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B Communications Ltd. (NASDAQ Global Select Market and TASE: BCOM) today reported its financial results for the fourth quarter and full year ended December 31, 2010 together with its cash position and loan repayment status as of December 31, 2010.
Progress in B Communications’ Loan Repayment Plan
As of December 31, 2010, B Communications exceeded its original plan for the repayment of the debt it incurred to fund its April 2010 acquisition of the controlling interest (approximately 30%) in Bezeq - The Israel Telecommunication Corp., Ltd. (“Bezeq”). From April 14, 2010 through December 31, 2010, the Company repaid NIS 892 million (US$ 251 million) principal amount of debt.
B Communications’ Unconsolidated Cash Position
At December 31, 2010,
the Company’s cash and cash equivalents totaled NIS 800 million (US$ 225 million) and its unconsolidated gross debt was NIS 5.2 billion (US$ 1.5 billion). This reflected the following events during 2010:
Dividends from Bezeq: On October 7, 2010, B Communications received a dividend of NIS 389 million (US$ 110 million) from Bezeq.Bezeq’s Board of Directors today announced its recommendation to distribute a cash dividend to shareholders of NIS 1.163 billion (US$ 328 million) with respect to its results for the second half of 2010, NIS 352 million (US$ 99 million) of which will be paid to B Communications. The dividend, which is subject to shareholder approval, would be payable on May 19, 2011. This is in addition to the approval of the General Shareholders at its meeting on January 24, of a capital distribution totaling NIS 3 billion (US$ 845 million) to be paid in six equal, semi-annual payments during 2011-2013. This proposed capital reduction plan, which is subject to court approval, would be in addition to Bezeq’s stated dividend policy of distributing 100% of its net profit attributable to shareholders on a semi-annual basis. In line with this strategy, in 2010 Bezeq paid in excess of NIS 3.7 billion (US$ 1.1 billion) in cash dividends to its shareholders for an effective dividend yield of 14.5%. The Company received a total of NIS 1.1 billion (US$ 320 million) in dividends from Bezeq in 2010.
Lenders Exercise of phantom stock options issued in April 2010: During the fourth quarter of 2010, the banking and financial institutions which provided B Communications with the financing for its acquisition of the controlling interest in Bezeq exercised all of the phantom stock options issued to them as part of the transaction. Under the exercise terms, B Communications is obligated to pay the lenders a total of NIS 124 million (US$ 35 million) in five equal annual installments beginning in May 2012. Under IFRS accounting principles, this liability was recorded at its present value as of December 31, 2010, increasing the Company’s financial debt by NIS 107 million (US$ 30 million).
Successful placement of NIS 400 million in debentures: On September 21, 2010, B Communications issued NIS 400 million (US$ 113 million) of Series B debentures. These debentures carry a 6.5% fixed annual interest rate, are not linked to the Israeli CPI and are listed for trade on the Tel Aviv Stock Exchange. The repayment of the debentures will be made in four equal payments from 2016 to 2019.
B Communications’ Unconsolidated Balance Sheet Data*
As of December 31, 2010
As of December 31, 2010
Short term liabilities
Long term liabilities
Cash and cash equivalents
Total net debt
* Does not include the balance sheet of Bezeq.
B Communications’ Fourth Quarter Financial Results
B Communications’ revenues for the fourth quarter were NIS 3.1 billion (US$ 862 million) compared with NIS 304 million reported in the fourth quarter of 2009. The Company’s revenues for the fourth quarter of 2010 consisted entirely of Bezeq's revenues, while its fourth quarter 2009 revenues consisted of sales generated by the Company’s legacy 012 Smile telecom business. Revenues for the year ended December 31, 2010, which reflect the consolidation of Bezeq's results from April 14, 2010, were NIS 8.7 billion (US$ 2.4 billion) compared with NIS 1.2 billion in 2009.