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Partner Communications' CEO Discussees Q2 2012 Results - Earnings Call Transcript

Thank you, Gideon. Good morning, good afternoon, ladies and gentlemen, please allow me to welcome you to our second quarterly 2012 conference call. I will start my short briefing with a review of the recent events in the telecommunication market in Israel.

Firstly, I will describe the competition in the cellular market, and say that during May, last May, two new cellular operations launched, Hot Mobile and Golan Telecom. The new operators offer to the customer an unlimited plan at an aggressive price of NIS 98 and NIS 99. The launch was heavily promoted by PR campaigns, supported by the Israeli media and the Ministry of Communication. Existing cellular companies responded also by launching an unlimited package. The statistical approach of telephone was trying to maintain the market share almost at any price, offering an unlimited plan at the price of NIS 99. Cell com offering bundles of services [inaudible] aggressive offers to the business customers determined to maintain their customers almost at any price.

Our strategy was maintaining ARPU even at the price of [inaudible], offering unlimited plans at the price of 125 and NIS 135, the highest plan in the market, and launching 012 mobile sub-frames for customers who are only sensitive to the price but not to service and they are willing to stay with the service that is best on the internet. The outcome of our strategy, we managed to maintain the [inaudible] at NIS 101, the same as at Q1. As for the MVNOs, there is no doubt that the MVNOs are the main losers for the entry of the new operators. Currently, they’re also offering unlimited plans.

Moving to the fixed line markets, we face increasing competition in the ISP markets. The competition in the [inaudible] launch caused a decline of our market share from 33 to 32. The rate of the market share’s decline slowed down towards the end of the quarter. In the last quarter, we accelerated full operation merger with 012, and we started offering to our customers a telecommunication bundle service, fixed line and mobile. In spite of the operational efficiency in Q2 2012, op ex increased by NIS 100 million compared with Q3 2011. We managed to reduce 2,100 positions from October, 2011 until July, 2012, and it is not the end of our efficiency plan. On an annual base, we managed to save something like NIS 250 million annually.

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