In Q4 2012, free cash flow was NIS 323 million (US$ 87 million), an increase of 11% compared with NIS 292 million in Q4 2011, reflecting a 6% increase in operating cash flow, partially offset by a 8% decrease in investment in fixed assets including intangible assets but excluding capitalized subscriber acquisition and retention costs. As stated above, the improvement was due to a greater decrease in working capital, partially offset by a decrease in profit before depreciation and amortization.
The level of net debt 10 at the end of 2012 was NIS 3,812 million (US$ 1,021 million), compared with NIS 4,639 million at the end of 2011.
Cellular Segment Financial Review 11
|NIS Millions||2012||2011||Change %||Q4’12||Q4’11||Change %|
Total revenues for the cellular segment in 2012 were NIS 4,488 million (US$ 1,202 million), a decrease of 25% from NIS 5,996 million in 2011. In Q4 2012, total revenues were NIS 997 million (US$ 267 million), a decrease of 23% from NIS 1,299 million in Q4 2011.
Annual service revenues for the cellular segment were NIS 3,592 million (US$ 962 million) in 2012, decreasing by 15% from NIS 4,248 million in 2011. The decrease was mainly a result of the intense price erosion of cellular services including voice and data services, following the entry of new competitors (MVNO’s and new operators) and the offering of "unlimited plans" in the first half of the year, as well as the continued decrease in revenues from roaming services. The decrease also reflected the lower Post-Paid cellular subscriber base which decreased by approximately 4% on an average basis over the past year.In Q4 2012, service revenues for the cellular segment were NIS 788 million (US$ 211 million), a decrease of 22% from NIS 1,005 million in Q4 2011. Pre-Paid subscribers contributed service revenues in a total amount of approximately NIS 475 million (US$ 127 million) in 2012, a decrease of 5% from approximately NIS 500 million in 2011, as a result of the price erosion and the decrease in the number of Pre-Paid subscribers . Revenues from cellular data and content services excluding SMS 12 in 2012 totaled NIS 559 million (US$ 150 million), a decrease of 16% compared with NIS 666 million in 2011. The decrease mainly reflected the price erosion of data and content services including browsing and other services, the lower Post-Paid subscriber base, and the impact of new consumer protection regulations in 2011 which led to a reduction in content service revenues (see the Company's 2011 Annual Report for further details). SMS service revenues 12 , on an allocated basis as explained below, totaled NIS 433 million (US$ 116 million) in 2012, a decrease of 5% compared with NIS 456 million in 2011. Since approximately two-thirds of outgoing airtime, content and data (including SMS) revenues is derived from customers who subscribe to bundled packages which include airtime, data and SMS, the separate reporting of data and content service revenues relies heavily on the allocation methodology and application of those revenues between the different services offered in the bundled packages. Furthermore, the proportion of customers with unlimited packages which offer unlimited use of voice and SMS, as well as certain browsing volumes, continues to rise, and this trend is expected to continue. The Company has therefore concluded that the separate reporting of content and SMS revenues is no longer beneficial to understanding the Company’s results of operation, and will not provide this breakdown in future results releases.