Cellcom Israel Announces Fourth Quarter and Full Year 2016 Results
Cellcom Israel concludes 2016 with net income of NIS 150 million and EBITDA1 of NIS 858 million.
Nir Sztern, Cellcom CEO said: "The Company continues its successful activity in the fixed-line market and reports of approximately 122,000 Cellcom tv households and more than 180,000 households in the landline wholesale market to date."
NETANYA, Israel, March 15, 2017 /PRNewswire/ --
2016 Full Year Highlights (compared to 2015):
- Total Revenues totaled NIS 4,027 million ($1,047 million) compared to NIS 4,180 million ($1,087 million) last year, a decrease of 3.7%
- Service revenues totaled NIS 3,033 million ($789 million) compared to NIS 3,132 million ($815 million) last year, a decrease of 3.2%
- EBITDA1 totaled NIS 858 million ($223 million) compared to NIS 872 million2 ($227 million) last year, a decrease of 1.6%
- EBITDA margin 21.3%, an increase from 20.9% last year.
- Operating income totaled NIS 310 million ($80 million) similar to last year.
- Net income totaled NIS 150 million ($39 million) compared to NIS 97 million ($25 million) last year, an increase of 54.6%
- Free cash flow1 totaled NIS 416 million ($108 million) compared to NIS 494 million ($128 million) last year, a decrease of 15.8%
- Cellular subscriber base totaled approximately 2.801 million subscribers (at the end of December 2016)
[1] |
Please see "Use of Non-IFRS financial measures" section in this press release. |
[2] |
EBITDA for 2015 includes a one-time expense in the amount of approximately NIS 30 million as a result of entering a collective employment agreement. |
Fourth Quarter 2016 Highlights (compared to fourth quarter of 2015):
- Total Revenues totaled NIS 984 million ($256 million) compared to NIS 1,046 million ($272 million) in the fourth quarter last year, a decrease of 5.9%
- Service revenues totaled NIS 719 million ($187 million) compared to NIS 757 million ($197 million) in the fourth quarter last year, a decrease of 5.0%
- EBITDA1 totaled NIS 173 million ($45 million) compared to NIS 225 million ($59 million) in the fourth quarter last year, a decrease of 23.1%
- EBITDA margin 17.6%, a decrease from 21.5% in the fourth quarter last year.
- Operating income totaled NIS 32 million ($8 million) compared to NIS 79 million ($21 million) in the fourth quarter last year, a decrease of 59.5%
- Net income totaled NIS 14 million ($4 million) compared to NIS 19 million ($5 million) in the fourth quarter last year, a decrease of 26.3%
- Free cash flow1 totaled NIS 83 million ($22 million) compared to NIS 121 million ($31 million) in the fourth quarter last year, a decrease of 31.4%
Nir Sztern, the Company's Chief Executive Officer, referred to the results of the full year and fourth quarter:
"Throughout 2016, we continued to be affected by the intensity of the competition in the cellular market while strengthening our position as a communications group. This is a year in which the Group's strategy of intensifying our activity as a communications group bore significant fruit.
The Cellcom tv success continues and expands, and there is no doubt that we offer an alternative to the Israeli consumer and generate competition in the market. To date, approximately 122,000 households have subscribed to Cellcom tv services, enjoying an advanced TV experience.
We continue to work actively in the landline market and to date, more than 180,000 households have subscribed to our internet infrastructure services. This achievement is even more impressive in light of the many challenges posed by the implementation of the reform in this market. We achieved all this alongside continuous successful landline solutions to business customers, offering IPVPN communications solutions, business continuity services, landline transmission services and PRI lines, data security services, fixed-line telephony services, cloud storage solutions and IOT services.
Signing the network sharing agreements with Electra Consumer Products and Xfone 018, will ensure revenues while reducing investment to the Group over the coming decade, with an ability to offer advanced high quality cellular services thanks to the amount of frequencies the shared network shall have. We are happy to have received the requisite approval from the Antitrust Commissioner and are awaiting the Ministry of Communications' approval and the completion of the transactions in order to move forward.
We were able to achieve the results of our strategy as a communications group, providing added value to the customer, thanks to the trust of our shareholders and thanks to the excellent employees and managers of the Group, in their daily uncompromising work in providing quality service to the Company's customers."
Shlomi Fruhling, Chief Financial Officer, said:
"2016 was characterized by growth in the fixed-line segment as well as continuous competition in the cellular segment, which was reflected by an erosion of service revenues compared to last year.
The service revenues in the cellular segment decreased by 4.9% compared to last year and were mainly affected by the intense competition during the year, though compared to previous years we are seeing a reduction in the level of erosion. The erosion was partially offset by an increase in revenues from national roaming services. The contribution of the cellular segment to EBITDA increased by 4.0% compared to last year, due to efficiency measures implemented by the Company.
We continued to grow in the fixed-line segment due to the ongoing recruitment of customers to Cellcom tv, to the landline wholesale market and for triple-play services. The increase in revenues from the Internet and TV fields was partially offset by a decrease in revenues from long distance calling services.
The Group continued to reduce its operating expenses. In 2016, the selling, marketing, general and administrative expenses of the Group decreased by approximately 8.4% compared to last year.
During 2016, the Company completed a debt offering through the issuance of two new series of debentures in Israel totaling approximately NIS 400 million with an average duration of 6.7 years. In addition, the Company completed a debt offering through a private placement of additional Series I debentures, for a total consideration of NIS 250 million. The debt offerings saw high demand, indicating a continued vote of confidence by investors in the Company.
The free cash flow for 2016 totaled NIS 416 million, a 15.8% decrease compared to NIS 494 million in 2015. The decrease in free cash flow was mainly due to a decrease in receipts from customers for services and end user equipment.
The Company's Board of Directors decided not to distribute a dividend for the fourth quarter of 2016, given the ongoing 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, while 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 fourth quarter and full year ended December 31, 2016.
