Partner Communications Company Ltd. (PTNR)

Q3 2011 Earnings Call

November 23, 2011 10:00 AM ET


Gideon Koch – Manager, Revenues-Finance Department

Haim Romano – CEO

Ziv Leitman – CFO


Michael Klahr – Citibank

Richard Gussow – Deutsche Bank

Darren Shaw – UBS



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Ladies and gentlemen, thank you for standing by. Welcome to the Partner Communications Third Quarter 2011 Results Conference Call. All participants are, at present, in a listen-only mode. (Operator Instructions)

Following management’s formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded, November 23, 2011.

I would now like to turn the call over to Mr. Gideon Koch. Mr. Koch, please begin.

Gideon Koch

Thank you. And thank you to all our listeners for joining us on this conference call to discuss Partner Communications’ results for the third quarter 2011. With me on the call today is Haim Romano, Partner’s CEO; and Ziv Leitman, our CFO.

As a backdrop to our results, our CEO, Haim Romano, is going to first give an overview of Partner’s strategy and Ziv will cover our financial and operational results for the quarter. And finally, we’ll move on to the Q&A.

Before we begin, as a tradition, I would like to draw your attention to the fact that all statements in the conference call may be forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended; Section 21E of the US Securities and Exchange Act of 1934, as amended; and the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Regarding such oral forward-looking statements, you should be aware that Partner’s actual results might vary materially from those projected in the forward-looking statements.

Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements are contained in Partner’s press release dated November 23, 2011, as well as Partner’s prior filings with the US Securities and Exchange Commission on Forms 20-F, F-1 and 6-K, as well as the S-3 shelf registration statement, all of which are readily available. Please note that the information in this conference call related to projections or other forward-looking statements is subject to the previous Safe Harbor Statement as of the date of this call.

For your information, this call is being broadcast simultaneously over the Internet and can be accessed through our website at I will now turn the call over to Partner’s CEO, Haim Romano. Haim?

Haim Romano

Thank you, Gideon. Good morning to everyone in US and good afternoon to everyone elsewhere. First, it’s my first conference call. I’m the CEO of Orange in the last six weeks. And it’s a great pleasure to be here again, as you well know, I was one of the founders of the company in ‘98 and left the company in 2005, and now I have the privilege to be here again as the CEO of the company.

What we can see here is continuing of the trend of the first half of the year. The final – the financial results of the third quarter reflect the impact of the regulatory change, including a reduction of the interconnect tariff together with increasing of the competition in the cellular market. These two operational conditions require Partner to prepare and act accordingly while maintaining the company assets and improving operational processes. My first and most pressing task is to refocus on the organizational towards the customers.

Partner has long tradition of treating the customers as one of its main assets. We will continue to take all measures, all necessary steps and action in order to safeguard these key strategic assets. We are implementing now a number of measures aimed to improve the interface of the customer satisfaction and simplicity, and then to increase the customer satisfaction. We expect them to step – improve level of customer service and be well known as the best customer service in Israel as we used to be before. The changes ahead of us are not easy to take, but we are persistent and we’re going to do it the way that we did it before and we are sure that we can do it again.

We also remain focused on long-term needs for the company. As part of these measures, we’re going to intend – we’re going to invest in improving the network and invest in IT systems.

Regarding 012 Smile, we continue to work toward maximizing the synergy between the two companies. At the same time, we are beginning to integrate carefully measure or partner with – or – into Smile. Our vision remains one of which Partner as a group offers the customer wide array of service in areas of cellular and fixed telephony.

Okay. With that said, I would now like to hand the call over to Ziv Leitman, our CFO.

Ziv Leitman

Thank you, Haim. As Haim said, our results continue to reflect the impact of the reduction in interconnect tariff and strengthened competition in the cellular market.

Cellular service revenue decreased by 25% from ILS 1.4 billion in the third quarter of 2010 to ILS 1.1 billion in the third quarter of 2011. This decrease mainly reflects the reduction in interconnect tariff effective January 1, 2011, which reduced cellular service revenue in the quarter by approximately ILS 282 million. Excluding the impact of the reduction in intercompany tariff, service revenue would have decreased by 5%, reflecting ongoing price erosion and ILS 26 million of one-time provision made in the quarter for lawsuits filed against the company.

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