News Releases

Cellcom Israel Announces Second Quarter 2016 Results
EBITDA1 for the second quarter of 2016 totaled NIS 238 million, an approximately 10% increase compared to the second quarter last year.
Net income for the second quarter of 2016 totaled NIS 44 million, an approximately 267% increase compared to the second quarter last year.
Nir Sztern, Cellcom CEO said: "In this quarter we continued to recruit customers at a fast pace, and the TV customer base increased in approximately 12,000 additional households. As of the end of the quarter approximately 87,000 households were enjoying Cellcom tv. We will continue to invest in Cellcom tv so it continues to be a quality and an advanced alternative to the existing TV service providers, for the best price in Israel."

NETANYA, Israel, Aug. 10, 2016 /PRNewswire/ --

Second Quarter 2016 Highlights (compared to second quarter of 2015):

  • Total Revenues totaled NIS 1,029 million ($267 million) compared to NIS 1,040 million ($270 million) in the second quarter last year, a decrease of 1.1%
  • Service revenues totaled NIS 782 million ($203 million) compared to NIS 786 million ($204 million) in the second quarter last year, a decrease of 0.5%
  • EBITDA1 totaled NIS 238 million ($62 million) compared to NIS 216 million ($56 million) in the second quarter last year, an increase of 10.2%
  • EBITDA margin 23.1%, up from 20.8%
  • Operating income totaled NIS 104 million ($27 million) compared to NIS 80 million ($21 million) in the second quarter last year, an increase of 30%
  • Net income totaled NIS 44 million ($11 million) compared to NIS 12 million ($3 million) in the second quarter last year, an increase of 266.7%
  • Free cash flow1 totaled NIS 103 million ($27 million) compared to NIS 119 million ($31 million) in the second quarter last year, a decrease of 13.4%
  • Cellular subscriber base totaled approximately 2.812 million subscribers (at the end of June 2016)

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

Nir Sztern, the Company's Chief Executive Officer, referred to the results of the second quarter:

"The business results of the quarter reflect the Group's ability to successfully operate in an environment characterized by intense competition. In this quarter also we see an improvement in most of the financial measures alongside a decrease in expenses, with an increase of approximately 267% in net income and approximately 10% in EBITDA compared with the corresponding quarter last year. We are implementing the strategy that established our position as a telecommunications group providing a complete value added offering to the customer, and we are enjoying the fruits of this strategy. In this quarter we continued to recruit customers at a fast pace, and the TV customers base increased by approximately 12,000 additional households. As of the end of the quarter, approximately 87,000 households are enjoying Cellcom tv. We will continue to invest in Cellcom tv so it continues to be a quality and an advanced alternative to the existing TV service providers, for the best price in Israel.

In this quarter we continued the efficiency measures pursuant to which we concluded a successful voluntary retirement plan, in relation to which we recorded an expense of approximately NIS 13 million in the quarter.

Recently, we announced our entering into a 4G network sharing and 2G and 3G hosting services agreement with Marathon 018 Xfone which was awarded 4G frequencies in the 2015 frequencies tender and has not entered the cellular market yet. This is an agreement which will advance the cellular infrastructure in Israel and will guarantee continued investments in the development of 4G network while complying with regulation requirements. We believe that only price based competition together with network quality competition and an investment in advanced infrastructures, is the only way to bring Israel back to a world class cellular leader status. This proves that a competitive market can be maintained while complying with regulation guidelines on a level playing field.

I want to thank the employees and managers of the Cellcom group, whose daily work and their commitment to the success of the Group contributed to us winning, for the sixth consecutive year, the title of the leading cellular brand in Israel of the business newspaper 'Globes' brands index."

Shlomi Fruhling, Chief Financial Officer, said:

"In the second quarter of 2016 Cellcom group recorded an improvement in its business results compared with the same quarter of last year, in spite of the continuous competition in the cellular field, reflected in erosion of service revenues, which was partially offset by an increase in revenues from national roaming. In the fixed-line segment we reported stability in service revenues, following the continued recruitment of Cellcom tv, landline wholesale market and triple-play services customers, which was offset by a continued decrease in long distance calls revenues.

From the beginning of the year we witnessed a moderation in the erosion of cellular services revenues compared with the erosion in 2015. The Group continues to act to decrease its operating expenses. In the first half of 2016, selling, marketing, general and administrative expenses reduced approximately 8.7% compared to the same period last year. In addition, the Group recorded a NIS 13 million expense in the second quarter of 2016 in relation of a voluntary retirement plan, and we will see the saving in wages cost gradually starting from the third quarter this year.

The Group continued in the second quarter also to act to decrease its net debt level to NIS 2.59 billion, compared to NIS 2.86 billion in the same quarter last year. The Free Cash Flow totaled NIS 103 million in the second quarter of 2016, a 13.4% decrease compared to the same quarter last year. The decrease in Free Cash Flow resulted mainly from a decrease in receipts from customers for services and end user equipment, which was partially offset by an increase in receipts from national roaming services.

Pursuant to the Group's actions to diversify its financial resources, in the second quarter of 2016 the Company was provided with the first loan under the loan agreement entered by the Company and two financial institutions in May 2015, in a principal amount of NIS 200 million.

The Company's Board of Directors decided not to distribute a dividend for the second quarter of 2016, given the continued intensified competition in the market and its effect on the Company's operating results and in order to further strengthen the Company's balance sheet. The Board of Directors will re-evaluate its decision as market conditions develop, and taking into consideration the Company's needs."

Cellcom Israel Ltd. (NYSE: CEL; TASE: CEL) ("Cellcom Israel" or the "Company" or the "Group"), announced today its financial results for the second quarter of 2016. Revenues for the second quarter of 2016 totaled NIS 1,029 million ($267 million). EBITDA for the second quarter of 2016 totaled NIS 238 million ($62 million), reflecting a margin of 23.1% of total revenues. Net income for the second quarter of 2016 totaled NIS 44 million ($11 million). Basic earnings per share for the second quarter of 2016 totaled NIS 0.43 ($0.11).

Main Consolidated Financial Results:

 

Q2/2016

NIS million

Q2/2015

NIS million

Change%

NIS million

Q2/2016

US$ million

(convenience translation)

Q2/2015

US$ million

(convenience translation)

Total revenues

1,029

1,040

(1.1%)

267

270

Operating Income

104

80

30%

27

21

Net Income

44

12

266.7%

11

3

Free cash flow

103

119

(13.4%)

27

31

EBITDA

238

216

10.2%

62

56

EBITDA, as percent of total revenues

23.1%

20.8%

11.1%

   

Main Financial Data by Operating Segments:

Starting from the first quarter of 2016, the Company presents its operations in two segments, "Cellular" segment and "Fixed-line" segment. These segments are managed separately for allocating resources and assessing performance purposes. The Company adjusted its operating segments reporting for prior periods on a retroactive basis, therefore the segment reporting for those periods reflect the new reporting format.