The Company reported that revenues for the fourth quarter and full year 2016 totaled NIS 984 million ($256 million) and NIS 4,027 million ($1,047 million), respectively; EBITDA for the fourth quarter 2016 totaled NIS 173 million ($45 million), or 17.6% of total revenues, and for the full year 2016 totaled NIS 858 million ($223 million), or 21.3% of total revenues; net income for the fourth quarter and full year 2016 totaled NIS 14 million ($4 million) and NIS 150 million ($39 million), respectively. Basic earnings per share for the fourth quarter and full year 2016 totaled NIS 0.12 ($0.03) and NIS 1.47 ($0.38), respectively.
Main Consolidated Financial Results:
NIS millions |
% of Revenues |
% Change |
US$ millions |
||||
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
||
Revenues - services |
3,033 |
3,132 |
75.3% |
74.9% |
(3.2%) |
789 |
815 |
Revenues - equipment |
994 |
1,048 |
24.7% |
25.1% |
(5.2%) |
258 |
272 |
Total revenues |
4,027 |
4,180 |
100.0% |
100.0% |
(3.7%) |
1,047 |
1,087 |
Cost of revenues - services |
(2,028) |
(2,000) |
(50.4%) |
(47.8%) |
1.4% |
(527) |
(520) |
Cost of revenues - equipment |
(674) |
(763) |
(16.7%) |
(18.3%) |
(11.7%) |
(176) |
(199) |
Total cost of revenues |
(2,702) |
(2,763) |
(67.1%) |
(66.1%) |
(2.2%) |
(703) |
(719) |
Gross profit |
1,325 |
1,417 |
32.9% |
33.9% |
(6.5%) |
344 |
368 |
Selling and marketing expenses |
(574) |
(620) |
(14.3%) |
(14.8%) |
(7.4%) |
(149) |
(161) |
General and administrative expenses |
(420) |
(465) |
(10.4%) |
(11.1%) |
(9.7%) |
(109) |
(121) |
Other expenses, net |
(21) |
(22) |
(0.5%) |
(0.5%) |
(4.5%) |
(6) |
(6) |
Operating income |
310 |
310 |
7.7% |
7.4% |
0.0% |
80 |
80 |
Financing expenses, net |
(150) |
(177) |
(3.7%) |
(4.2%) |
(15.3%) |
(39) |
(46) |
Profit before taxes on income |
160 |
133 |
4.0% |
3.2% |
20.3% |
41 |
34 |
Taxes on income |
(10) |
(36) |
(0.2%) |
(0.9%) |
(72.2%) |
(2) |
(9) |
Net income |
150 |
97 |
3.7% |
2.3% |
54.6% |
39 |
25 |
Free cash flow |
416 |
494 |
10.3% |
11.8% |
(15.8%) |
108 |
128 |
EBITDA |
858 |
872 |
21.3% |
20.9% |
(1.6%) |
223 |
227 |
Q4/2016 |
Q4/2015 |
Change% |
Q4/2016 |
Q4/2015 |
|
NIS million |
US$ million (convenience translation) |
||||
Total revenues |
984 |
1,046 |
(5.9%) |
256 |
272 |
Operating Income |
32 |
79 |
(59.5%) |
8 |
21 |
Net Income |
14 |
19 |
(26.3%) |
4 |
5 |
Free cash flow |
83 |
121 |
(31.4%) |
22 |
31 |
EBITDA |
173 |
225 |
(23.1%) |
45 |
59 |
EBITDA, as percent of total revenues |
17.6% |
21.5% |
(18.1%) |
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.
Cellular (*)
|
Fixed-line (**)
|
Consolidation (***) |
Consolidated results
|
||||||||
NIS million |
2016 |
2015 |
Change % |
2016 |
2015 |
Change % |
2016 |
2015 |
2016 |
2015 |
Change % |
Total revenues |
2,998 |
3,203 |
(6.4%) |
1,229 |
1,181 |
4.1% |
(200) |
(204) |
4,027 |
4,180 |
(3.7%) |
Service revenues |
2,162 |
2,273 |
(4.9%) |
1,071 |
1,063 |
0.8% |
(200) |
(204) |
3,033 |
3,132 |
(3.2%) |
Equipment revenues |
836 |
930 |
(10.1%) |
158 |
118 |
33.9% |
- |
- |
994 |
1,048 |
(5.2%) |
EBITDA |
625 |
601 |
4.0% |
233 |
271 |
(14.0%) |
- |
- |
858 |
872 |
(1.6%) |
EBITDA, as percent of total revenues |
20.8% |
18.8% |
10.6% |
19.0% |
22.9% |
(17.0%) |
21.3% |
20.9% |
1.9% |
Cellular (*) |
Fixed-line (**) |
Consolidation (***) |
Consolidated results |
||||||||
NIS million |
Q4'16 |
Q4'15 |
Change % |
Q4'16 |
Q4'15 |
Change % |
Q4'16 |
Q4'15 |
Q4'16 |
Q4'15 |
Change % |
Total revenues |
707 |
779 |
(9.2%) |
327 |
319 |
2.5% |
(50) |
(52) |
984 |
1,046 |
(5.9%) |
Service revenues |
502 |
546 |
(8.1%) |
267 |
263 |
1.5% |
(50) |
(52) |
719 |
757 |
(5.0%) |
Equipment revenues |
205 |
233 |
(12.0%) |
60 |
56 |
7.1% |
- |
- |
265 |
289 |
(8.3%) |
EBITDA |
117 |
154 |
(24.0%) |
56 |
71 |
(21.1%) |
- |
- |
173 |
225 |
(23.1%) |
EBITDA, as percent of total revenues |
16.5% |
19.8% |
(16.7%) |
17.1% |
22.3% |
(23.3%) |
17.6% |
21.5% |
(18.1%) |
(*) |
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 (2016 full year compared to 2015):
Revenues for 2016 decreased 3.7% totaling NIS 4,027 million ($1,047 million), compared to NIS 4,180 million ($1,087 million) last year. The decrease in revenues is attributed to a 3.2% decrease in service revenues and a 5.2% decrease in equipment revenues.
