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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

NIS Million

Q3’20

Q4’20

Comments

Service Revenues

631

632

The results reflected a stability in service revenues in both the cellular and the fixed-line segments

Equipment Revenues

169

176

The increase reflected a higher volume of equipment sales mainly in the fixed-line segment

Total Revenues

800

808


Gross profit from equipment sales

38

40


OPEX

475

480

The increase reflected a reduction in the intensity of the cost-cutting measures compared with the previous quarter

Adjusted EBITDA

204

203


Profit (loss) for the period

(5)

5

The increase in profit mainly reflected the decrease in finance costs, net primarily due to one-time expenses of NIS 7 million in Q3’20

Capital Expenditures (cash)

147

156


Adjusted Free Cash Flow (before interest payments)

21

(3)

The decrease resulted mainly from changes in operating assets and liabilities and an increase in cash used in capital expenditures

Net Debt

646

657



Q3’20

Q4’20

Comments

Cellular Subscribers (end of period, thousands)

2,762

2,836

Increase of 58 thousand Post-Paid subscribers (of which 25 thousand from Ministry of Education) and increase of 16 thousand Pre-Paid subscribers

Monthly Average Revenue per Cellular User (ARPU) (NIS)

51

49


Quarterly Cellular Churn Rate (%)

7.3%

7.2%


Fiber-Optic Subscribers (end of period, thousands)

120

139

Active subscribers to an end-to-end service including both Partner’s fiber-optic infrastructure and access to the internet

Homes Connected to the Fiber-Optic Infrastructure (HC) end of period, thousands)

432

465

The total number of households within buildings connected to the Partner fiber-optic infrastructure

Infrastructure-Based Internet Subscribers (end of period, thousands)

311

329

Active subscribers to an end-to-end service including both infrastructure (either through the wholesale market on Bezeq/Hot infrastructure and or through Partner’s fiber-optic infrastructure) and access to the internet

TV Subscribers (end of period, thousands)

224

232


Key Financial Results 

NIS MILLION (except EPS)

2016*

2017*

2018*

2019

2020

Revenues

3,544

3,268

3,259

3,234

3,189

Cost of revenues

2,924

2,627

2,700

2,707

2,664

Gross profit

620

641

559

527

525

S,G&A and credit losses

689

465

471

468

459

Income with respect to settlement  

    agreement with Orange

217

108




Other income

45

31

28

28

30

Operating profit

193

315

116

87

96

Finance costs, net

105

180

53

68

69

Income tax expenses

36

21

7

0

10

Profit for the year

52

114

56

19

17

Earnings per share (basic, NIS)

0.33

0.70

0.34

0.12

0.09

* 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.

NIS MILLION (except EPS)

Q4’19

Q1’20

Q2’20

Q3’20

Q4’20

Revenues

834

807

774

800

808

Cost of revenues

693

655

653

677

679

Gross profit

141

152

121

123

129

S,G&A and credit losses

116

122

108

111

118

Other income

5

6

7

8

9

Operating profit

30

36

20

20

20

Finance costs, net

20

19

13

24

13

Income tax expenses

3

7

0

1

2

Profit (Loss) for the period

7

10

7

(5)

5

Earnings (Loss) per share (basic, NIS)

0.05

0.05

0.04

(0.03)

0.03

NIS MILLION (except EPS)

Q4’19

Q4’20

% Change

Revenues

834

808

-3%

Cost of revenues

693

679

-2%

Gross profit

141

129

-9%

Operating profit

30

20

-33%

Profit for the period

7

5

-29%

Earnings per share (basic, NIS)

0.05

0.03


Adjusted Free Cash Flow (before interest)

16

(3)


Key Operating Indicators


2016*

2017*

2018*

2019

2020

Adjusted EBITDA (NIS million)

834

917

722

853

822

Adjusted EBITDA (as a % of total revenues)

24%

28%

22%

26%

26%

Adjusted Free Cash Flow (NIS million)

758

599

124

49

72

Cellular Subscribers (end of period, thousands)

2,686

2,662

2,646

2,657

2,836

Estimated Cellular Market Share (%)

26%

25%

25%

25%

27%

Annual Cellular Churn Rate (%)

40%

38%

35%

31%

30%

Average Monthly Revenue per Cellular Subscriber (ARPU) (NIS)

65

62

58

57

51

Fiber-Optic Subscribers (end of period, thousands)




76

139

Homes Connected to fiber-optic network (end of period, thousands)




324

465

Infrastructure-Based Internet Subscribers (end of period, thousands)




268

329

TV subscribers (end of period, thousands)


43

122

188

232

* 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.


