CIBC Oppenheimer determines Partner Communications (Nasdaq, TASE:PTNR, LSE:PCCD) debts on its acquisition of new frequencies and interest payment on its bonds will bear negatively on the cellular operator's cash flow.
The sum of its repayments in 2002, including repayment of 50% of its loan from Bank Hapoalim and the interest charges is $200 million. Its debt to be repaid in 2003 comes to $120 million. Failing to repay its debt to the bank will require additional funding in 2002.
According to Oppenheimer, the company will fund its 3G UMTS network, for which the company filed a $400 million shelf prospectus in December, by increasing its debt rather than issuing additional shares. The cost of laying out these networks could come, the bank estimates, to at least $150 to $200 million.
Oppenheimer says investing in Partner bonds is a high-risk investment. Though Partner could buy back as much as 35% of its debt by August of 2003, the bank does not believe it will do so. The yield on Partner's bonds should be higher than 12.44%, but in reality they yield 11.9%.
Oppenheimer does not believe the company will fail to finance its activity in the next few years, especially in light of its successful entry into the Israeli market.