Service revenues for 2016 totaled NIS 3,033 million ($789 million), a 3.2% decrease from NIS 3,132 million ($815 million) last year.
Service revenues in the cellular segment totaled NIS 2,162 million ($562 million) in 2016, a 4.9% decrease from NIS 2,273 million ($591 million) 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 services.
Service revenues in the fixed-line segment totaled NIS 1,071 million ($279 million) in 2016, a 0.8% increase from NIS 1,063 million ($276 million) last year. This increase resulted mainly from an increase in revenues from the Internet and TV fields. Such increase was partially offset by a decrease in revenues from long distance calling services.
Equipment revenues totaled NIS 994 million ($258 million) in 2016, a 5.2% decrease compared to NIS 1,048 million ($272 million) last year. This decrease resulted mainly from a decrease in the quantity of end user equipment sold during 2016 in the cellular segment as compared to 2015. This decrease was partially offset by an increase in equipment sales in the fixed-line segment.
Cost of revenues totaled NIS 2,702 million ($703 million) in 2016, compared to NIS 2,763 million ($719 million) in 2015, a 2.2% decrease. This decrease resulted mainly from a decrease in costs of end user equipment sold, primarily as a result of a decrease in the quantity of end user equipment sold in cellular segment during 2016 as compared to 2015, which was partially offset by an increase in content costs related to the TV field and in costs related to the landline wholesale market.
Gross profit for 2016 decreased 6.5% to NIS 1,325 million ($344 million), compared to NIS 1,417 million ($368 million) in 2015. Gross profit margin for 2016 amounted to 32.9%, down from 33.9% in 2015.
Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for 2016 decreased 8.4% to NIS 994 million ($258 million), compared to NIS 1,085 million ($282 million) in 2015. This decrease is primarily a result of efficiency measures implemented by the Company, a one-time expense as a result of entering a collective employment agreement in 2015, and a decrease in depreciation and amortization expenses.
Other expenses for 2016 totaled NIS 21 million ($6 million), compared to other expenses of NIS 22 million ($6 million) in 2015. Other expenses for 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 2015.
Operating income for 2016 is similar to 2015, NIS 310 million ($80 million). The decrease in the revenues was fully offset by a decrease in cost of revenues and Selling, Marketing, General and Administrative Expenses.
EBITDA for 2016 decreased by 1.6% totaling NIS 858 million ($223 million) compared to NIS 872 million ($227 million) in 2015. EBITDA for 2016, as a percent of revenues, totaled 21.3% up from 20.9% in 2015. The decrease in the EBITDA resulted mainly from the ongoing erosion in service revenues. The decrease was partially offset by a decrease in operating expenses, mainly as a result of efficiency measures implemented by the Company and from a one-time expense in 2015 as a result of entering a collective employment agreement.
Cellular segment EBITDA for 2016 totaled NIS 625 million ($163 million), compared to NIS 601 million ($156 million) last year, an increase of 4.0%, resulted mainly from a decrease in operating expenses, mainly as a result of efficiency measures implemented by the Company and from an increase in revenues from national roaming. Fixed-line segment EBITDA for 2016 totaled NIS 233 million ($61 million), compared to NIS 271 ($70 million) last year, a 14.0% decrease resulted mainly from an erosion in long distance calling services revenues and an erosion in the internet field profitability.
Financing expenses, net for 2016 decreased 15.3% and totaled NIS 150 million ($39 million), compared to NIS 177 million ($46 million) in 2015. The decrease mainly resulted from a decrease in interest expenses, associated with the Company's debentures, due to a lower debt level in 2016 compared to 2015.
Taxes on income for 2016 totaled NIS 10 million ($2 million) of tax expenses, compared to NIS 36 million ($9 million) tax expenses in 2015. The decrease resulted mainly from recording of tax income, as a result of a tax assessment agreement for the years 2012-2013 and a decrease in corporate tax rate for the following years.
Net Income for 2016 totaled NIS 150 million ($39 million), compared to NIS 97 million ($25 million) in 2015, a 54.6% increase.
Basic earnings per share for 2016 totaled NIS 1.47 ($0.38), compared to NIS 0.95 ($0.25) last year.
Financial Review (fourth quarter of 2016 compared to fourth quarter of 2015):
Revenues for the fourth quarter of 2016 decreased 5.9% totaling NIS 984 million ($256 million), compared to NIS 1,046 million ($272 million) in the fourth quarter last year. The decrease in revenues is attributed to a 5.0% decrease in service revenues and an 8.3% decrease in equipment revenues.
Service revenues totaled NIS 719 million ($187 million) in the fourth quarter of 2016, a 5.0% decrease from NIS 757 million ($197 million) in the fourth quarter last year.
Service revenues in the cellular segment totaled NIS 502 million ($131 million) in the fourth quarter of 2016, an 8.1% decrease from NIS 546 million ($142 million) in the fourth quarter 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.
Service revenues in the fixed-line segment totaled NIS 267 million ($69 million) in the fourth quarter of 2016, a 1.5% increase from NIS 263 million ($68 million) in the fourth quarter last year. This increase resulted mainly from an increase in revenues from the Internet and TV fields. Such increase was fully offset by a decrease in revenues from long distance calling services.
Equipment revenues in the fourth quarter of 2016 totaled NIS 265 million ($69 million), an 8.3% decrease compared to NIS 289 million ($75 million) in the fourth quarter last year. This decrease resulted mainly from a decrease in the amount of end user equipment sold in the cellular segment during the fourth quarter of 2016 as compared to the fourth quarter of 2015. This decrease was partially offset by an increase in equipment sales in the fixed-line segment.