Q4’19

Q4’20

Change

Adjusted EBITDA (NIS million)

217

203

-6%

Adjusted EBITDA margin (as a % of total revenues)

26%

25%

-1

Quarterly Cellular Churn Rate (%)

7.2%

7.2%

Monthly Average Revenue per Cellular User (ARPU) (NIS)

55

49

-6

Partner Consolidated Results


Cellular Segment

Fixed-Line Segment

Elimination

Consolidated

NIS Million

2019

2020

Change %

2019

2020

Change %

2019

2020

2019

2020

Change %

Total Revenues

2,369

2,208

-7%

1,028

1,129

+10%

(163)

(148)

3,234

3,189

-1%

Service Revenues

1,798

1,663

-8%

925

993

+7%

(163)

(148)

2,560

2,508

-2%

Equipment Revenues

571

545

-5%

103

136

+32%

674

681

+1%

Operating Profit

77

73

-5%

10

23

+130%

87

96

+10%

Adjusted EBITDA

635

533

-16%

218

289

+33%

853

822

-4%


Cellular Segment

Fixed-Line Segment

Elimination

Consolidated

NIS Million

Q4’19

Q4’20

Change %

Q4’19

Q4’20

Change %

Q4’19

Q4’20

Q4’19

Q4’20

Change %

Total Revenues

610

551

-10%

264

293

+11%

(40)

(36)

834

808

-3%

Service Revenues

438

416

-5%

238

252

+6%

(40)

(36)

636

632

-1%

Equipment Revenues

172

135

-22%

26

41

+58%

198

176

-11%

Operating Profit (loss)

30

27

-10%

0

(7)


30

20

-33%

Adjusted EBITDA

156

138

-12%

61

65

+7%

217

203

-6%

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.

Non-GAAP
Measure

Calculation

Most Comparable IFRS
Financial Measure

Adjusted EBITDA

Profit (Loss)

add

Income tax expenses,

Finance costs, net,

Depreciation and amortization expenses (including amortization of intangible assets, deferred expenses-right of use and impairment charges), Other expenses (mainly amortization of share based compensation)

Profit (Loss)




Adjusted EBITDA
margin (%)

Adjusted EBITDA

divided by 

Total revenues


Adjusted Free
Cash Flow

Net cash provided by operating activities

add

Net cash used in investing activities

deduct

Proceeds from (investment in) deposits, net

deduct

Lease principal payments

deduct

Lease interest payments

Net cash provided by operating activities

add

Net cash used in investing activities

Total Operating
Expenses (OPEX)

Cost of service revenues

add

Selling and marketing expenses

add

General and administrative expenses

add

Credit losses  

deduct

Depreciation and amortization expenses,
Other expenses (mainly amortization of employee share based compensation)

Sum of:

Cost of service revenues,

Selling and marketing expenses,

General

and administrative expenses,

Credit losses

Net Debt

Current maturities of notes payable and borrowings

add

Notes payable

add

Borrowings from banks

add

Financial liability at fair value

deduct

Cash and cash equivalents

deduct

Short-term and long-term deposits

Sum of:

Current maturities of notes payable and borrowings,

Notes payable,

Borrowings from banks,

Financial liability at fair value

Less

Sum of:

Cash and cash equivalents,

Short-term deposits,

Long-term deposits.