  • Cellular Segment - the segment includes the cellular communications services, end user cellular equipment and supplemental services.
  • Fixed-line segment - the segment includes landline telephony services, internet infrastructure and connectivity services, television services, end user fixed-line equipment and supplemental services.

 

 

NIS million

Cellular (*)

Q2'16

Cellular (*)

Q2'15

Cellular (*)

Change%

Fixed-line (**)

Q2'16

Fixed-line (**)

Q2'15

Fixed-line (**)

Change%

Consolidation adjustments
(***)

Q2'16

Consolidation adjustments
(***)

Q2'15

Consolidated results

Q2'16

Consolidated results

Q2'15

Consolidated results

Change%

Total revenues

784

810

(3.2%)

294

281

4.6%

(49)

(51)

1,029

1,040

(1.1%)

Service revenues

567

573

(1.0%)

264

264

-

(49)

(51)

782

786

(0.5%)

Equipment revenues

217

237

(8.4%)

30

17

76.5%

-

-

247

254

(2.8%)

EBITDA

181

149

21.5%

57

67

(14.9%)

-

-

238

216

10.2%

EBITDA, as percent of total revenues

23.1%

18.4%

25.5%

19.4%

23.8%

(18.5%)

   

23.1%

20.8%

11.1%

 

 (*) The segment includes the cellular communications services, end user cellular equipment and supplemental services.

(**) The segment includes landline telephony services, internet infrastructure and connectivity services, television
       services, end user fixed-line equipment and supplemental services.

(***) Include cancellation of inter-segment revenues between Cellular and Fixed-line segments.

 

Financial Review

Revenues for the second quarter of 2016 decreased 1.1% totaling NIS 1,029 million ($267 million), compared to NIS 1,040 million ($270 million) in the second quarter of last year. The decrease in revenues is attributed to a 0.5% decrease in service revenues, and a 2.8% decrease in equipment revenues.

Service revenues totaled NIS 782 million ($203 million) in the second quarter of 2016, a 0.5% decrease from NIS 786 million ($204 million) in the second quarter of last year.

Service revenues in the cellular segment totaled NIS 567 million ($147 million) in the second quarter of 2016, a 1.0% decrease from NIS 573 million ($149 million) in the second quarter of last year. This decrease resulted mainly from a decrease in cellular services revenues due to the ongoing erosion in the price of these services and churn of customers as a result of the competition in the cellular market. This decrease was partially offset by an increase in revenues from national roaming.

Service revenues in the fixed-line segment totaled NIS 264 million ($69 million) in the second quarter of 2016, with no change from the second quarter of last year. In the second quarter of 2016 revenues from long distance calls decreased. Such decrease was offset by an increase in revenues from the Internet and TV fields.

Equipment revenues in the second quarter of 2016 totaled NIS 247 million ($64 million), a 2.8% decrease compared to NIS 254 million ($66 million) in the second quarter of last year. This decrease resulted mainly from a decrease in communications equipment sold during the second quarter of 2016 as compared with the second quarter of 2015 as a result, mainly, from seasonality (holidays).  This decrease was partially offset by an increase in equipment revenues in the fixed-line segment.

Cost of revenues for the second quarter of 2016 totaled NIS 666 million ($173 million), compared to NIS 682 million ($177 million) in the second quarter of 2015, a 2.3% decrease. This decrease resulted mainly from a decrease in costs associated with the sale of communications equipment, primarily as a result of a decrease in the quantity of equipment sold during the second quarter of 2016 as compared with the second quarter of 2015, which was partially offset by an increase in content costs related to the TV field and the landline wholesale market field.

Gross profit for the second quarter of 2016 Increased 1.4% to NIS 363 million ($94 million), compared to NIS 358 million ($93 million) in the second quarter of 2015. Gross profit margin for the second quarter of 2016 amounted to 35.3%, up from 34.4% in the second quarter of 2015.

Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for the second quarter of 2016 decreased 4.3% to NIS 245 million ($63 million), compared to NIS 256 million ($67 million) in the second quarter of 2015. This decrease is primarily a result of the efficiency measures implemented by the Company.

Other expenses for the second quarter of 2016 totaled NIS 14 million ($4 million), compared with other expenses of NIS 22 million ($6 million) in the second quarter of 2015. Other expenses for the second quarter of 2016 primarily include an expense for a new employee voluntary retirement plan in the amount of approximately NIS 13 million ($3 million), compared to an expense for the previous employee voluntary retirement plan in the amount of approximately NIS 25 million ($7 million) in the second quarter of 2015.

Operating income for the second quarter of 2016 increased by 30% to NIS 104 million ($27 million) from NIS 80 million ($21 million) in the second quarter of 2015. The increase in the operating income resulted mainly from a decrease in the employee voluntary retirement plan expense as compared to this expense in the second quarter of 2015, as well as an improvement in gross profitability and a decrease in operating expenses mainly as a result of efficiency measures implemented by the Company.

EBITDA for the second quarter of 2016 increased by 10.2% totaling NIS 238 million ($62 million) compared to NIS 216 million ($56 million) in the second quarter of 2015. EBITDA in the second quarter of 2016 includes an expense for an employee voluntary retirement plan in the amount of NIS 13 million, compared to EBITDA in the same quarter last of year which includes an expense for an employee voluntary retirement plan in the amount of NIS 25 million. EBITDA for the second quarter 2016, as a percent of second quarter revenues, totaled 23.1%, up from 20.8% in the second quarter of 2015. The increase in the EBITDA resulted mainly from an improvement in gross profitability and a decrease in operating expenses, mainly as a result of lower employee voluntary retirement plan expenses in this quarter as compared with the same quarter of 2015.

Cellular segment EBITDA totaled NIS 181 million ($47 million), compared to NIS 149 million ($39 million) in the second quarter last year, an increase of 21.5% resulted mainly from a decrease in cost of revenues and the operating expenses as mentioned above. Fixed-line segment EBITDA totaled NIS 57 million ($15 million), a 14.9% decrease from the second quarter last year, mainly as a result of an erosion in international calls revenues and an erosion in internet field profitability.

Financing expenses, net for the second quarter of 2016 decreased 29.0% and totaled NIS 44 million ($11 million), compared to NIS 62 million ($16 million) in the second quarter of 2015. The decrease resulted mainly from lower interest expenses in relation of the Company's debentures, as a result of a decrease in the Company's debt level in the second quarter of 2016 compared to the second quarter of 2015, and gains in the Company's investment portfolio in this quarter as opposed to losses in the corresponding quarter of 2015.