Cost of revenues for the fourth quarter of 2016 totaled NIS 697 million ($181 million), compared to NIS 688 million ($179 million) in the fourth quarter of 2015, a 1.3% increase. This increase resulted mainly from an increase in content costs related to the TV field and in costs related to the landline wholesale market field which was partially offset by a decrease in the costs of end user equipment sold, primarily as a result of a decrease in the quantity of end user equipment sold in the cellular segment during the fourth quarter of 2016 as compared to the fourth quarter of 2015.
Gross profit for the fourth quarter of 2016 decreased 19.8% to NIS 287 million ($75 million), compared to NIS 358 million ($93 million) in the fourth quarter of 2015. Gross profit margin for the fourth quarter of 2016 amounted to 29.2%, down from 34.2% in the fourth quarter of 2015.
Selling, Marketing, General and Administrative Expenses ("SG&A Expenses") for the fourth quarter of 2016 decreased 9.4% to NIS 251 million ($65 million), compared to NIS 277 million ($72 million) in the fourth quarter of 2015. This decrease is primarily a result of a decrease in depreciation and amortization expenses and efficiency measures implemented by the Company.
Operating income for the fourth quarter of 2016 decreased by 59.5% to NIS 32 million ($8 million) from NIS 79 million ($21 million) in the fourth quarter of 2015. The decrease in the operating income resulted from a decrease in revenues primarily due to the ongoing erosion in service revenues.
EBITDA for the fourth quarter of 2016 decreased by 23.1% totaling NIS 173 million ($45 million) compared to NIS 225 million ($59 million) in the fourth quarter of 2015. EBITDA as a percent of revenues for the fourth quarter of 2016 totaled 17.6%, down from 21.5% in the fourth quarter of 2015. The decrease in the EBITDA resulted mainly from the ongoing erosion in service revenues and an increase of a provision for claims recorded in the fourth quarter of 2016. The decrease was partially offset by a decrease in operating expenses, mainly as a result of efficiency measures implemented by the Company.
Cellular segment EBITDA for the fourth quarter of 2016 totaled NIS 117 million ($30 million), compared to NIS 154 million ($40 million) in the fourth quarter last year, a decrease of 24.0%, resulted mainly from a decrease in service revenues as mentioned above. Fixed-line segment EBITDA for the fourth quarter of 2016 totaled NIS 56 million ($15 million), compared to NIS 71 million ($18 million) in the fourth quarter last year, a 21.1% decrease, mainly as a result of an erosion in long distance calling services revenues and an erosion in the internet field profitability.
Financing expenses, net for the fourth quarter of 2016 decreased 16.7% and totaled NIS 40 million ($10 million), compared to NIS 48 million ($12 million) in the fourth quarter of 2015. The decrease resulted mainly from hedging transactions losses in the fourth quarter of 2015 regarding the Israeli Consumer Price Index, associated with the Company's debentures.
Taxes on income for the fourth quarter of 2016 totaled NIS 22 million ($6 million) of tax income, compared to NIS 12 million ($3 million) of tax expenses in the fourth quarter of 2015. The decrease resulted mainly from tax income which was recorded in this quarter as a result of a decrease in corporate tax rate for the following years.
Net Income for the fourth quarter of 2016 totaled NIS 14 million ($4 million), compared to NIS 19 million ($5 million) in the fourth quarter of 2015, a 26.3% decrease.
Basic earnings per share for the fourth quarter of 2016 totaled NIS 0.12 ($0.03), compared to NIS 0.18 ($0.05) in the fourth quarter last year.
Operating Review
Main Performance Indicators - Cellular segment:
2016 |
2015 |
Change (%) |
|
Cellular subscribers at the end of period (in thousands) |
2,801 |
2,835 |
(1.2%) |
Churn Rate for cellular subscribers (in %) |
42.4% |
42.0% |
1.0% |
Monthly cellular ARPU (in NIS) |
63.3 |
65.0 |
(2.6%) |
Q4/2016 |
Q4/2015 |
Change (%) |
|
Churn Rate for cellular subscribers (in %) |
10.4% |
11.1% |
(6.3%) |
Monthly cellular ARPU (in NIS) |
59.3 |
63.0 |
(5.9%) |
Cellular subscriber base - at the end of 2016 the Company had approximately 2.801 million cellular subscribers, a decrease of approximately 34,000 subscribers net, or approximately 1.2%, compared to the cellular subscriber base at the end of 2015. In the fourth quarter of 2016, the Company's cellular subscriber base decreased by approximately 21,000 net cellular subscribers.
Cellular Churn Rate for 2016 totaled 42.4%, compared to 42.0% in 2015. The cellular churn rate for the fourth quarter 2016 totaled to 10.4%, compared to 11.1% in the fourth quarter last year.
The monthly cellular Average Revenue per User ("ARPU") for 2016 totaled NIS 63.3 ($16.5) compared to NIS 65.0 ($16.9) in 2015. ARPU for the fourth quarter of 2016 totaled NIS 59.3 ($15.4), compared to NIS 63.0 ($16.4) in the fourth quarter last year. The decrease in ARPU resulted, among others, from the ongoing erosion in the prices of cellular services, resulting from the intense competition in the cellular market.
Main Performance Indicators - Fixed-line segment:
2016 |
2015 |
Change (%) |
|
Internet infrastructure field- households at the end of period (in thousands) |
163 |
95 |
71.6% |
TV field- households at the end of period (in thousands) |
111 |
63 |
76.2% |
In the fourth quarter of 2016, the Company's households base in respect of internet infrastructure field and TV field had increased by approximately 17,000 net households and 12,000 net households, respectively.
Financing and Investment Review
Cash Flow
Free cash flow for 2016 totaled NIS 416 million ($108 million), compared to NIS 494 million ($128 million) in 2015, a 15.8% decrease. Free cash flow for the fourth quarter of 2016 totaled NIS 83 million ($22 million), compared to NIS 121 million ($31 million) in the fourth quarter of 2015, a 31.4% decrease. The decrease in free cash flow, both annual and quarterly, resulted mainly from a decrease in receipts from customers for services and end user equipment.
