Partner Communications Co. Ltd. · TASE:PTNR
Partner Communications — Q3 2017 Earnings Presentation
30 slides from Partner Communications's earnings presentation, Nov 21, 2017
Slide 1: Company and Financial Overview
Company and Financial Overview November 21, 2017 1
Slide 2: Safe harbor statement
Safe harbor statement This presentation 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
Slide 3: Company overview
Company overview 3
Slide 4: Partner Communications highlights
Partner Communications highlights ▪ A leading Israeli communication group established in 1998 ▪ A public company, traded on the Nasdaq R Tel Aviv stock exchanges ▪ Saban Capital Group - Controlling share holder since 2013 ▪ Comprehensive communications group serving over 3 million residential and bu
Slide 5: Q3 2017 highlights
Q3 2017 highlights* +9% +54% +184% -50% -50% -6% 239 43 54 0.9 1.0 202 Adjusted Gross profit Net Profit** Net Debt Net Debt/ Adjusted Free (NIS, million) (NIS, billion) EBITDA** Equipment sale Adjusted EBITDA*** Cash Flow (NIS, million) (NIS, million) (NIS, million) * Changes vs. Q3 2016 ** Figures
Slide 6: Value added controlling shareholder
Value added controlling shareholder Saban Capital Group Shareholders Founded by Haim Saban, actively manages a globally diversified portfolio of investments across public equities, credit, alternative investments, and real property assets. Among its current and prior investments in the S.B. Israel t
Slide 7: Partner's strategy
Partner,s strategy Enabling the connected life anywhere, anytime and on any device Meet the full spectrum of our customers, Comprehensive communications needs TOTAL Solutions for businesses COMMUNICATIONS NEEDS Be truly digital in how we think, act and collaborate Customer Centric At the forefront o
Slide 8: Why be a Partner Customer?
Why be a Partner Customer ? Quality service Innovative technology Triple services Value added services widest deployment of 4G Guard, security services, network, began deployment of storage services 4.5G, IoT pro network, Wi-Fi Calling 8
Slide 9: Full offering to the Business Customer
Full offering to the Business Customer Integration Services ▪ A range of services to suit different business Broadband Data + Transmission customers ▪ Substantial existing fiber optic network reaching Fixed Cellular major business parks Telephony Services ▪ Value added fixed R mobile service offerin
Slide 10: The fixed-line business market opportunity
The fixed-line business market opportunity The Israeli business data market Partner has the foundations to aggressively penetrate the market ▪ Substantial size ▪ Existing fiber optic network reaching business ▪ Growing in size and offerings areas, constantly expanding ▪ Highly lucrative ▪ Significan
Slide 11: Full offering to the Private Customer
Full offering to the Private Customer Telephony ▪ Offering the consumer a variety of Internet Cellular telecommunication services with triple (Broadband + Services ISP) offering ▪ Diversified equipment offerings (products and payment means) Equipment ▪ Service platform to fit different consumer TV (
Slide 12: First to offer private customers FTTH
First to offer private customers FTTH ▪ Expanding existing fiber optic network to residential neighborhoods - reaching tens of thousands of households ▪ Offering the consumer speeds of up to 1 GB ▪ Deployment in the center and periphery of Israel, starting by cherry picking high potential areas ▪ Gr
Slide 13: TV offering - 30 thousand households in less than 4 months
TV offering - 30 thousand households in less than 4 months of installations ▪ Competitive price and value ▪ 40 linear channels including Broadcast channels, Sport, Children, Lifestyle etc. ▪ VoD with thousands of hours of content ▪ Catch Up of up to two weeks on all channels ▪ 4k open infrastructure
Slide 14: Operational Improvements
Operational Improvements Offering 360º Merged our Unified our fixed- service to service systems to Expanding our line activities business Investments enable a Cost cutting fiber optic under the Partner customers - one optimization comprehensive coverage brand representative for customer view all the
Slide 15: Following six years of decline, ARPU is stabilizing
Following six years of decline, ARPU is stabilizing Cellular ARPU (NIS) 83 75 69 66 62 65 61 62 64 2013 2014 2015 2016 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 * Since Q2 2016 ARPU doesn,t include Hot Mobile,s hosting revenues 15
Slide 16: Increase in Post-Paid subscriber base and churn rate in decline trend