Net Income for the second quarter of 2016 totaled NIS 44 million ($11 million), compared to NIS 12 million ($3 million) in the second quarter of 2015, a 266.7% increase.

Basic earnings per share for the second quarter of 2016 totaled NIS 0.43 ($0.11), compared to NIS 0.12 ($0.03) in the second quarter last year.

Operating Review

Main Performance Indicators - Cellular segment:

 

Q2/2016

Q2/2015

Change (%)

Cellular subscribers at the end of period (in thousands)

2,812

2,848

(1.30%)

Churn Rate for cellular subscribers (in %)

10.6%

10.2%

3.90%

Monthly cellular ARPU (in NIS)

66.0

65.5

0.80%

 

Cellular subscriber base – at the end of the second quarter of 2016 the Company had approximately 2.812 million cellular subscribers. During the second quarter of 2016 the Company's cellular subscriber base decreased by approximately 1,000 net cellular subscribers.

Cellular Churn Rate for the second quarter of 2016 totaled 10.6%, compared to 10.2% in the second quarter of 2015.

The monthly cellular Average Revenue per User ("ARPU") for the second quarter of 2016 totaled NIS 66.0 ($17.2), compared to NIS 65.5 ($17.0) in the second quarter of 2015. The increase in ARPU resulted, among others, from an increase in revenues from national roaming, which was partially offset by the ongoing erosion in the prices of cellular services, resulting from the intense competition in the cellular market.

Main Performance Indicators - Fixed-line segment:

At the end of the second quarter of 2016, the Company had approximately 136,000 households in the internet infrastructure field, compared to approximately 32,000 households at the end of the second quarter of 2015. In the TV field, the Company had approximately 87,000 households, compared to approximately 37,000 households at the end of the second quarter of 2015. 

Financing and Investment Review

Cash Flow

Free cash flow for the second quarter of 2016 totaled NIS 103 million ($27 million), compared to NIS 119 million ($31 million) in the second quarter of 2015, a 13.4% decrease. The decrease in free cash flow was mainly due to a decrease in receipts from customers for services and end user equipment, which was partially offset by an increase in receipts from national roaming.

Total Equity

Total Equity as of June 30, 2016 amounted to NIS 1,290 million ($335 million) primarily consisting of accumulated undistributed retained earnings of the Company.

Cash Capital Expenditures in Fixed Assets and Intangible Assets

During the second quarter of 2016 the Company invested NIS 102 million ($26 million) in fixed assets and intangible assets (including, among others, investments in the Company's communications networks, information systems, software and TV set-top boxes), compared to NIS 125 million ($33 million) in the second quarter of 2015.

Dividend

On August 9, 2016, the Company's board of directors decided not to declare a cash dividend for the second quarter of 2016. In making its decision, the board of directors considered the Company's dividend policy and business status and decided not to distribute a dividend at this time, given the intensified competition and its adverse effect on the Company's results of operations, and in order to strengthen the Company's balance sheet. The board of directors will re-evaluate its decision in future quarters. No future dividend declaration is guaranteed and is subject to the Company's board of directors' sole discretion, as detailed in the Company's annual report for the year ended December 31, 2015 on Form 20-F dated March 21, 2016, under "Item 8 - Financial Information – A. Consolidated Statements and Other Financial Information - Dividend Policy".

Debentures

For information regarding the Company's summary of financial liabilities and details regarding the Company's outstanding debentures as of June 30, 2016, see "Disclosure for Debenture Holders" section in this press release.

Loan from Financial Institutions

According to a loan agreement entered by the Company and two financial institutions in May 2015, in June 2016 the first loan under the agreement in a principal amount of NIS 200 million was provided to the Company. The loan is without linkage and the principal amount bears an annual fixed interest of 4.6%, and will be paid in four equal annual payments on June 30 of each calendar year commencing June 30, 2018 through and including June 30, 2021. The interest will be paid in ten semi-annual installments on June 30 and December 31, of each calendar year commencing December 31, 2016 through and including June 30, 2021. For details in regards to the fulfilling of financial covenants included in the loan agreement, which are identical to those included in the Company's Debentures Series F through I, see comment no.1 to the table of "Aggregation of the information regarding the debenture series issued by the Company" under "Disclosure for Debenture Holders" section in this press release. For additional details see the Company's most recent annual report for the year ended December 31, 2015 on Form 20-F, filed on March 21, 2016, under "Item 5B. Liquidity and Capital Resources – Other Credit Facilities".

Other developments during the second quarter of 2016 and subsequent to the end of the reporting period

Agreement with Xfone

In July 2016, the Company entered a 4G network sharing and 2G and 3G hosting services agreement (the "Agreement"), with Marathon 018 Xfone Ltd., or Xfone, which was awarded 4G frequencies in the 2015 frequencies tender and has not entered the cellular market yet.

The main provisions of the Agreement include the following:

  • 4G network sharing – the parties will cooperate in the development of a shared 4G network, which will use both parties' 4G frequencies, to be operated by a separate, newly created entity, or NewCo, that will be equally owned by the parties. Each of the Company and Xfone shall own the active elements of the 4G radio network, or the 4G Radio Network, in equal parts and will grant each other and NewCo an Indefeasible Right of Use, or IRU in their 4G Radio Network. To that end, Xfone will purchase half of the 4G Radio Network owned by the Company prior to the Effective Date from the Company while each party will purchase and operate its own core network. The Company shall further provide Xfone and NewCo an IRU to the Company's passive elements of the 4G network. The company shall provide services to NewCo as a subcontractor.
  • 2G and 3G hosting services – the Company shall provide Xfone hosting services in relation to its 2G and 3G networks.
  • Term – the Agreement is for a term of ten years commencing from the earlier of the commercial launch of cellular services by Xfone or 12 months following the receipt of regulatory approvals for the Agreement, or Effective Date, and will be extended for additional periods, unless either party notifies otherwise.
  • Consideration –
    • 4G CAPEX - for 4G Radio Network investments prior to the Effective Date, Xfone shall pay the Company half its original cost in several installments (not expected to be material), commencing on the Effective Date. The ongoing investments in 4G Radio Network as of the Effective Date, shall be equally borne by the parties.
    • Passive network IRU - for the passive elements' IRU, Xfone shall pay the Company approximately NIS 45 million per annum, in 12 monthly installments.
    • Operation costs - the operation costs of the 4G shared network and the 2G and 3G networks (both active and passive), shall be borne as follows: a fixed component to be borne equally by the parties, subject to certain discount arrangements dependent on Xfones' subscribers amount and a variable component to be borne by the parties according to the parties' relative usage of data by their subscribers (as defined in the Agreement).
    • However, during up to the first 5 years commencing on the Effective Date, Xfone shall be entitled to a discount regarding the said payments for the IRU to the passive elements and its share of the operation costs, according to which, such payments will be replaced with a monthly payment per subscriber to the Company of NIS 25 in the first year, NIS 27.5 in the second year and NIS 30 thereafter, plus VAT, but in any case not less than the minimum annual amounts set in the Agreement (ranging between NIS 20 million in the first year and NIS 110 million in the fifth year).
  • Termination – the Agreement includes separation and termination arrangements, including an interim period in which each party will have IRU to the other's 4G Radio Network under the same terms, the provision of IRU to the passive elements of the 4G network for a certain per cell site payment, and the provision of 2G and 3G services and transmission services to Xfone as shall be agreed between the parties. In addition to standard termination causes, Xfone may terminate the Agreement by a prior written notice if it decides to cease operating in the cellular market in Israel.
  • The Agreement is preconditioned by the receipt of any required regulatory approval including the Antitrust Commissioner and the Ministry of Communications' approvals.
  • The agreement includes standard stipulations as well as certain arrangements for adding another sharing party.