Total Equity
Total Equity as of December 31, 2016 amounted to NIS 1,340 million ($349 million) primarily consisting of undistributed accumulated retained earnings of the Company.
Cash Capital Expenditures in Fixed Assets and Intangible Assets
During 2016 and the fourth quarter of 2016, the Company invested NIS 368 million ($96 million) and NIS 96 million ($25 million), respectively 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 396 million ($103 million) and NIS 89 million ($23 million) in 2015 and the fourth quarter 2015, respectively.
Dividend
On March 14, 2017, the Company's Board of Directors decided not to declare a cash dividend for the fourth 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 December 31, 2016, see "Disclosure for Debenture Holders" section in this press release.
Loans from Financial Institutions
Pursuant 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. Pursuant to a loan agreement between the Company and an Israeli bank from August 2015, in December 2016 a loan in the amount of NIS 140 million was provided to the Company. For details regarding the fulfillment of financial covenants included in the loan agreements, which are identical to those included in the Company's Debentures Series F through K, 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 regarding the loans see the Company's 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".
Conference Call Details
The Company will be hosting a conference call regarding its results for the year 2016 and for the fourth quarter of 2016 on Wednesday, March 15, 2017 at 10:00 am ET, 07:00 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: 1 888 668 9141
UK Dial-in Number: 0 800 917 5108
Israel Dial-in Number: 03 918 0609
International Dial-in Number: +972 3 918 0609
at: 10:00 am Eastern Time; 07:00 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 2.801 million cellular subscribers (as at December 31, 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 3.845 = US$ 1 as published by the Bank of Israel for December 31, 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 Tel: +972 52 998 9735 |
Investor Relations Contact Ehud Helft GK Investor & Public Relations Tel: +1 617 418 3096 |
Financial Tables Follow
Cellcom Israel Ltd. |
||||||
(An Israeli Corporation) |
||||||
Consolidated Statements of Financial Position |
||||||
Convenience |
||||||
translation into |
||||||
US dollar |
||||||
December 31, |
December 31, |
December 31, |
||||
2015 |
2016 |
2016 |
||||
NIS millions |
NIS millions |
US$ millions |
||||
Assets |
||||||
Cash and cash equivalents |
761 |
1,240 |
322 |
|||
Current investments, including derivatives |
281 |
284 |
74 |
|||
Trade receivables |
1,254 |
1,325 |
345 |
|||
Current tax assets |
- |
25 |
6 |
|||
Other receivables |
104 |
61 |
16 |
|||
Inventory |
85 |
64 |
17 |
|||
Total current assets |
2,485 |
2,999 |
780 |
|||
Trade and other receivables |
785 |
796 |
207 |
|||
Property, plant and equipment, net |
1,745 |
1,659 |
432 |
|||
Intangible assets, net |
1,254 |
1,207 |
314 |
|||
Deferred tax assets |
9 |
1 |
- |
|||
Total non- current assets |
3,793 |
3,663 |
953 |
|||
Total assets |
6,278 |
6,662 |
1,733 |
|||
Liabilities |
||||||
Current maturities of debentures |
734 |
863 |
224 |
|||
Trade payables and accrued expenses |
677 |
675 |
176 |
|||
Current tax liabilities |
53 |
- |
- |
|||
Provisions |
110 |
108 |
28 |
|||
Other payables, including derivatives |
286 |
279 |
73 |
|||
Total current liabilities |
1,860 |
1,925 |
501 |
|||
Long-term loans from financial institutions |
- |
340 |
88 |
|||
Debentures |
3,054 |
2,866 |
745 |
|||
Provisions |
20 |
30 |
8 |
|||
Other long-term liabilities |
24 |
31 |
8 |
|||
Liability for employee rights upon retirement, net |
12 |
12 |
3 |
|||
Deferred tax liabilities |
123 |
118 |
31 |
|||
Total non- current liabilities |
3,233 |
3,397 |
883 |
|||
Total liabilities |
5,093 |
5,322 |
1,384 |
|||
Equity attributable to owners of the Company |
||||||
Share capital |
1 |
1 |
- |
|||
Cash flow hedge reserve |
(2) |
(1) |
- |
|||
Retained earnings |
1,170 |
1,322 |
344 |
|||
Non-controlling interests |
16 |
18 |
5 |
|||
Total equity |
1,185 |
1,340 |
349 |
|||
Total liabilities and equity |
6,278 |
6,662 |
1,733 |
Cellcom Israel Ltd. |
||||||||
(An Israeli Corporation) |
||||||||
Consolidated Statements of Income |
||||||||
Convenience |
||||||||
translation into |
||||||||
US dollar |
||||||||
Year ended |
Year ended |
Year ended |
Year ended |
|||||
December 31, |
December 31, |
December 31, |
December 31, |
|||||
2014 |
2015 |
2016 |
2016 |
|||||
NIS millions |
NIS millions |
NIS millions |
US$ millions |
|||||
Revenues |
4,570 |
4,180 |
4,027 |
1,047 |
||||
Cost of revenues |
(2,727) |
(2,763) |
(2,702) |
(703) |
||||
Gross profit |
1,843 |
1,417 |
1,325 |
344 |
||||
Selling and marketing expenses |
(672) |
(620) |
(574) |
(149) |
||||
General and administrative expenses |
(463) |
