upon their allotment, and will be entitled to any payment of interest or other benefit, the effective date of which is due after the allotment date. The debentures that will be allotted as a result of the exercise of option warrants will be registered on the TASE. The total amount received by the Company on the allotment date of the option warrants is NIS 37 million. For additional details see the Company's press release dated April 17, 2019. Following exercise of option warrants from the first series, the Company issued Series G Notes in a total principal amount of NIS 225 million. Following exercise of option warrants from the second series in July 2020 and November 2020, the Company issued Series G Notes in a principal amount of NIS 12.2 million and NIS 62.2 million, respectively. As of today, the total future considerations expected to the Company in respect of the allotment of the option warrants from the second series (after the exercises of option warrants as described above) and in respect of their full exercise (and assuming that there will be no change to the exercise price) is approximately NIS 23 million.
In July 2020, the Company issued in a private placement additional Series G Notes in a principal amount of NIS 300 million, under the same conditions of the original series.
(2)  Regarding Series F and G Notes, the Company is required to comply with a financial covenant that the ratio of Net Debt to Adjusted EBITDA shall not exceed 5. Compliance will be examined and reported on a quarterly basis. For the purpose of the covenant, Adjusted EBITDA is calculated as the sum total for the last 12 month period, excluding adjustable one-time items. As of December 31, 2020, the ratio of Net Debt to Adjusted EBITDA was 0.8. Additional stipulations regarding Series F and G Notes mainly include: shareholders' equity shall not decrease below NIS 400 million and NIS 600 million, respectively; the Company shall not create floating liens subject to certain terms; the Company has the right for early redemption under certain conditions; the Company shall pay additional annual interest of 0.5% in the case of a two-notch downgrade in the Notes rating and an additional annual interest of 0.25% for each further single-notch downgrade, up to a maximum additional interest of 1%; the Company shall pay additional annual interest of 0.25% during a period in which there is a breach of the financial covenant. In any case, the total maximum additional interest for Series F and G, shall not exceed 1.25% or 1%, respectively. For more information see the Company's Annual Report on Form 20-F for the year ended December 31, 2020.
In the reporting period, the Company was in compliance with all financial covenants and obligations and no cause for early repayment occurred.
(3)  In July 2020, the Company executed a partial early redemption of Series F Notes in a total principal amount of NIS 305 million. The total amount paid was NIS 313 million.
(4)  'MAKAM' is a variable interest based on the yield of 12 month government bonds issued by the government of Israel. The interest rate is updated on a quarterly basis.
*    On these dates additional Notes of the series were issued. The information in the table refers to the full series.      
**   Representing an amount of less than NIS 1 million.

Disclosure for Notes holders as of December 31, 2020 (cont.)
Notes Rating Details*

(1) In August 2020, S&P Maalot reaffirmed the Company's ilA+ credit rating and updated the Company's rating outlook from "negative" to "stable".

(2) For details regarding the rating of the notes see the S&P Maalot reports dated August 10, 2020.

(3) In January 2019, the Company issued Series G Notes in a principal amount of NIS 225 million. In July 2019, November 2019, February 2020, May 2020, July 2020 and November 2020 the Company issued additional Series G Notes in a principal amount of NIS 38.5 million, NIS 86.5 million, NIS 15.1 million, NIS 84.8 million, NIS 12.2 million and NIS 62.2 million, respectively. In addition, in July 2020, the Company issued in a private placement additional Series G Notes in a principal amount of NIS 300 million.

 * 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

Summary of Financial Undertakings (according to repayment dates) as of December 31, 2020

a.  Notes issued to the public by the Company and held by the public, excluding such notes 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).

b.  Private notes and other non-bank credit, excluding such notes 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 – None.

c.  Credit from banks in Israel based on the Company's "Solo" financial data (in thousand NIS).

Summary of Financial Undertakings (according to repayment dates) as of December 31, 2020 (cont.)

d.  Credit from banks abroad based on the Company's "Solo" financial data – None.

e.  Total of sections a - d above, total credit from banks, non-bank credit and notes based on the Company's "Solo" financial data (in thousand NIS).

f.  Off-balance sheet Credit exposure based on the Company's "Solo" financial data (in thousand NIS) – 50,000 (Guarantees on behalf of a joint arrangement, without expiration date).

g.  Off-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 - None.

h.  Total balances of the credit from banks, non-bank credit and notes of all the consolidated companies, excluding companies that are reporting corporations and excluding Company's data presented in sections a - d above - None.

i.  Total balances of credit granted to the Company by the parent company or a controlling shareholder and balances of notes offered by the Company held by the parent company or the controlling shareholder - None.

j.  Total balances of credit granted to the Company by companies held by the parent company or the controlling shareholder, which are not controlled by the Company, and balances of notes offered by the Company held by companies held by the parent company or the controlling shareholder, which are not controlled by the Company – None.

k.  Total balances of credit granted to the Company by consolidated companies and balances of notes offered by the Company held by the consolidated companies - None.

In addition to the total credit above, Company's financial debt includes financial liability at fair value in respect of option warrants issued in May 2019. At December 31, 2020, this financial liability totaled to an amount of NIS 4 million.

SOURCE Partner Communications Company Ltd.