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

Contacts:

Tamir Amar

Amir Adar

Chief Financial Officer & VP Fiber-Optics

Head of Investor Relations and Corporate Projects

Tel: +972-54-781-4951

Tel: +972-54-781-5051


E-mail: [email protected]

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION







New Israeli Shekels

Convenience
translation
into U.S.
Dollars



December 31,



2019

2020

2020



In millions

CURRENT ASSETS





Cash and cash equivalents


299

376

117

Short-term deposits


552

411

128

Trade receivables


624

560

174

Other receivables and prepaid expenses


39

46

14

Deferred expenses – right of use


26

26

8

Inventories


124

77

24



1,664

1,496

465






NON CURRENT ASSETS





Long-term deposits



155

48

Trade receivables


250

232

72

Deferred expenses – right of use


102

118

37

Lease – right of use


582

663

206

Property and equipment


1,430

1,495

465

Intangible and other assets


538

521

162

Goodwill


407

407

127

Deferred income tax asset


41

29

9

Prepaid expenses and other assets


1

9

3



3,351

3,629

1,129






TOTAL ASSETS


5,015

5,125

1,594

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION







New Israeli Shekels

Convenience
translation into
U.S. Dollars



December 31,



2019

2020

2020



In millions

CURRENT LIABILITIES





Current maturities of notes payable and borrowings


367

290

90

Trade payables


716

666

207

Payables in respect of employees


103

58

18

Other payables (mainly institutions)       


23

29

9

Income tax payable


30

27

8

Lease liabilities


131

120

37

Deferred revenues from HOT mobile


31

31

10

Other deferred revenues


45

100

31

Provisions


43

13

4



1,489

1,334

414

NON CURRENT LIABILITIES





Notes payable


1,275

1,219

379

       Borrowings from banks


138

86

27

       Financial liability at fair value


28

4

1

       Liability for employee rights upon retirement, net


43

42

13

 Lease liabilities


486

582

181

  Deferred revenues from HOT mobile


102

71

22

       Provisions and other non-current liabilities


37

64

21



2,109

2,068

644






TOTAL LIABILITIES


3,598

3,402

1,058






EQUITY





Share capital – ordinary shares of NIS 0.01
par value: authorized – December 31, 2019

and 2020 – 235,000,000 shares; 

issued and outstanding –                                  


2

2

1

 December 31, 2019 – ­*162,915,990 shares





 December 31, 2020 – *182,826,973 shares





Capital surplus


1,077

1,311

408

Accumulated retained earnings


576

606

188

Treasury shares, at cost
     December 31, 2019 – **8,275,837 shares
     December 31, 2020 – **7,741,784 shares


(238)

(196)

(61)

TOTAL EQUITY


1,417

1,723

536

TOTAL LIABILITIES AND EQUITY


5,015

5,125

1,594

*    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.

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME












Convenience






translation



New Israeli Shekels

into U.S. dollars



Year ended December 31,



2018**

2019

2020

2020



In millions (except earnings per share)

Revenues, net


3,259

3,234

3,189

992

Cost of revenues


2,700

2,707

2,664

829

Gross profit


559

527

525

163







Selling and marketing expenses


293

301

291

90

General and administrative expenses


148

149

145

45

Credit losses


30

18

23

7

Other income, net


28

28

30

9







Operating profit


116

87

96

30

Finance income


2

7

8

2

Finance expenses


55

75

77

24

Finance costs, net


53

68

69

22







Profit before income tax


63

19

27

8

Income tax expenses


7

*

10

3

Profit for the year


56

19

17

5

Attributable to:






Owners of the Company


57

19

17

5

Non-controlling interests


(1)

*









Profit for the year


56

19

17

5







Earnings per share






       Basic   


0.34

0.12

0.09

0.03

       Diluted


0.34

0.12

0.09

0.03














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

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME




New Israeli Shekels

Convenience
translation
into U.S.
dollars



Year ended December 31,



2018**

2019

2020

2020



In millions

 

Profit for the year


56

19

17

5

Other comprehensive income, items






 that will not be reclassified to profit or loss






 Remeasurements of post-employment benefit






 obligations


1

(2)

1

*

Income taxes relating to remeasurements of






     post-employment benefit obligations


*

*

*

*

Other comprehensive income (loss)






 for the year, net of income taxes


1

(2)

1

*







TOTAL COMPREHENSIVE INCOME






 FOR THE YEAR


57

17

18

5

Total comprehensive income attributable to:






Owners of the Company


58

17

18

5

Non-controlling interests


(1)