(465) |
(420) |
(109) |
||||
Other expenses, net |
(46) |
(22) |
(21) |
(6) |
||||
Operating profit |
662 |
310 |
310 |
80 |
||||
Financing income |
100 |
55 |
46 |
12 |
||||
Financing expenses |
(298) |
(232) |
(196) |
(51) |
||||
Financing expenses, net |
(198) |
(177) |
(150) |
(39) |
||||
Profit before taxes on income |
464 |
133 |
160 |
41 |
||||
Taxes on income |
(110) |
(36) |
(10) |
(2) |
||||
Profit for the year |
354 |
97 |
150 |
39 |
||||
Attributable to: |
||||||||
Owners of the Company |
351 |
95 |
148 |
39 |
||||
Non-controlling interests |
3 |
2 |
2 |
- |
||||
Profit for the year |
354 |
97 |
150 |
39 |
||||
Earnings per share |
||||||||
Basic earnings per share (in NIS) |
3.51 |
0.95 |
1.47 |
0.38 |
||||
Diluted earnings per share (in NIS) |
3.48 |
0.95 |
1.47 |
0.38 |
||||
Weighted-average number of |
99,924,306 |
100,589,458 |
100,604,578 |
100,604,578 |
||||
Weighted-average number of |
100,706,282 |
100,589,530 |
100,698,306 |
100,698,306 |
Cellcom Israel Ltd. |
|||||||
(An Israeli Corporation) |
|||||||
Consolidated Statements of Cash Flows |
|||||||
Convenience |
|||||||
translation into |
|||||||
US dollar |
|||||||
Year ended |
Year ended |
Year ended |
Year ended |
||||
December 31, |
December 31, |
December 31, |
December 31, |
||||
2014 |
2015 |
2016 |
2016 |
||||
NIS millions |
NIS millions |
NIS millions |
US$ millions |
||||
Cash flows from operating activities |
|||||||
Profit for the year |
354 |
97 |
150 |
39 |
|||
Adjustments for: |
|||||||
Depreciation and amortization |
610 |
562 |
534 |
139 |
|||
Share based payment |
3 |
3 |
6 |
2 |
|||
Loss (gain) on sale of property, plant and equipment |
7 |
(1) |
10 |
3 |
|||
Income tax expense |
110 |
36 |
10 |
2 |
|||
Financing expenses, net |
198 |
177 |
150 |
39 |
|||
Changes in operating assets and liabilities: |
|||||||
Change in inventory |
(5) |
4 |
21 |
5 |
|||
Change in trade receivables (including long-term amounts) |
422 |
209 |
(28) |
(7) |
|||
Change in other receivables (including long-term amounts) |
(35) |
(34) |
(5) |
(1) |
|||
Change in trade payables, accrued expenses and provisions |
(24) |
(54) |
- |
- |
|||
Change in other liabilities (including long-term amounts) |
36 |
(95) |
20 |
5 |
|||
Payments for derivative hedging contracts, net |
(6) |
- |
- |
- |
|||
Income tax paid |
(119) |
(68) |
(88) |
(23) |
|||
Income tax received |
6 |
- |
1 |
- |
|||
Net cash from operating activities |
1,557 |
836 |
781 |
203 |
|||
Cash flows used in investing activities |
|||||||
Acquisition of property, plant, and |
(289) |
(305) |
(295) |
(77) |
|||
Acquisition of intangible assets |
(77) |
(91) |
(73) |
(19) |
|||
Dividend received |
- |
2 |
- |
- |
|||
Change in current investments, net |
(15) |
231 |
(9) |
(2) |
|||
Proceeds from other derivative contracts, net |
4 |
- |
- |
- |
|||
Proceeds from sale of property, plant and equipment |
4 |
4 |
2 |
- |
|||
Interest received |
23 |
15 |
11 |
3 |
|||
Repayment of a long-term deposit |
- |
48 |
- |
- |
|||
Net cash used in investing activities |
(350) |
(96) |
(364) |
(95) |
Cellcom Israel Ltd. |
|||||||
(An Israeli Corporation) |
|||||||
Consolidated Statements of Cash Flows (cont'd) |
|||||||
Convenience |
|||||||
translation into |
|||||||
US dollar |
|||||||
Year ended |
Year ended |
Year ended |
Year ended |
||||
December 31, |
December 31, |
December 31, |
December 31, |
||||
2014 |
2015 |
2016 |
2016 |
||||
NIS millions |
NIS millions |
NIS millions |
US$ millions |
||||
Cash flows used in financing activities |
|||||||
Payments for derivative contracts, net |
(29) |
(32) |
(13) |
(3) |
|||
Receipt (Repayment) of long-term loans from financial institutions |
(12) |
- |
340 |
88 |
|||
Repayment of debentures |
(1,092) |
(873) |
(732) |
(191) |
|||
Proceeds from issuance of debentures, net of issuance costs |
326 |
(3) |
653 |
170 |
|||
Dividend paid |
(4) |
(1) |
(1) |
- |
|||
Interest paid |
(295) |
(227) |
(185) |
(48) |
|||
Net cash used in financing activities |
(1,106) |
(1,136) |
62 |
16 |
|||
Changes in cash and cash equivalents |
101 |
(396) |
479 |
124 |
|||
Cash and cash equivalents as at the beginning of the year |
1,057 |
1,158 |
761 |
198 |
|||
Effect of exchange rate fluctuations on cash and cash equivalents |
- |
(1) |
- |
- |
|||
Cash and cash equivalents as at the end of the year |
1,158 |
761 |
1,240 |
322 |
Cellcom Israel Ltd |
||||
(An Israeli Corporation) |
||||
Reconciliation for Non-IFRS Measures |
||||
EBITDA |
||||
The following is a reconciliation of net income to EBITDA: |
||||
Year ended December 31 |
Convenience translation into US dollar Year ended December 31 |
|||
2014 NIS millions |
2015 NIS millions |
2016 NIS millions |
2016 US$ millions |
|
Net income |
354 |
97 |
150 |
39 |
Income taxes |
110 |
36 |
10 |
2 |
Financing income |
(100) |
(55) |
(46) |
(12) |
Financing expenses |
298 |
232 |
196 |
51 |
Other expenses (income) |
7 |
(3) |
8 |
2 |
Depreciation and amortization |