The Agreement will have no impact on the Company's current agreements with Golan Telecom or the Company's compliance with such agreements.

The information relating to the execution of the Agreement and the benefits therefrom, are subject to uncertainties and assumptions about the receipt of the necessary approvals, Xfone's entrance to the cellular market and its cellular subscribers quantity during the agreement period, the parties' ability to execute the contemplated arrangements and the Israeli telecommunications market condition.

For additional details see the Company's most recent annual report for the year ended December 31, 2015 on Form 20-F, filed on March 21, 2016, or the 2015 Annual Report, under "Item 3. Key Information – D. Risk Factors – Risks Related to our Business – We face intense competition in all aspects of our business" and "- Risks Related to the Proposed Acquisition of Golan Telecom Ltd." and "Item 4. Information on the Company – B. Business Overview - General - Agreement for the Purchase of Golan", "– Network and Technology - Network and Cell Sites Sharing Agreements" and under "-Competition – Cellular" and " - Government Regulation – Additional MNOs"", and the Company's current reports on Form 6-K date March 28, 2016, April 12, 2016, May 16, 2016 and June 13, 2016.

Golan Telecom

In June 2016, the controlling shareholder of Hot Mobile Ltd. ("Hot"), another Israeli cellular operator, announced a non-exclusive long term agreement for the provision of hosting services to Golan Telecom on the network used by Hot, and financing arrangements to be provided by Hot and its controlling shareholder (the "Hot Agreement"), subject to the Israeli regulators' approval and instructions.

The Company has notified Golan Telecom and its shareholders that the Hot agreement constitutes material breaches of the Share Purchase Agreement ("SPA") and National Roaming Agreement ("NRA") between the Company and Golan Telecom.

In July 2016, following Golan Telecom's subsequent rejection of said notice, the Company commenced legal actions against Golan Telecom and later that month, the district court granted an interim injunction against the consummation of the Hot Agreement, as requested by the Company. In August 2016, Golan Telecom filed a request to appeal the said interim injunction, with the Israeli Supreme Court.

The Company cannot estimate the chances of regulatory approval of the Hot Agreement, or its impact on the Company's ability to collect amounts owed by Golan Telecom or to generate future revenues from Golan Telecom. A substantial reduction of the future revenues from Golan Telecom will have a material adverse effect on the Company's revenues and results of operations.

For additional details see the Company's 2015 Annual Report under "Item 3 Key Information - D. Risk Factors– Risks Related to our Business –We face intense competition in all aspects of our business" and "- Risks Related to the Proposed Acquisition of Golan Telecom Ltd." and under "Item 4. Information on the Company - B. Business Overview - General - Agreement for the Purchase of Golan", and under "-Competition – Cellular" and " - Government Regulation –Additional MNOs", and the Company's current reports on Form 6-K date March 28, 2016, April 12, 2016, May 16, 2016, June 13, 2016, July 12, 2016 and July 21, 2016.

Voluntary Retirement Plan

In May 2016, the Group in collaboration with the employees representatives, launched a new voluntary retirement plan for employees, following which, the Company recorded an expense in an amount of approximately NIS 13 million in the second quarter of 2016 with respect to employees who joined the plan.

 

CONFERENCE CALL DETAILS

The Company will be hosting a conference call regarding its results for the second quarter of 2016 on Wednesday, August 10, 2016 at 09:00 am ET, 06:00 am PT, 14:00 UK time, 16:00 Israel time. On the call, management will review and discuss the results, and will be available to answer questions. To participate, please either access the live webcast on the Company's website, or call one of the following teleconferencing numbers below. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Number: 1 866 744 5399             

UK Dial-in Number: 0 800 917 9141

Israel Dial-in Number: 03 918 0687               

International Dial-in Number:  +972 3 918 0687

at: 09:00 am Eastern Time; 06:00 am Pacific Time; 14:00 UK Time; 16:00 Israel Time

 

To access the live webcast of the conference call, please access the investor relations section of Cellcom Israel's website: www.cellcom.co.il. After the call, a replay of the call will be available under the same investor relations section.

About Cellcom Israel

Cellcom Israel Ltd., established in 1994, is the largest Israeli cellular provider; Cellcom Israel provides its approximately 2.812 million cellular subscribers (as at June 30, 2016) with a broad range of value added services including cellular 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 LTE 4 generation network and an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Through its broad customer service network Cellcom Israel offers technical support, account information, direct to the door parcel delivery services, internet and fax services, dedicated centers for hearing impaired, etc. Cellcom Israel further provides OTT TV services (as of December 2014), internet infrastructure (as of February 2015) and connectivity services and international calling services, as well as landline telephone communications services in Israel, in addition to data communications 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://investors.cellcom.co.il.

Forward-Looking Statements

The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about the Company, may include projections of the Company's future financial results, its anticipated growth strategies and anticipated trends in its business. These statements are only predictions based on the Company's current expectations and projections about future events. There are important factors that could cause the Company's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: changes to the terms of the Company's license, new legislation or decisions by the regulator affecting the Company's operations, new competition and changes in the competitive environment, the outcome of legal proceedings to which the Company is a party, particularly class action lawsuits, the Company's ability to maintain or obtain permits to construct and operate cell sites, and other risks and uncertainties detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission, including under the caption "Risk Factors" in its Annual Report for the year ended December 31, 2015. 

Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company assumes no duty to update any of these forward-looking statements after the date hereof to conform its prior statements to actual results or revised expectations, except as otherwise required by law.

The Company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). Unless noted specifically otherwise, the dollar denominated figures were converted to US$ using a convenience translation based on the New Israeli Shekel (NIS)/US$ exchange rate of NIS 3.846 = US$ 1 as published by the Bank of Israel for June 30, 2016.

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 (excluding expenses related to employee voluntary retirement plans); income tax; depreciation and amortization and share based payments. This is an accepted measure in the communications industry. The Company presents this measure as an additional performance measure as the Company believes that it enables us to compare operating performance between periods and companies, net of any potential differences which may result from differences in capital structure, taxes, age of fixed assets and related depreciation expenses. EBITDA should not be considered in isolation, or as a substitute for operating income, any other performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as measures of profitability or liquidity. EBITDA does not take into account debt service requirements, or other commitments, including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company's use. In addition, EBITDA as presented by the Company may not be comparable to similarly titled measures reported by other companies, due to differences in the way these measures are calculated. See the reconciliation of net income to EBITDA under "Reconciliation of Non-IFRS Measures" in the press release.

Free cash flow is a non-IFRS measure and is defined as the net cash provided by operating activities (including the effect of exchange rate fluctuations on cash and cash equivalents), minus the net cash used in investing activities excluding short-term investment in tradable debentures and deposits and proceeds from sales of such debentures (including interest received in relation to such debentures) and deposits. See "Reconciliation of Non-IFRS Measures" below.

 

Company Contact

Shlomi Fruhling

Chief Financial Officer

investors@cellcom.co.il

Tel: +972 52 998 9755

Investor Relations Contact

Ehud Helft

GK Investor & Public Relations in partnership with LHA

cellcom@GKIR.com

Tel: +1 617 418 3096

 

 

 

 

Financial Tables Follow

 

 

Cellcom Israel Ltd.

(An Israeli Corporation)

Condensed Consolidated Interim Statements of Financial Position

   

June 30,2015

NIS
millions

 

June 30,2016

NIS
millions

 

Convenience

translation

into US dollar

June 30,2016

US$
millions

 

December 31,2015

NIS
millions

Assets

               

Cash and cash equivalents

 

894

 

982

 

255

 

761

Current investments, including derivatives

 

375

 

284

 

74

 

281

Trade receivables

 

1,311

 

1,327

 

345

 

1,254

Other receivables

 

89

 

68

 

18

 

104

Inventory

 

85

 

63

 

17

 

85

                 

Total current assets

 

2,754

 

2,724

 

709

 

2,485

                 

Trade and other receivables

 

772

 

813

 

211

 

785

Property, plant and equipment, net

 

1,797

 

1,682

 

437

 

1,745

Intangible assets, net

 

1,291

 

1,206

 

313

 

1,254

Deferred tax assets

 

15

 

6

 

2

 

9

                 

Total non- current assets

 

3,875

 

3,707

 

963

 

3,793

                 

Total assets

 

6,629

 

6,431

 

1,672

 

6,278

                 

Liabilities

               

Current maturities of debentures

 

736

 

861

 

224

 

734

Trade payables and accrued expenses

 

643

 

638

 

166

 

677

Current tax liabilities

 

68

 

49

 

12

 

53

Provisions

 

117

 

115

 

30

 

110

Other payables, including derivatives

 

368

 

299

 

78

 

286

                 

Total current liabilities

 

1,932

 

1,962

 

510

 

1,860

                 

Long-term loans from financial institutions

 

-

 

200

 

52

 

-

Debentures

 

3,397

 

2,796

 

727

 

3,054

Provisions

 

23

 

30

 

8

 

20

Other long-term liabilities

 

8

 

29

 

8

 

24

Liability for employee rights upon retirement, net

 

12

 

12

 

3

 

12

Deferred tax liabilities

 

127

 

112

 

29

 

123

                 

Total non- current liabilities

 

3,567

 

3,179

 

827

 

3,233

                 

Total liabilities

 

5,499

 

5,141

 

1,337

 

5,093

                 

Equity attributable to owners of the Company

               

Share capital

 

1

 

1

 

-

 

1

Cash flow hedge reserve

 

(3)

 

(2)

 

-

 

(2)

Retained earnings

 

1,115

 

1,275

 

331

 

1,170

                 

Non-controlling interest

 

17

 

16

 

4

 

16

                 

Total equity

 

1,130

 

1,290

 

335

 

1,185

                 

Total liabilities and equity

 

6,629

 

6,431

 

1,672

 

6,278

                 
                 

 

Cellcom Israel Ltd.

(An Israeli Corporation)

Condensed Consolidated Interim Statements of Income

 

For the six
months ended
June 30,

2015

NIS millions

 

For the six
months ended
June 30,

2016

NIS millions

 

Convenience

translation

into US dollar

For the six
months ended
June 30,

2016

US$ millions

 

For the three
months ended
June 30,

2015

NIS millions

 

For the three
months ended
June 30,

2016

NIS millions

 

Convenience

translation

into US dollar

For the three
months ended
June 30,

2016

US$ millions

 

For the
year ended
December 31,

2015

NIS millions

Revenues

2,102

 

2,051

 

533

 

1,040

 

1,029

 

267

 

4,180

Cost of revenues

(1,404)

 

(1,336)

 

(347)

 

(682)

 

(666)

 

(173)

 

(2,763)

                           

Gross profit

698

 

715

 

186

 

358

 

363

 

94

 

1,417

                           

Selling and marketing expenses

(304)

 

(291)

 

(76)

 

(148)

 

(143)

 

(37)

 

(620)

General and administrative expenses

(239)

 

(205)

 

(53)

 

(108)

 

(102)

 

(26)

 

(465)

Other expenses, net

(20)

 

(14)

 

(4)

 

(22)

 

(14)

 

(4)

 

(22)

                           

Operating profit

135

 

205

 

53

 

80

 

104

 

27

 

310

                           

Financing income

33

 

28

 

8

 

27

 

16

 

5

 

55

Financing expenses

(113)

 

(96)

 

(25)

 

(89)

 

(60)

 

(16)

 

(232)

Financing expenses, net

(80)

 

(68)

 

(17)

 

(62)

 

(44)

 

(11)

 

(177)

                           

Profit before taxes on income

55

 

137

 

36

 

18

 

60

 

16

 

133

                           

Taxes on income

(17)

 

(34)

 

(9)

 

(6)

 

(16)

 

(5)

 

(36)

Profit for the period

38

 

103

 

27

 

12

 

44

 

11

 

97

Attributable to:

                         