*



TOTAL COMPREHENSIVE INCOME FOR
THE YEAR


57

17

18

5







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

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION









New Israeli Shekels



New Israeli Shekels



Year ended December 31, 2020



Year ended December 31, 2019



In millions



In millions



Cellular
segment


Fixed line
segment


Elimination


Consolidated



Cellular
segment


Fixed line
segment


Elimination


Consolidated


Segment revenue – Services

1,647


861




2,508



1,783


777




2,560


Inter-segment revenue – Services

16


132


(148)





15


148


(163)




Segment revenue – Equipment

545


136




681



571


103




674


Total revenues

2,208


1,129


(148)


3,189



2,369


1,028


(163)


3,234


Segment cost of revenues – Services

1,272


856




2,128



1,367


810




2,177


Inter-segment cost of revenues – Services

131


17


(148)





147


16


(163)




Segment cost of revenues – Equipment

451


85




536



464


66




530


Cost of revenues

1,854


958


(148)


2,664



1,978


892


(163)


2,707


Gross profit

354


171




525



391


136




527


Operating expenses (3)

300


159




459



334


134




468


Other income, net

19


11




30



20


8




28


Operating profit

73


23




96



77


10




87


Adjustments to presentation of segment
    
Adjusted EBITDA 


















 –Depreciation and amortization

450


264







542


209






 –Other (1)

10


2







16


(1)






Segment Adjusted EBITDA (2)

533


289







635


218






Reconciliation of segment subtotal Adjusted EBITDA to profit for the
    year


















Segments subtotal Adjusted EBITDA (2)







822









853


 –  Depreciation and amortization







(714)









(751)


 – Finance costs, net







(69)









(68)


    –  Income tax expenses







(10)









*


 – Other (1)







(12)









(15)


Profit for the year







17









19


*   Representing an amount of less than 1 million.

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION









New Israeli Shekels



New Israeli Shekels



3 months ended December 31, 2020



3 months ended December 31, 2019



In millions (Unaudited)



In millions (Unaudited)



Cellular
segment


Fixed line
segment


Elimination


Consolidated



Cellular
segment


Fixed line
segment


Elimination


Consolidated


Segment revenue – Services

412


220




632



435


201




636


Inter-segment revenue – Services

4


32


(36)





3


37


(40)




Segment revenue – Equipment

135


41




176



172


26




198


Total revenues

551


293


(36)


808



610


264


(40)


834


Segment cost of revenues – Services

312


231




543



323


209




532


Inter-segment cost of revenues – Services

31


5


(36)





36


4


(40)




Segment cost of revenues – Equipment

112


24




136



143


18




161


Cost of revenues

455


260


(36)


679



502


231


(40)


693


Gross profit

96


33




129



108


33




141


Operating expenses (3)

73


45




118



81


35




116


Other income, net

4


5




9



3


2




5


Operating profit (loss)

27


(7)




20



30


0




30


Adjustments to presentation of segment
    Adjusted EBITDA 


















 –Depreciation and amortization

108


72







124


60






 –Other (1)

3


*







2


1






Segment Adjusted EBITDA (2)

138


65







156


61






Reconciliation of segment subtotal Adjusted EBITDA to profit for the
    period


















Segments subtotal Adjusted EBITDA (2)







203









217


 –  Depreciation and amortization







(180)









(184)


 – Finance costs, net







(13)









(20)


    –  Income tax expenses







(2)









(3)


 – Other (1)







(3)









(3)


Profit for the period







5









7


*   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. 

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS





New Israeli Shekels

Convenience
translation
into
U.S. Dollars


Year ended  December 31,


2018**

2019

2020

2020


In millions

CASH FLOWS FROM OPERATING ACTIVITIES:





Cash generated from operations (Appendix)

627

838

787

244

Income tax paid

(2)

(1)

(1)

*

Net cash provided by operating activities

625

837

786

244






CASH FLOWS FROM INVESTING ACTIVITIES:





Acquisition of property and equipment

(343)

(462)

(409)

(127)

Acquisition of intangible and other assets

(159)

(167)

(164)

(51)

Acquisition of a business, net of cash acquired


(3)



Proceeds from (investment in) deposits, net

150

(552)

(14)

(4)

