The competition and material price erosion that adversely affected our financial results for the fourth quarter of 2012 are continuing in the first quarter of 2013 and may continue further into the year, which could have a material adverse effect on our financial results in the first quarter of 2013 and going forward."

Key Financial Results  (unaudited)
 
NIS MILLION       2008       2009       2010      

2011 8
      2012
Revenues       6,302       6,079       6,674       6,998       5,572
Cost of revenues

3,868

3,77

4,093

4,978

4,031
Gross profit 2,434 2,309 2,581 2,02 1,541
S,G&A 672 677 785 1,002 787
Impairment of goodwill - - - 87 -
Other income

64

69

64

105

111
Operating profit 1,826 1,701 1,86 1,036 865
Financial costs, net 184 176 181 294 234
Income tax expenses

444

384

436

299

153
Net Profit

1,198

1,141

1,243

443

478
Earnings per share (basic, NIS) 7.71 7.42 8.03 2.85 3.07
Free cash flow       1,401       1,021       1,502       1,082       1,234
                                         
NIS MILLION      

Q4' 11 8
     

Q1' 12
      Q2' 12       Q3' 12       Q4' 12
Revenues 1,589 1,571 1,428 1,315 1,258
Cost of revenues

1,279

1,128

1,000

934

969
Gross profit 310 443 428 381 289
S,G&A 309 222 213 192 160
Impairment of goodwill 87 - - - -
Other income

31

27

30

28

26
Operating profit (loss) -55 248 245 217 155
Financial costs, net 55 55 73 68 38
Income tax expenses 78 47 52 39 15
Net profit (loss)

(188)

146

120

110

102
Earnings (Losses) per share (basic, NIS) (1.21) 0.94 0.77 0.71 0.65
Free cash flow       292       223       313       375       323
 

Key Operating Indicators:
        2008       2009       2010       2011       2012
EBITDA (NIS millions) 2,298 2,304 2,57 2,178 1,602
EBITDA as a percentage of total revenues 36% 38% 38% 31% 29%

Cellular Subscribers (end of period, thousands)
2,898 3,042 3,16 3,176 2,976
Estimated Cellular Market Share (%) 32% 32% 32% 32% 29%
Annual Cellular Churn Rate (%) 18% 18% 21% 29% 38%

Average Monthly Usage per Cellular Subscriber(MOU) (minutes)
365 364 366 397 450

Average Monthly Revenue per Cellular Subscriber(ARPU) (NIS)
161 151

122 1
111 97
No. Fixed Lines (end of period, thousands) * * 69 292 288
ISP Subscribers (end of period, thousands)       *       *       60       632       587

* Prior to 2010, the Company did not operate a fixed line service nor have ISP subscribers.
 

Partner Consolidated Results (unaudited)
 
      Cellular Segment       Fixed Line Segment       Elimination       Consolidated
NIS Millions       2012       2011       Change %       2012       2011       Change %       2012       2011       2012       2011       Change %
Total Revenues 4,488       5,996       -25% 1,246       1,153      

+ 8%
(162)       (151) 5,572       6,998       -20%
Service Revenues 3,592 4,248 -15% 1,21 1,127

+ 7%
(162) (151)

4,640

 
5,224 -11%
Equipment Revenues 896 1,748 -49% 36 26

+ 38%
- - 932 1,774 -47%
Operating Profit 742 1,287 -42% 123

71 8

+ 73%
- - 865

1,358 8
-36%
EBITDA       1,314       1,896       -31%       288       282      

+ 2%
      -       -       1,602       2,178       -26%
                                                                                         
Cellular Segment Fixed Line Segment Elimination Consolidated
NIS Millions       Q4’12       Q4’11       Change %       Q4’12       Q4’11       Change %       Q4’12       Q4’11       Q4’12       Q4’11       Change %
Total Revenues 997 1,299 -23% 307 333 -8% (46) (43) 1,258 1,589 -21%
Service Revenues 788 1,005 -22% 294 324 -9% (46) (43) 1,036

1,286
-19%
Equipment Revenues 209 294 -29% 13 9

+ 44%
- - 222 303 -27%
Operating Profit 112 260 -57% 43

7 8

+ 514%
- - 155

267 8
-42%
EBITDA       256       407       -37%       84       71      

+ 18%
      -       -       340       478       -29%
 

Financial Review

Total revenues in 2012 were NIS 5,572 million (US$ 1,493 million), a decrease of 20% from NIS 6,998 million in 2011. Partner concluded the acquisition of 012 Smile, an Israeli operator of international telecoms services and local fixed line services and a provider of internet services, in March 2011. The consolidated results of 2011 therefore only included the results of 012 Smile from March 2011 forward.

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