Partner Communications Co. Ltd. · TASE:PTNR
Partner Communications — Q4 2022 Earnings Presentation
35 slides from Partner Communications's earnings presentation, Mar 28, 2023
Slide 1: Company & Financial Overview Q4 2022 & FY 2022
Company & Financial Overview Q4 2022 & FY 2022 March 28 ,2023 1
Slide 2: Safe harbor statement
Safe harbor statement The information included in this presentation includes forward looking statements as defined in the Israeli Securities Law, 5728- 1968 ((“Securities Law”) and is based, among others things, on evaluations and forecasts regarding future trends in the markets relevant to the Comp
Slide 3: Company Overview
Company Overview 3
Slide 4: Major Milestones in 2022
Major Milestones in 2022 ▪ Progress in 5G network deployment reaching coverage of approximately 60% of the population Cellular ▪ Growth in 5G package subscribers, their share in the post-paid subscriber mix is 12% ▪ ARPU growth following quarterly stability in 2021 ▪ Focus on providing customers wit
Slide 5: A leading Israeli Communication provider
A leading Israeli Communication provider Strengthening customer reach through growth engines and value Unique combination of infrastructure and service under one roof Cellular Partner’s fiber Fiber optics based Partner TV Business Solutions 25% MS Infrastructure internet Leading 30% Take-UP service
Slide 6: Partner is positioned to utilize the market growth
Partner is positioned to utilize the market growth From… To… 4G 5G Each telecom company established its own 3 new infrastructures are under deployment ; 4-5 infrastructure; 6-7 active players in the market active players in the market Mobile Internet infrastructure Fiber optic network Two internet n
Slide 7: Internal strengthening to ensure growth over the coming years
Internal strengthening to ensure growth over the coming years Major Processes in 2023 ▪ Change in perception and structure ▪ Move to a value model in cellular ▪ Strengthening internal systems ▪ IRU fiber-optic agreement providing a ▪ Increasing marketing efforts in sustainable business model for yea
Slide 8: 5G is expected to support the continued growth of the cellular sector
5G is expected to support the continued growth of the cellular sector ▪ Deployment enabling a 5G experience in designated geographic areas Population coverage of approximately 60% at the end of 2022. In 2023 additional sites are expected to join the network Transition to a 5G SA core system is expec
Slide 9: Successful conclusion of the main deployment phase enables the next jump in fiber strategy
Successful conclusion of the main deployment phase enables the next jump in our fiber-optic strategy ▪ Moving to a significantly lower deployment rate encompassing the connection of tens of thousands of households per year while focusing on new residential buildings and/or new neighborhoods ▪ In vie
Slide 10: Significant expansion of our fiber optics addressable market
Significant expansion our Fiber optics addressable market ▪ IRU purchase for 15 years of 120 thousand non-specific fiber optic lines in buildings connected to Bezeq's fiber- * optic infrastructure with an option to increase the number of lines to up to 48 thousand additional lines (under the same te
Slide 11: On track with deployment of infrastructure for the international communications market
On track with deployment of an infrastructure aimed at the international communications market ▪ We intend to lay the local infrastructure for durable communication and data transfer services between the Far East/Gulf countries and Europe ▪ An alternative route from Haifa to both Eilat and King Huss
Slide 12: Partner TV
Partner TV ▪ Focus on Super Aggregator strategy, with traditional TV services (linear channels, VOD, etc.) included ▪ Partnership with Netflix & Amazon Prime Video (including unique TV bundle offering) ▪ Offering comprehensive channels & add-on packages for sports fans (Sport 1, Sport 5, ONE), and A
Slide 13: ESG - Partner in numbers – 2022
ESG - Partner in numbers – 2022 ▪ “Platinum Plus” rating in the Maala ESG Index of Corporate Social Responsibility for 9 consecutive years ▪ Women account for 50% of our workforce ▪ 43% of our management positions are held by women ▪ 53% of our senior management positions are held by women ▪ 4.1% of
Slide 14: Financial Overview
Financial Overview 14
Slide 15: Extraordinary events in Q4'22
Extraordinary events in Q4’22 ▪ Impairment • As part of the company’s preparation for the annual report, an impairment test of the fixed-line segment was done by an external appraiser. The book value that was received totaled NIS 1,660 million compared with book value of NIS 1,964 million as of the
Slide 16: Operating and Financial Highlights 2022 vs. 2021
Operating and Financial Highlights 2022 vs. 2021 Cellular subs. ARPU Fiber-Optic subs. TV subs. (thousands) (NIS) (thousands) (thousands) 2,744 -279K 51 + NIS 3 287 +75K 220 -6k Excluding change in subs. counting logic Excluding impact of the change in Increase of 71k partner’s infrastructure and pa
Slide 17: Operating and Financial Highlights Q4'22 vs. Q4'21
Operating and Financial Highlights Q4’22 vs. Q4’21 Cellular subs. ARPU Fiber-Optic subs. TV subs. (thousands) (NIS) (thousands) (thousands) Excluding change in subs. counting method and packages for Ministry of -279K 54 + NIS 6 Subs. base growth of 15K fiber +75K in Q4’22 in partner’s fibe Subs. bas
Slide 18: Cellular Subscribers & Cellular Market Share