Interest received

1

1

6

2

Consideration received from sales of property and equipment

3

2

*

*

Payment for acquisition of subsidiary, net of cash acquired

(3)




Net cash used in investing activities

(351)

(1,181)

(581)

(180)






CASH FLOWS FROM FINANCING ACTIVITIES:





Lease principal payments


(139)

(129)

(40)

Lease interest payments


(20)

(18)

(6)

Share issuance, net of issuance costs



276

86

Acquisition of treasury shares

(100)




Proceeds from issuance of notes payable, net of issuance costs

150

562

466

145

Proceeds from issuance of option warrants exercisable for notes
    payables


37



Interest paid

(69)

(37)

(49)

(15)

Repayment of non-current borrowings

(382)

(52)

(52)

(16)

Repayment of current borrowings


(13)



Repayment of notes payables

(324)

(109)

(620)

(193)

Settlement of contingent consideration



(2)

(1)

Transactions with non-controlling interests


(2)



Net cash provided by (used in) financing activities

(725)

227

(128)

(40)






INCREASE (DECREASE) IN CASH AND CASH 
         EQUIVALENTS

(451)

(117)

77

24






CASH AND CASH EQUIVALENTS AT BEGINNING

          OF PERIOD

867

416

299

93






CASH AND CASH EQUIVALENTS AT END OF PERIOD

416

299

376

117






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

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




Appendix – Cash generated from operations and supplemental information





New Israeli Shekels

Convenience
translation
into
U.S. Dollars


Year ended  December 31,


2018**

2019

2020

2020


In millions






Cash generated from operations:





     Profit for the year

56

19

17

5






    Adjustments for:





         Depreciation and amortization

545

723

683

212

          Amortization of deferred expenses – Right of use

47

28

31

10

         Employee share based compensation expenses

15

17

12

4

         Liability for employee rights upon retirement, net

1

1

(1)

*

 Finance costs, net

(7)

5

(2)

(1)

 Lease interest payments


20

18

6

 Interest paid

69

37

49

15

 Interest received

(1)

(1)

(6)

(2)

         Deferred income taxes

16

4

12

4

          Income tax paid

2

1

1

*

Capital loss from property and equipment

*

(2)

*

*

Changes in operating assets and liabilities:





    Decrease (increase) in accounts receivable:





              Trade

124

42

82

26

              Other

16

(1)

(6)

(2)

          Increase (decrease) in accounts payable and accruals:





                   Trade

(69)

63

(57)

(18)

              Other payables

(18)

12

(37)

(12)

                Provisions

(11)

(21)

(30)

(9)

                Deferred revenues from HOT mobile

(31)

(31)

(31)

(10)

                Other deferred revenues

*

4

55

17

        Increase in deferred expenses – Right of use

(107)

(51)

(47)

(15)

        Current income tax

(15)

(5)

(3)

(1)

        Decrease (increase) in inventories

(5)

(26)

47

15

Cash generated from operations

627

838

787

244






*   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:

 

Adjusted Free Cash Flow

New Israeli Shekels

Convenience translation into
U.S. Dollars


12 months ended

December 31,

3 months ended

December 31,

12 months
ended
December 31,

3 months
ended
December 31,


2019

2020

2019

2020

2020

2020


(Audited)

(Audited)

(Unaudited)

(Unaudited)

(Audited)

(Unaudited)


In millions

Net cash provided by operating activities

837

786

178

182

244

57

Net cash used in investing activities

(1,181)

(581)

(523)

(61)

(180)

(19)

Investment in (proceeds from) deposits, net

552

14

396

(92)

4

(29)

Lease principal payments

(139)

(129)

(30)

(27)

(40)

(8)

Lease interest payments

(20)

(18)

(5)

(5)

(6)

(2)

Adjusted Free Cash Flow

49

72

16

(3)

22

(1)

Interest paid

(37)

(49)

(16)

(7)

(15)

(2)

Adjusted Free Cash Flow After Interest

12

23

0

(10)

7

(3)

Total Operating Expenses (OPEX)

New Israeli Shekels

Convenience translation into
U.S. Dollars


12 months ended

December 31,

3 months ended

December 31,

12 months
ended
December 31,

3 months
ended
December 31,


2019

2020

2019

2020

2020

2020


(Audited)