610 |
562 |
534 |
139 |
Share based payments |
3 |
3 |
6 |
2 |
EBITDA |
1,282 |
872 |
858 |
223 |
Three-month period ended December 31 |
||||
2014 NIS millions |
2015 NIS millions |
2016 NIS millions |
Convenience translation into US dollar 2016 US$ millions |
|
Net income |
55 |
19 |
14 |
4 |
Income taxes |
20 |
12 |
(22) |
(6) |
Financing income |
(28) |
(11) |
(13) |
(4) |
Financing expenses |
84 |
59 |
53 |
14 |
Other expenses |
3 |
1 |
3 |
1 |
Depreciation and amortization |
148 |
143 |
136 |
35 |
Share based payments |
- |
2 |
2 |
1 |
EBITDA |
282 |
225 |
173 |
45 |
Free cash flow |
||||
The following table shows the calculation of free cash flow: |
||||
Year ended December 31 |
Convenience translation into US dollar Year ended December 31 |
|||
2014 NIS millions |
2015 NIS millions |
2016 NIS millions |
2016 US$ millions |
|
Cash flows from operating activities(*) |
1,557 |
836 |
781 |
203 |
Cash flows from investing activities |
(350) |
(96) |
(364) |
(95) |
Sale of tradable debentures(**) |
(3) |
(246) |
(1) |
- |
Free cash flow |
1,204 |
494 |
416 |
108 |
Three-month period ended December 31 |
||||
2014 NIS millions |
2015 NIS millions |
2016 NIS millions |
Convenience translation into US dollar 2016 US$ millions |
|
Cash flows from operating activities(*) |
277 |
210 |
178 |
47 |
Cash flows from investing activities |
(99) |
8 |
(96) |
(25) |
Sale of tradable debentures(**) |
(4) |
(97) |
1 |
- |
Free cash flow |
174 |
121 |
83 |
22 |
(*) |
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 |
Q3-2016 |
Q4-2016 |
FY-2015 |
FY-2016 |
Cellular service revenues |
582 |
573 |
572 |
546 |
559 |
567 |
534 |
502 |
2,273 |
2,162 |
Fixed-line service revenues |
269 |
264 |
267 |
263 |
264 |
264 |
276 |
267 |
1,063 |
1,071 |
Cellular equipment revenues |
245 |
237 |
215 |
233 |
219 |
217 |
195 |
205 |
930 |
836 |
Fixed-line equipment revenues |
17 |
17 |
28 |
56 |
29 |
30 |
39 |
60 |
118 |
158 |
Consolidation adjustments |
(51) |
(51) |
(50) |
(52) |
(49) |
(49) |
(52) |
(50) |
(204) |
(200) |
Total revenues |
1,062 |
1,040 |
1,032 |
1,046 |
1,022 |
1,029 |
992 |
984 |
4,180 |
4,027 |
Cellular EBITDA |
130 |
149 |
168 |
154 |
178 |
181 |
149 |
117 |
601 |
625 |
Fixed-line EBITDA |
66 |
67 |
67 |
71 |
60 |
57 |
60 |
56 |
271 |
233 |
Total EBITDA |
196 |
216 |
235 |
225 |
238 |
238 |
209 |
173 |
872 |
858 |
Operating profit |
55 |
80 |
96 |
79 |
101 |
104 |
73 |
32 |
310 |
310 |
Financing expenses, net |
18 |
62 |
49 |
48 |
24 |
44 |
42 |
40 |
177 |
150 |
Profit for the period |
26 |
12 |
40 |
19 |
59 |
44 |
33 |
14 |
97 |
150 |
Free cash flow |
127 |
119 |
127 |
121 |
149 |
103 |
81 |
83 |
494 |
416 |
Cellular subscribers at the end of period (in 000's) |
2,885 |
2,848 |
2,832 |
2,835 |
2,813 |
2,812 |
2,822 |
2,801 |
2,835 |
2,801 |
Monthly cellular ARPU (in NIS) |
65.5 |
65.5 |
66.0 |
63.0 |
65.2 |
66.0 |
62.8 |
59.3 |
65.0 |
63.3 |
Churn rate for cellular subscribers (%) |
11.9% |
10.2% |
10.1% |
11.1% |
11.1% |
10.6% |
10.5% |
10.4% |
42.0% |
42.4% |
Cellcom Israel Ltd. |
|||||||||||||||
Disclosure for debenture holders as of December 31, 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 31.12.2016 |
As of 14.03.2017 |
Interest Rate (fixed) |
Principal Repayment Dates |
Interest Repayment Dates (3) |
Linkage |
Trustee Contact Details |
||||||
Principal Balance on Trade |
Linked Principal Balance |
Interest Accumulated in Books |
Debenture Balance Value in Books (2) |
Market Value |
Principal Balance on Trade |
Linked Principal Balance |
From |
To |
|||||||
B (4)(8) |
22/12/05 02/01/06* 05/01/06* 10/01/06* 31/05/06* |
925.102 |
185.020 |
220.220 |
11.544 |
231.764 |
231.831 |
- |
- |
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)** |
07/10/07 03/02/08* 06/04/09* 30/03/11* 18/08/11* |
2,423.075 |
299.602 |
348.829 |
9.054 |
357.883 |
363.147 |
299.602 |
347.822 |
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)(8) |
06/04/09 30/03/11* 18/08/11* |
1,798.962 |
163.633 |
163.622 |
10.115 |
173.737 |
173.795 |
- |
- |
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)(8)** |
20/03/12 |
714.802 |
714.802 |
730.637 |
16.454 |
747.091 |
700.899 |
643.322 |
656.254 |
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)(8)** |
20/03/12 |
285.198 |
285.198 |
285.414 |
9.777 |
295.191 |
246.571 |
228.158 |
228.325 |
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 |
824.173 |
9.221 |
833.394 |
949.814 |
949.624 |
827.994 |
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 |
752.961 |
16.324 |
769.285 |
854.261 |
804.010 |
754.246 |
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. |
J (4)(5) |
26/09/16 |
103.267 |
103.267 |
102.229 |
0.665 |
102.894 |
102.968 |
103.267 |
102.246 |
2.45% |
05.07.21 |
05.07.26 |
January-5 and July-5 |
Linked to CPI |
Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel Aviv. Tel: 03-6374355. |
K (4)(5)** |
26/09/16 |
303.971 |
303.971 |
300.867 |
2.838 |
303.705 |
301.965 |
303.971 |