   Owners of the Company

37

 

102

 

27

 

12

 

44

 

11

 

95

   Non-controlling interests

1

 

1

 

-

 

-

 

-

 

-

 

2

Profit for the period

38

 

103

 

27

 

12

 

44

 

11

 

97

                           

Earnings per share

                         

Basic earnings per share
            (in NIS)

0.37

 

1.01

 

0.26

 

0.12

 

0.43

 

0.11

 

0.95

                           

Diluted earnings per share
        (in NIS)

0.37

 

1.01

 

0.26

 

0.12

 

0.43

 

0.11

 

0.95

                           

Weighted-average number of shares used in the calculation of basic earnings per share (in shares)

100,584,490

 

100,604,578

 

100,604,578

 

100,584,490

 

100,604,578

 

100,604,578

 

100,589,458

                           

Weighted-average number of shares used in the calculation of diluted earnings per share (in shares)

100,584,490

 

100,604,578

 

100,604,578

 

100,584,490

 

100,705,952

 

100,705,952

 

100,589,530

 

 

Cellcom Israel Ltd.

(An Israeli Corporation)

Condensed Consolidated Interim Statements of Cash Flows

 

For the six 

months ended 

June 30,

2015

NIS millions

 

For the six 

months ended 

June 30,

2016

NIS millions

 

Convenience

translation

into US dollar

For the six

months ended 

June 30,

2016

US$ millions

 

For the three 

months ended

June 30,

2015

NIS millions

 

For the three 

months ended

June 30,

2016

NIS millions

 

Convenience

translation

into US dollar

For the three

months ended 

June 30,

2016

US$ millions

 

For the three

months ended 

June 30,

2015

NIS millions

Cash flows from operating activities

                         

Profit for the period

38

 

103

 

27

 

12

 

44

 

11

 

97

Adjustments for: 

                         

Depreciation and amortization

281

 

267

 

69

 

138

 

132

 

34

 

562

Share based payments

-

 

3

 

1

 

-

 

1

 

-

 

3

Loss (gain) on sale of property, plant and equipment

(2)

 

3

 

1

 

-

 

2

 

-

 

(1)

Income tax expenses

17

 

34

 

9

 

6

 

16

 

5

 

36

Financing expenses, net

80

 

68

 

17

 

62

 

44

 

11

 

177

                           

Changes in operating assets and liabilities:

                         

Change in inventory

4

 

22

 

6

 

24

 

15

 

4

 

4

Change in trade receivables
   (including long-term amounts)

113

 

(75)

 

(20)

 

23

 

(17)

 

(4)

 

209

Change in other receivables
   (including long-term amounts)

(24)

 

15

 

4

 

(8)

 

(17)

 

(4)

 

(34)

Changes in trade payables,
   accrued expenses and provisions

(71)

 

30

 

8

 

(25)

 

28

 

7

 

(54)

Change in other liabilities
   (including long-term amounts)

17

 

23

 

6

 

25

 

(15)

 

(4)

 

(95)

Income tax paid

(36)

 

(50)

 

(13)

 

(9)

 

(29)

 

(7)

 

(68)

Net cash from operating activities

417

 

443

 

115

 

248

 

204

 

53

 

836

                           

Cash flows from investing activities

                         

Acquisition of property, plant
   and equipment

(162)

 

(151)

 

(39)

 

(86)

 

(83)

 

(21)

 

(305)

Acquisition of intangible assets

(59)

 

(41)

 

(11)

 

(39)

 

(19)

 

(5)

 

(91)

Dividend received

-

 

-

 

-

 

-

 

-

 

-

 

2

Change in current investments, net

137

 

(4)

 

(1)

 

146

 

(3)

 

(1)

 

231

Payments for other
   derivative contracts, net

-

 

-

 

-

 

(1)

 

-

 

-

 

-

Proceeds from sale of property,
   plant and equipment

4

 

1

 

-

 

-

 

1

 

-

 

4

Repayment of a long term deposit

48

 

-

 

-

 

-

 

-

 

-

 

48

Interest received 

13

 

7

 

2

 

2

 

1

 

-

 

15

Net cash from (used in) investing activities

(19)

 

(188)

 

(49)

 

22

 

(103)

 

(27)

 

(96)

                           
                           

 

 

Cellcom Israel Ltd.

(An Israeli Corporation)

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

 

 

 

For the six
months ended
June 30, 
2015

NIS millions

 

For the six
months ended
June 30, 
2016

NIS millions

 

Convenience

translation

into US dollar

For the six
months ended
June 30, 
2016

US$ millions

 

For the three
months ended
June 30, 
2015

NIS millions

 

For the three
months ended
June 30, 
2016

NIS millions

 

Convenience

translation

into US dollar

For the three
months ended
June 30, 
2016

US$ millions

 

For the
year ended
December 31, 
2015

NIS millions

Cash flows from financing activities

                         

Payments for derivative contracts, net

(9)

 

(6)

 

(2)

 

(7)

 

-

 

-

 

(32)

Long term loans from financial institutions

-

 

200

 

52

 

-

 

200

 

52

 

-

Repayment of debentures

(523)

 

(385)

 

(100)

 

-

 

-

 

-

 

(873)

Proceeds from issuance of debentures, net of issuance costs

(3)

 

250

 

65

 

(3)

 

-

 

-

 

(3)

Dividend paid

-

 

(1)

 

-

 

-

 

-

 

-

 

(1)

Interest paid

(124)

 

(92)

 

(24)

 

-

 

-

 

-

 

(227)

                           

Net cash from (used in) financing activities

(659)

 

(34)

 

(9)

 

(10)

 

200

 

52

 

(1,136)

                           

Changes in cash and cash equivalents

(261)

 

221

 

57

 

260

 

301

 

78

 

(396)

                           

Cash and cash equivalents as at the beginning of the period

1,158

 

761

 

198

 

637

 

681

 

177

 

1,158

                           

Effect of exchange rate fluctuations on cash and cash equivalents

(3)

 

-

 

-

 

(3)

 

-

 

-

 

(1)

                           

Cash and cash equivalents as at the end of the period

894

 

982

 

255

 

894

 

982

 

255

 

761

                           

 

 

Cellcom Israel Ltd

(An Israeli Corporation)

Reconciliation for Non-IFRS Measures

EBITDA

The following is a reconciliation of net income to EBITDA:

 

Three-month

period ended

June 30,

2015

NIS millions

Three-month

period ended

June 30,

2016

NIS millions

Convenience

translation

into US dollar

Three-month

period ended

June 30,

2016

US$ millions

 

Year ended

December 31,

2015

NIS millions

Profit for the period

12

44

11

 