(Audited)

(Unaudited)

(Unaudited)

(Audited)

(Unaudited)


In millions

Cost of revenues – Services

2,177

2,128

532

543

663

168

Selling and marketing expenses                                                                 

301

291

73

79

90

25

General and administrative expenses

149

145

40

35

45

11

Credit losses

18

23

3

4

7

1

Depreciation and amortization

(751)

(714)

(184)

(180)

(222)

(56)

Other (1)

(9)

(2)

3

(1)

(1)

*

OPEX

1,885

1,871

467

480

582

149








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

Key Financial and Operating Indicators (unaudited) ***

NIS M unless otherwise stated

Q4′ 18

Q1′ 19

Q2′ 19

Q3′ 19

Q4′ 19

Q1′ 20

Q2′ 20

Q3′ 20

Q4′ 20


2019

2020

Cellular Segment Service Revenues

447

441

453

466

438

423

409

415

416


1,798

1,663

Cellular Segment Equipment Revenues

165

142

115

142

172

146

130

134

135


571

545

Fixed-Line Segment Service Revenues

220

224

230

233

238

245

244

252

252


925

993

Fixed-Line Segment Equipment Revenues

24

28

24

25

26

32

28

35

41


103

136

Reconciliation for consolidation

(42)

(41)

(41)

(41)

(40)

(39)

(37)

(36)

(36)


(163)

(148)

Total Revenues

814

794

781

825

834

807

774

800

808


3,234

3,189

Gross Profit from Equipment Sales

42

39

35

33

37

37

30

38

40


144

145

Operating Profit*

14

9

22

26

30

36

20

20

20


87

96

Cellular Segment Adjusted EBITDA*

119

150

159

170

156

132

129

134

138


635

533

Fixed-Line Segment Adjusted EBITDA*

53

47

55

55

61

83

71

70

65


218

289

Total Adjusted EBITDA*

172

197

214

225

217

215

200

204

203


853

822

Adjusted EBITDA Margin (%)*

21%

25%

27%

27%

26%

27%

26%

26%

25%


26%

26%

OPEX*

502

472

472

474

467

460

456

475

480


1,885

1,871

Finance costs, net*

12

14

16

18

20

19

13

24

13


68

69

Profit (Loss)*

19

2

3

7

7

10

7

(5)

5


19

17

Capital Expenditures (cash)

143

185

143

174

127

151

119

147

156


629

573

Capital Expenditures (additions)

177

157

142

150

129

129

121

179

166


578

595

Adjusted Free Cash Flow

(22)

(11)

31

13

16

10

44

21

(3)


49

72

Adjusted Free Cash Flow (after interest)

(37)

(15)

15

12

0

8

13

12

(10)


12

23

Net Debt

950

977

965

956

957

673

658

646

657


957

657

Cellular Subscriber Base (Thousands)

2,646

2,620

2,616

2,651

2,657

2,676

2,708

2,762

2,836


2,657

2,836

Post-Paid Subscriber Base (Thousands)

2,361

2,340

2,337

2,366

2,366

2,380

2,404

2,437

2,495


2,366

2,495

Pre-Paid Subscriber Base (Thousands)

285

280

279

285

291

296

304

325

341


291

341

Cellular ARPU (NIS)

57

56

58

59

55

53

51

51

49


57

51

Cellular Churn Rate (%)

8.5%

8.5%

7.9%

7.7%

7.2%

7.5%

7.5%

7.3%

7.2%


31%

30%

Infrastructure-Based Internet Subscribers (Thousands)





268

281

295

311

329


268

329

Fiber-Optic subscribers (Thousands)





76

87

101

120

139


76

139

Homes connected to fiber-optic infrastructure 
(Thousands)





324

361

396

432

465


324

465

TV Subscriber Base (Thousands)

122

141

160

176

188

200

215

224

232


188

232

Number of Employees (FTE)**

2,782

2,897

2,895

2,923

2,834

1,867

2,745

2,731

2,655


2,834

2,655

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

Series

Original
issuance
date

Principal on
the date of
issuance

As of 31.12.2020

Annual interest
rate

Principal repayment
dates

Interest
repayment dates

Interest
linkage

Trustee contact details

Principal
book value

Linked principal
book value

Interest accumulated
in books

Market
value

From

To




D

25.04.10

04.05.11*

400

146

109

109

**

110

1.252%

 

(MAKAM+1.2%)

30.12.17

30.12.21

30.03, 30.06, 30.09, 30.12

Variable
interest
MAKAM (4)

Hermetic Trust (1975) Ltd.
Merav Offer. 113 Hayarkon
St., Tel Aviv. Tel: 03-5544553.