300.895 |
3.55% |
05.07.21 |
05.07.26 |
January-5 and July-5 |
Not linked |
Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel Aviv. Tel: 03-6374355. |
Total |
8,308.011 |
3,809.127 |
3,728.952 |
85.992 |
3,814.944 |
3,925.251 |
3,331.954 |
3,217.782 |
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 K financial and loan agreements covenants - as of December 31, 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 2.99 (the net leverage without excluding one-time events was 2.99). In the reporting period, no cause for early repayment occurred. (2) Including interest accumulated in the books. (3) Annual payments, excluding Series F through K debentures in which the payments are semi annual. (4) Regarding debenture Series B and F through K 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 K 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 January 5, 2017, after the end of the reporting period, the Company repaid principal payments of approximately NIS 514 million of Series B, E, F and G debentures. |
(*) |
On these dates additional debentures of the series were issued, the information in the table refers to the full series. |
(**) |
As of December 31, 2016, debentures Series D, F through I and K 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 December 31, 2016 (cont.) |
|||||||
Debentures Rating Details* |
|||||||
Series |
Rating Company |
Rating as of 31.12.2016 (1) |
Rating as of 14.03.2017 |
Rating assigned upon issuance of the Series |
Recent date of rating as of 14.03.2017 |
Additional ratings between original issuance and the recent date of rating as of 14.03.2017 (2) |
|
Rating |
|||||||
B |
S&P Maalot |
A+ |
A+ |
AA- |
08/2016 |
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, 08/2016 |
AA-, AA,AA-,A+ (2) |
D |
S&P Maalot |
A+ |
A+ |
AA- |
08/2016 |
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, 08/2016 |
AA-, AA,AA-,A+ (2) |
E |
S&P Maalot |
A+ |
A+ |
AA |
08/2016 |
9/2010, 8/2011, 1/2012, 3/2012, 5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 01/2015, 9/2015, 3/2016, 08/2016 |
AA,AA-,A+ (2) |
F |
S&P Maalot |
A+ |
A+ |
AA |
08/2016 |
5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 1/2015, 9/2015, 3/2016, 08/2016 |
AA,AA-,A+ (2) |
G |
S&P Maalot |
A+ |
A+ |
AA |
08/2016 |
5/2012, 11/2012, 6/2013, 6/2014, 8/2014, 1/2015, 9/2015, 3/2016, 08/2016 |
AA,AA-,A+ (2) |
H |
S&P Maalot |
A+ |
A+ |
A+ |
08/2016 |
6/2014, 8/2014, 1/2015, 9/2015, 3/2016, 08/2016 |
A+ (2) |
I |
S&P Maalot |
A+ |
A+ |
A+ |
08/2016 |
6/2014, 8/2014, 1/2015, 9/2015, 3/2016, 08/2016 |
A+ (2) |
J |
S&P Maalot |
A+ |
A+ |
A+ |
08/2016 |
08/2016 |
A+ (2) |
K |
S&P Maalot |
A+ |
A+ |
A+ |
08/2016 |
08/2016 |
A+ (2) |
(1) |
In August 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, March 2016 and August 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 August 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 December 31, 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 |
Gross interest |
|||||
ILS linked to CPI |
ILS not linked to CPI |
Euro |
Dollar |
Other |
||
First year |
635,476 |
219,313 |
- |
- |
- |
151,339 |
Second year |
331,941 |
222,524 |
- |
- |
- |
101,017 |
Third year |
331,941 |
165,619 |
- |
- |
- |
77,439 |
Fourth year |
331,941 |
80,263 |
- |
- |
- |
58,843 |
Fifth year and on |
702,484 |
860,430 |
- |
- |
- |
148,057 |
Total |
2,333,783 |
1,548,149 |
- |
- |
- |
536,695 |
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).
Principal payments |
Gross interest |
|||||
ILS linked to CPI |
ILS not linked to CPI |
Euro |
Dollar |
Other |
||
First year |
- |
- |
- |
- |
- |
16,060 |
Second year |
- |
78,000 |
- |
- |
- |
14,213 |
Third year |
- |
78,000 |
- |
- |
- |
10,541 |
Fourth year |
- |
78,000 |
- |
- |
- |
6,874 |
Fifth year and on |
- |
106,000 |
- |
- |
- |
3,881 |
Total |
- |
340,000 |
- |
- |
- |
51,569 |
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 December 31, 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 |
Gross interest |
|||||
ILS linked to CPI |
ILS not linked to CPI |
Euro |
Dollar |
Other |
||
First year |
635,476 |
219,313 |
- |
- |
- |
167,399 |
Second year |
331,941 |
300,524 |
- |
- |
- |
115,230 |
Third year |
331,941 |
243,619 |
- |
- |
- |
87,980 |
Fourth year |
331,941 |
158,263 |
- |
- |
- |
65,717 |
Fifth year and on |
702,484 |
966,430 |
- |
- |
- |
151,938 |
Total |
2,333,783 |
1,888,149 |
- |
- |
- |
588,264 |
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 |
Gross interest |
|||||
ILS linked to CPI |
ILS not linked to CPI |
Euro |
Dollar |
Other |
||
First year |
5,627 |
1,360 |
- |
- |
- |
869 |
Second year |
833 |
476 |
- |
- |
- |
521 |
Third year |
833 |
341 |
- |
- |
- |
475 |
Fourth year |
833 |
138 |
- |
- |
- |
430 |
Fifth year and on |
8,542 |
6,348 |
- |
- |
- |
1,216 |
Total |
16,668 |
8,663 |
- |
- |
- |
3,511 |
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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