97

Taxes on income

6

16

5

 

36

Financing income

(27)

(16)

(5)

 

(55)

Financing expenses

89

60

16

 

232

Other expenses (income)

(2)

1

-

 

(3)

Depreciation and amortization

138

132

35

 

562

Share based payments

-

1

-

 

3

EBITDA

216

238

62

 

872

 

 

Free cash flow

The following table shows the calculation of free cash flow:

 

Three-month

period ended

June 30,

2015

NIS millions

Three-month

period ended

June 30,

2016

NIS millions

Convenience

translation

into US dollar

Three-month

period ended

June 30,

2016

US$ millions

 

Year ended

December 31,

2015

NIS millions

Cash flows from operating activities(*)

248

204

53

 

835

Cash flows from investing activities

22

(103)

(27)

 

(96)

Sale of short-term tradable debentures and deposits (**)

(151)

2

1

 

(245)

Free cash flow

119

103

27

 

494

 

 

(*)  Including the effects of exchange rate fluctuations in cash and cash equivalents.

 

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

 

Cellcom Israel Ltd.

(An Israeli Corporation)

Key financial and operating indicators

NIS millions unless otherwise stated

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

FY-2015

               

Cellular service revenues

582

573

572

546

559

567

2,273

Fixed-line service revenues

269

264

267

263

264

264

1,063

               

Cellular equipment revenues

245

237

215

233

219

217

930

Fixed-line equipment revenues

17

17

28

56

29

30

118

               

Consolidation adjustments

(51)

(51)

(50)

(52)

(49)

(49)

(204)

Total revenues

1,062

1,040

1,032

1,046

1,022

1,029

4,180

               

Cellular EBITDA

130

149

168

154

178

181

601

Fixed-line EBITDA

66

67

67

71

60

57

271

Total EBITDA

196

216

235

225

238

238

872

               

Operating profit

55

80

96

79

101

104

310

Financing expenses, net

18

62

49

48

24

44

177

Profit for the period

26

12

40

19

59

44

97

               

Free cash flow

127

119

127

121

149

103

494

               

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

2,885

2,848

2,832

2,835

2,813

2,812

2,835

Monthly cellular ARPU (in NIS)

65.5

65.5

66.0

63.0

65.2

66.0

65.0

Churn rate for cellular subscribers (%)

11.9%

10.2%

10.1%

11.1%

11.1%

10.6%

42.0%

 

 

Cellcom Israel Ltd.

Disclosure for debenture holders as of June 30, 2016

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

Series

Original Issuance Date

Principal on the Date of Issuance

As of 30.06.2016

Principal

Balance on Trade

As of 30.06.2016

Linked Principal Balance

As of 30.06.2016

Interest Accumulated in Books

As of 30.06.2016

Debenture Balance   Value in Books (2)

As of 30.06.2016

Market Value

As of 09.08.2016

Principal Balance on Trade

As of 09.08.2016

Linked Principal Balance

Interest Rate (fixed)

Principal Repayment Dates

From

Principal Repayment Dates

To

Interest Repayment Dates (3)

Linkage

Trustee

Contact Details

 

 

B (4)

22/12/05

02/01/06*

05/01/06*

10/01/06*

31/05/06*

925.102

185.020

219.869

5.654

225.523

230.980

185.020

220.547

5.30%

05.01.13

05.01.17

January 5

Linked to CPI

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

D (7)(8)**

07/10/07

03/02/08*

06/04/09*

30/03/11*

18/08/11*

2,423.075

599.203

697.153

36.079

733.232

363.536

299.602

350.430

5.19%

01.07.13

01.07.17

July 1

Linked to CPI

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

E (7)

06/04/09

30/03/11*

18/08/11*

1,798.962

163.633

163.297

4.959

168.256

172.944

163.633

163.340

6.25%

05.01.12

05.01.17

January 5

Not linked

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

F (4)(5)(6)**

20/03/12

714.802

714.802

730.228

16.254

746.482

784.853

714.802

732.372

4.60%

05.01.17

05.01.20

January 5

and July 5

Linked to CPI

Strauss Lazar Trust Company (1992) Ltd. Ori Lazar. 17 Yizhak Sadeh St., Tel Aviv. Tel: 03- 6237777.

G (4)(5)(6)**

20/03/12

285.198

285.198

285.508

9.667

295.175

309.896

285.198

285.476

6.99%

05.01.17

05.01.19

January 5

and July 5

Not linked

Strauss Lazar Trust Company (1992) Ltd. Ori Lazar. 17 Yizhak Sadeh St., Tel Aviv. Tel: 03- 6237777.

H (4)(5)(7)**

08/07/14

03/02/15*

11/02/15*

949.624

949.624

812.406

9.118

821.524

949.624

949.624

814.354

1.98%

05.07.18

05.07.24

January 5

and July 5

Linked to CPI

Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel Aviv. Tel: 03-6374355.

I (4)(5)

(7)**

08/07/14

03/02/15*

11/02/15*

30/03/16*

804.010

804.010

748.921

16.141

765.062

854.421

804.010

749.569

4.14%

05.07.18

05.07.25

January 5 

and July 5

Not linked

Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel Aviv. Tel: 03-6374355.

Total

 

7,900.773

3,701.490

3,657.382

97.872

3,755.254

3,666.254

3,401.889

3,316.088

           

 

 

 

Comments:

(1) In the reporting period, the Company fulfilled all terms of the debentures. The Company also fulfilled all terms of the Indentures and loan agreements. Debentures Series F through I financial and loan agreements covenants - as of June 30, 2016 the net leverage (net debt to EBITDA excluding one time events ratio- see definition in the Company's annual report for the year ended December 31, 2015 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Debt Service– Public Debentures") was 2.79 (the net leverage without excluding one-time events was 2.79). In the reporting period, no cause for early repayment occurred. (2) Including interest accumulated in the books. (3) Annual payments, excluding Series F through I debentures in which the payments are semi annual. (4) Regarding debenture Series B and F through I and loan agreements, the Company undertook not to create any pledge on its assets, as long as debentures or loans are not fully repaid, subject to certain exclusions. (5) Regarding debenture Series F through I and loan agreements - the Company has the right for early redemption under certain terms (see the Company's annual report for the year ended December 31, 2015 on Form 20-F, under "Item 5. Operating and Financial Review and Prospects– B. Liquidity and Capital Resources – Debt Service– Public Debentures" and "-Other Credit Facilities". (6) Regarding debenture Series F and G - in June 2013, following a second decrease of the Company's debenture rating since their issuance, the annual interest rate has been increased by 0.25% to 4.60% and 6.99%, respectively, beginning July 5, 2013. (7) In February 2015, pursuant to an exchange offer of the Company's Series H and I debentures for a portion of the Company's outstanding Series D and E debentures, respectively, or the Exchange Offer, the Company exchanged approximately NIS 555 million principal amount of Series D debentures with approximately NIS 844 million principal amount of Series H debentures, and approximately NIS 272 million principal amount of Series E debentures with approximately NIS 335 million principal amount of Series I debentures. (8) On July 1, 2016, after the end of the reporting period, the Company repaid a principal payment of approximately NIS 348 million (the ex-date of which was June 19, 2016).