F

(2) (3)

20.07.17

12.12.17*

04.12.18*

01.12.19*

255

389

150

226.75

512

512

**

524

2.16%

25.06.20

25.06.24

25.06, 25.12

Not Linked

Hermetic Trust (1975) Ltd.

Merav Offer. 113 Hayarkon
St., Tel Aviv. Tel: 03-5544553.

G

(1) (2)

06.01.19

01.07.19*

28.11.19*

27.02.20*

31.05.20*

01.07.20*

02.07.20*

26.11.20*

225

38.5

86.5

15.1

84.8

12.2

300

62.2

824

824

17

939

4%

25.06.22

25.06.27

25.06

Not Linked

Hermetic Trust (1975) Ltd.

Merav Offer. 113 Hayarkon
St., Tel Aviv. Tel: 03-5544553.

(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*

Series

Rating
Company

Rating as of
31.12.2020 and
25.03.2021 (1)

Rating assigned
upon issuance of
the Series

Recent date of rating
as of 31.12.2020 and
25.03.2021

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

Date

Rating

D

S&P Maalot

ilA+

ilAA-

11/2020

07/2010, 09/2010, 10/2010, 09/2012, 12/2012,

06/2013, 07/2014, 07/2015, 07/2016, 07/2017,

08/2018, 11/2018, 12/2018, 01/2019, 04/2019,

08/2019, 02/2020, 05/2020, 06/2020, 07/2020,

08/2020, 11/2020

ilAA-, ilAA-, ilAA-, ilAA-, ilAA-,

ilAA-, ilAA-, ilA+, ilA+, ilA+,

ilA+, ilA+, ilA+, ilA+, ilA+,

ilA+, ilA+, ilA+, ilA+, ilA+,

ilA+, ilA+

F

S&P Maalot

ilA+

ilA+

11/2020

07/2017, 09/2017, 12/2017, 01/2018, 08/2018,

11/2018, 12/2018, 01/2019, 04/2019, 08/2019,

02/2020, 05/2020, 06/2020, 07/2020, 08/2020,

11/2020

ilA+, ilA+, ilA+, ilA+, ilA+,

ilA+, ilA+, ilA+, ilA+, ilA+,

ilA+, ilA+, ilA+, ilA+, ilA+,

ilA+

G (3)

S&P Maalot

ilA+

ilA+

11/2020

12/2018, 01/2019, 04/2019, 08/2019, 02/2020,

 05/2020, 06/2020, 07/2020, 08/2020, 11/2020

ilA+, ilA+, ilA+, ilA+, ilA+,

ilA+, ilA+, ilA+, ilA+, ilA+

(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).


Principal payments

Gross interest
payments (without
deduction of tax)


ILS linked
to CPI

ILS not linked
to CPI

Euro

Dollar

Other

First year

237,130

43,984

Second year

210,334

39,880

Third year

210,334

33,820

Fourth year

210,334

27,832

Fifth year and on

577,027

56,054

Total

1,445,159

201,570

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).


Principal payments

Gross interest
payments (without
deduction of tax)


ILS linked to CPI

ILS not linked to CPI

Euro

Dollar

Other

First year

52,132

2,915

Second year

52,132

1,643

Third year

22,720

639

Fourth year

11,400

107

Fifth year and on

Total

138,384

5,304

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).


Principal payments

Gross interest
payments (without
deduction of tax)


ILS linked
to CPI

ILS not linked
to CPI

Euro

Dollar

Other

First year

289,262

46,899

Second year

262,466

41,523

Third year

233,054

34,459

Fourth year

221,734

27,939

Fifth year and on

577,027

56,054

Total

1,583,543

206,874

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.

Related Links

http://www.partner.co.il



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