Cellular Subscribers & Cellular Market Share (EOP, '000s) +63K net adds excluding change in subs. counting method impact and Ministry of Education’s packages subs. Percentage of subscribers with 5G packages among Postpaid subscribers was 12% at the end of 2022, compared to 9% in 2021 18
Slide 19: Cellular ARPU & Churn
Cellular ARPU & Churn The increase in 2022 mainly reflects the effect of the change in the Excluding Ministry of Education’s packages & subscriber counting logic and improved revenues from roaming services. change in subs. counting logic , churn rate Excluding the impact of subs. deduction, ARPU for
Slide 20: Partner's Homes Connected
Partner’s Homes Connected (EOP, '000s) Achieving Fiber-Optic deployment goals while maintaining a take-up rate of 30% 67 municipalities from Eilat in the south to Naharia in the north 20 20
Slide 21: Partner's Fiber-Optic Subs
* Partner’s Fiber-Optic Subs (EOP, '000s) ▪ An increase of 75K subs. In 2022 vs. an increase of 73K in 2021 ▪ At the end of 2022: 283K fiber-optic subs. in an independent infrastructure, an annual increase of 71K 4k fiber-optic subs. in Bezeq infrastructure (wholesale based, pre-IRU), an annual incr
Slide 22: Partner's Internet Subscriber Base
Partner's Internet Subscriber Base * (EOP, '000s) Wholesale subscriber base provides a solid basis for exercising the irrevocable right to at least 120 thousand fiber-optic lines on Bezeq infrastructure 22
Slide 23: Partner TV subscriber base
Partner TV subscriber base (EOP, '000s) Over 80% of TV subscribers are in bundle/triple offerings (broadband based) 23
Slide 24: Cellular segment annual growth in revenue and profit
The cellular segment demonstrates annual growth in revenue, in profit and profitability despite the impact of the collective agreement in the second half The decrease in the adjusted EBITDA in Q4’22 relative to Q4’21 mainly reflects the increase in salary and related expenses, increase in credit los
Slide 25: Fixed-line segment: Internet and TV drive Adj. EBITDA growth
In the fixed-line segment, revenues from Internet and TV services continue to drive Adj. EBITDA growth In Q4'22, revenues from services increased by 7% compared to Q4'21, this in light of the increase in revenues from internet and television services, thus despite a decrease in revenues from equipme
Slide 26: Sales of equipment and other
Sales of equipment and other Gross margin of 20% in in 2022 mainly reflects the transition from router sales to a rental model, offsetting a rise from the sale of rights to international communication operators for use of the fiber-optic infrastructure Equipment sales revenues and gross profit 26
Slide 27: OPEX in 2022 excluding one-time collective agreement impact
Excluding the one-time impact of the Collective agreement, OPEX in 2022 totaled NIS 1,920 million, an increase of 1% compared to 2021 The main increase in 2022 compared to 2021, was due to salary and related increases and an increase in roaming service expenses, which were partially offset by a decr
Slide 28: An additional year of growth in Adjusted EBITDA and its margin
An additional year of growth in Adjusted EBITDA and it’s margin Adjusted EBITDA in 2022 totaled NIS 1,057 million, an increase of 15% from NIS 922 million in 2022. As a percentage of total revenues, Adjusted EBITDA in 2022 was 30% compared with 27% in 2021 Adjusted EBITDA & Adjusted EBITDA margin %
Slide 29: CAPEX and Adjusted FCF
CAPEX and Adjusted FCF Decrease in CAPEX in Q4’22 as a result of the receipt of a grant from the Ministry of Communications amounting to NIS 37 million in respect of the deployment of the 5G network and the rolling over of payments to Q1’23 Capital Expenditures (cash) Adjusted Free Cash Flow (before
Slide 30: Decrease in Net Financial Debt in the past decade
Decrease in Net Financial Debt in the past decade Financial debt / net financial debt Repayment Schedule Notes & Loans (NIS, billion) (NIS, million) As of December 31, 2022 'Net Financial Debt' represents total financial debt less cash and cash equivalents and short-term deposits; Net financial debt
Slide 31: Net Financial Debt to Adjusted EBITDA
Net Financial Debt to Adjusted EBITDA 'Net Financial Debt' represents total financial debt less cash and cash equivalents and short-term deposits; Net financial debt is not a financial measure according to IFRS and may not be comparable to other measure with similar headings for other companies 31
Slide 32: Partner's strengths
Partner’s strengths Strong Foundations Defined Strategy Customer Base Innovative DNA 5G rollout, widest The Company's strategy aims Partner provides service to The only Israeli 4G coverage, leading to improve the value, among over 3 mil’ connections – Communication Provider of customer service, othe
Slide 33: In Conclusion
In Conclusion ▪ Entering an internal strengthening process to ensure growth over the coming years ▪ Meeting the fiber and 5G deployment goals in 2022 ▪ Continued focus of the Cellular segment on value propositions including 5G packages ▪ Expanding the fiber value chain: • Continue independent deploy
Slide 34: Let's stay in touch
Let’s stay in touch Amir Adar Head of Investor Relations & Corporate Projects +972 (54) 781 5051 investors@partner.co.il Investor website: www.partner.co.il/en/Investors-Relations/lobby 34
Slide 35: Thank you
Partner 5G Thank you
Partner Communications Company — Q4 2022 Earnings Presentation on 6ix