Increase in Post-Paid subscriber base R churn rate in a decline trend Cellular Subscriber Base (EOP, '000) Cellular churn rate (Pre-Paid and Post-Paid subscribers) +4 +15 2,837 2,718 2,693 2,686 2,658 2,662 2,677 10.8% 11.1% 11.2% 705 562 478 445 399 389 371 9.8% 9.8% 9.7% 9.4% 9.3% 9.0% +14 +33 +26
Slide 17: Despite launch of Partner TV service, OPEX remain stable
Despite launch of Partner TV service, OPEX remain stable OPEX (NIS, Million) 889 744 675 630 608 570 570 478 472 477 Q4'11 Q4'12 Q4'13 Q4'14 Q4'15 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 * OPEX is a Non-GAAP financial measures. Please see "Use of Non-GAAP Financial Measures" in the quarterly PR. OPEX figures
Slide 18: Network sharing agreement with HOT Mobile
Network sharing agreement with HOT Mobile …while enabling network Cost savings on the one hand … differentiation as a result of separate core network Key benefits Examples ▪ Savings in CAPEX and OPEX ▪ IOT network ▪ Reduction in number of network sites ▪ Wifi calling ▪ Improved network coverage and
Slide 19: Although we are streamlining, we are:
Although we are streamlining, we are: ✓ Leading in customer experience among cellular companies in Israel* ✓ Rated as the fastest mobile network in Israel** ✓ Voted "the best place to work" among Cellular companies*** * Marketest survey December 2016 ** OpenSignal, The state of LTE: "Partner is the
Slide 20: Financial overview
Financial overview 20
Slide 21: Q3' 2017 Summary
Q3' 2017 Summary Q3, 17 Q3, 16 YoY change Total revenue (NIS, Million) 826 849 -3% Service revenue (NIS, Million) 666 698 -5% Equipment revenue (NIS, Million) 160 151 +6% OPEX* (NIS, Million) 477 570 -16% Adjusted EBITDA* (NIS, Million) 239 220 +9% Adjusted EBITDA margin* 29% 26% +3 ppt Profit* (NIS
Slide 22: Improvement in Adjusted EBITDA and Strong FCF
Improvement in Adjusted EBITDA and Strong FCF Adjusted EBITDA R Adjusted EBITDA margin (NIS, Adjusted Free Cash Flow (before interest) (NIS, million) million) 40% 2,500 35% 31% 30% 2,000 25% 25% 25% 24% 25% 21% 1,500 20% 1,000 15% 1,114 1,096 1,041 876 834 10% 758 500 670 759 5% 520 566 489 536 - 0%
Slide 23: Financial activities result in a substantial decline in interest costs
Financial activities result in a substantial decline in interest costs ▪ Q3,17 finance costs totaled NIS 15 million, a decline of 50% compared to Q3,16 ▪ Net profit in Q3,17 totaled NIS 54 million ▪ Total debt stands at ~ NIS 2 billion R Net debt stands at ~ NIS 0.9 billion ▪ Net Debt/EBITDA in Q3 2
Slide 24: Net Debt decreased by ~62% in two years
Net Debt decreased by ～ 62% in two years Debt/Net Debt (NIS, billion) Repayment Schedule Notes R Loans a/o September 30, 2017 (NIS, million) 5.4 5.2 4.7 4.4 4.9 4.0 4.6 3.5 3.4 3.6 4.2 3.3 3.1 3.8 2.9 3.4 2.7 3.0 2.0 2.0 2.7 2.6 2.6 1.8 2.2 2.0 1.5 1.1 0.9 DEBT NET DEBT Debt figures for year-end 201
Slide 25: Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA * 2.4 2.3 2.0 1.8 1.6 1.2 1.0 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 *Notes payable and borrowings less cash R cash equivalents (incl. ST deposits) divided by Adjusted EBITDA for the last 4 quarters Adjusted EBITDA figures for 2017 include the impact of early adoption
Slide 26: Balance sheet a/o September 30, 2017
Balance sheet a/o September 30, 2017 Assets NIS m illion Liabilities and Equity NIS m illion C ash and cash equivalents & ST deposits 1,160 C urrent m aturities ofnotes payable & borrow ings 557 Trade receivables and other 921 Trade payables 702 Inventories 90 O thercurrent liabilities 313 TotalC ur
Slide 27: Partner's opportunities
Partner,s opportunities Improved results Fixed-line business Stabilization in the TV market and in the equipment market + retail mobile market Triple offerings - sale operation market (wholesale, alongside continues operating as a full telephony R fiber) efficiency measures communication group 27
Slide 28: Partner's strengths
Partner,s strengths Strong Widest 4G coverage, leading customer service, network sharing Foundations agreement, more than 16 hundred kilometers of fiber optics Defined Transforming into a Total Communications Group, diversified revenue sources from Strategy private and business customers, increasing
Slide 29: IR contacts
IR contacts Dudu Mizrahi CFO +972 (54) 781 4951 Liat Glazer Shaft Head of Investor Relations R Corporate Projects +972 (54) 781 5051 investors@partner.co.il Investor website: www.partner.co.il/en/Investors-Relations/lobby 29
Slide 30: Thank you
Thank you 30
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