Yaacov Heen, Chief Financial Officer, commented: "The efficiency measures we implemented had a positive impact on the second quarter results and demonstrate our continued efforts in adjusting our expense structure to the revenue level.
As we anticipated in the previous quarter, our financing expenses increased due to the increase in the Israeli Consumer Price Index (CPI), which resulted in a significant decrease in our net income for the second quarter of 2012 compared with the first quarter.
Due to the accumulated impact of customers transferring to the new price plans we expect additional erosion to the Company's revenues in the following quarters. Furthermore, we expect that the efficiency measures, which were realized in the first half of 2012 and their continuum in the coming quarters, will moderate this effect.
Our free cash flow for the second quarter of 2012 totaled NIS 284 million, an approximately 63% increase compared with the second quarter 2011, and approximately 97% increase compared with the previous quarter. The improvement in free cash flow is primarily due to a decrease in handset sales, which led to a decrease in purchase of handsets, as well as due to our continued efficiency measures.The second quarter results and the improvement in free cash flow demonstrate the Company's strength and ability to satisfy its obligations. With that, given the changing competitive environment and the desire to take precaution measures, the Company's board of directors decided not to distribute a dividend for the second quarter of 2012. The board of directors will re-evaluate its decision in the coming quarters." Main Consolidated Financial Results (financial data for Q2/2012 only, includes Netvision's results ):
Q2/2012 Q2/2011 % Change Q2/2012 Q2/2011 million US$ (convenience million NIS translation) Total revenues 1,498 1,589 (5.7%) 381.9 405.0 Operating profit 282 397 (29.0%) 71.9 101.2 Net income 121 244 (50.4%) 30.8 62.2 Free cash flow 284 174 63.2% 72.4 44.4 EBITDA 474 566 (16.3%) 120.8 144.3 EBITDA, as percent of total revenues 31.6% 35.6% (11.2%)Main Financial Data by Companies:
Cellcom Israel without Consolidation adjustments Consolidated Netvision Netvision (*) results Change Q2/2012 Q2/2011 (%) Q2/2012 Q2/2012 Total revenues 1,239 1,589 (22.0%) 277 (18) 1,498 Total service revenues  942 1,131 (16.7%) 258 (18) 1,182 Equipment revenues 297 458 (35.2%) 19 - 316 Operating profit 256 397 (35.5%) 55 (29) 282 EBITDA 399 566 (29.5%) 75 - 474 EBITDA, as percent of total revenues 32.2% 35.6% (9.6%) 27.1% - 31.6%(*)Include inter-company revenues between Cellcom Israel and Netvision, and amortization expenses attributable to the merger.