(*) On these dates additional debentures of the series were issued, the information in the table refers to the full series.
(**) As of June 30, 2016, debentures Series D and F through I 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, 2016 (cont.)

Debentures Rating Details* 

Series

Rating Company

Rating as of 30.06.2016 (1)

Rating as of 09.08.2016

Rating assigned upon issuance of the Series

Recent date of rating as of 09.08.2016

Additional ratings between original issuance and

the recent date of rating as of 09.08.2016 (2)

Additional ratings between original issuance and

the recent date of rating as of 09.08.2016 (2 

Rating

B

S&P Maalot

A+

A+

AA-

03/2016

5/2006, 9/2007, 1/2008, 10/2008, 3/2009, 9/2010, 8/2011, 1/2012, 3/2012, 5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 1/2015, 9/2015, 3/2016

AA-, AA,AA-,A+ (2)

D

S&P Maalot

A+

A+

AA-

03/2016

1/2008, 10/2008, 3/2009, 9/2010, 8/2011, 1/2012, 3/2012, 5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 01/2015, 9/2015, 3/2016

AA-, AA,AA-,A+ (2)

E

S&P Maalot

A+

A+

AA

03/2016

9/2010, 8/2011, 1/2012, 3/2012, 5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 01/2015, 9/2015, 3/2016

AA,AA-,A+ (2)

F

S&P Maalot

A+

A+

AA

03/2016

5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 1/2015, 9/2015, 3/2016

AA,AA-,A+ (2)

G

S&P Maalot

A+

A+

AA

03/2016

5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 1/2015, 9/2015, 3/2016

AA,AA-,A+ (2)

H

S&P Maalot

A+

A+

A+

03/2016

6/2014, 8/2014, 1/2015, 9/2015, 3/2016

A+ (2)

I

S&P Maalot

A+

A+

A+

03/2016

6/2014, 8/2014, 1/2015, 9/2015, 3/2016

A+ (2)

 

 

 

(1)

In March 2016, S&P Maalot affirmed the Company's rating of "ilA+/stable".

(2)

In September 2007, S&P Maalot issued a notice that the AA- rating for debentures issued by the Company was in the process of recheck with positive implications (Credit Watch Positive). In October 2008, S&P Maalot issued a notice that the AA- rating for debentures issued by the Company is in the process of recheck with stable implications (Credit Watch Stable). This process was withdrawn upon assignment of AA rating in March 2009. In August 2011, S&P Maalot issued a notice that the AA rating for debentures issued by the Company is in the process of recheck with negative implications (Credit Watch Negative). In May 2012, S&P Maalot updated the Company's rating from an "ilAA/negative" to an "ilAA-/negative". In November 2012, S&P Maalot affirmed the Company's rating of "ilAA-/negative". In June 2013, S&P Maalot updated the Company's rating from an "ilAA-/negative" to an "ilA+/stable". In June 2014, August 2014, January 2015, September 2015 and March 2016, S&P Maalot affirmed the Company's rating of "ilA+/stable". For details regarding the rating of the debentures see the S&P Maalot report dated March 23, 2016.

* 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, 2016

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

 

 

Principal payments 

ILS linked
to CPI

Principal payments

ILS not
linked to CPI

Principal

payments

Euro

Principal

payments

Dollar

Principal

payments

Other

Gross interest payments
(without deduction of tax)

First year

635,230

219,989

-

-

-

162,944

Second year

565,258

142,599

-

-

-

115,996

Third year

331,762

165,793

-

-

-

75,200

Fourth year

331,762

80,234

-

-

-

53,602

Fifth year and on

716,799

641,871

-

-

-

120,018

Total

2,580,811

1,250,486

-

-

-

527,760

 

 

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.

 

 

Principal payments

ILS linked to CPI

Principal payments

ILS not linked to CPI

Principal payments

Euro

Principal payments

Dollar

Principal payments

Other

Gross interest payments (without deduction of tax)

First year

-

-

-

-

-

9,187

Second year

-

50,000

-

-

-

9,200

Third year

-

50,000

-

-

-

6,900

Fourth year

-

50,000

-

-

-

4,606

Fifth year and on

-

50,000

-

-

-

2,297

Total

-

200,000

-

-

-

32,190

 

 

 

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.

 

Cellcom Israel Ltd.

Summary of Financial Undertakings (according to repayment dates) as of June 30, 2016 (cont.)

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

 

 

Principal payments

ILS linked to CPI

Principal payments

ILS not linked to CPI

Principal payments

Euro

Principal payments

Dollar

Principal payments

Other

Gross interest payments (without deduction of tax)

First year

635,230

219,989

-

-

-

172,131

Second year

565,258

192,599

-

-

-

125,196

Third year

331,762

215,793

-

-

-

82,100

Fourth year

331,762

130,234

-

-

-

58,208

Fifth year and on

716,799

691,871

-

-

-

122,315

Total

2,580,811

1,450,486

-

-

-

559,950

 

f.     Out of the balance sheet Credit exposure based on the Company's "Solo" financial data -  None.

g.    Out of the balance sheet Credit exposure of all the Company's consolidated companies, excluding companies that are reporting corporations and excluding the Company's data presented in section f above (in thousand NIS) - None.

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

i.      Total balances of credit granted to the Company by the parent company or a controlling shareholder and balances of debentures offered by the Company held by the parent company or the controlling shareholder (in thousand NIS) - None.

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

 

 

Principal payments

ILS linked to CPI

Principal payments

ILS not linked to CPI

Principal payments

Euro 

Principal payments

Dollar

Principal payments

Other

Gross interest payments (without deduction of tax)

First year

5,224

683

-

-

-

565

Second year

925

-

-

-

-

247

Third year

791

167

-

-

-

188

Fourth year

791

167

-

-

-

165

Fifth year and on

4,915

1,337

-

-

-

427

Total

12,646

2,354

-

-

-

1,592

 

 

k.    Total balances of credit granted to the Company by consolidated companies and balances of debentures offered by the Company held by the consolidated companies (in thousand NIS) - None.

 

 

SOURCE Cellcom Israel Ltd.


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