Cellcom. Israel. Company Presentation Q3 17

Transcription

1 Cellcom Israel Company Presentation Q3 17

2 FORWARD LOOKING STATEMENTS The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as may, might, will, should, expect, plan, anticipate, believe, estimate, predict, potential or continue, the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial results, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: changes to the terms of our license, new legislation or decisions by the regulator affecting our operations, the outcome of legal proceedings to which we are a party, particularly class action lawsuits, our ability to maintain or obtain permits to construct and operate cell sites, and other risks and uncertainties detailed from time to time in our filings with the U.S. Securities and Exchange Commission, including under the caption Risk Factors in our Annual Report for the year ended December 31, Although we believe the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We assume no duty to update any of these forward-looking statements after the date hereof to conform our prior statements to actual results or revised expectations, except as otherwise required by law. 2

3 Q3 17 Key Financial Summary (1,2) In M Nis Q3 16 (M NIS) Q3 17 (M NIS) YoY % Total Revenues % Service Revenues % Equipment Revenues % EBITDA % Net Income % Free Cash Flow % (1) As of the first quarter of 2017 the company applies IFRS 15 (2) All data should be reviewed in conjunction with the Company's press release and financial report for the third quarter of 2017 filed on November 22,

4 Full end-to-end Service Communications Group (September 2017) Mobile Appx. 2.8 million mobile subs Largest market share 27% Leading brand in Israel s mobile market line Residential Appx. 206k (1) broadband subs Appx. 154k TV subs VOB offering International Calls line Business Internet Security Cloud services Independent transmission network Hosting Services Transmission Integration services (1) Wholesale Internet Infrastructure subscribers 4

5 Cellcom s Strategy Network Sharing Agreement Reduce opex & capex by sharing costs with other operators A balanced cost structure among the MNO s Growth in the Fix Line Market New TV service Using Wholesale internet services Triple & Quad play Cost Cutting Reduce head count Streamline processes Reduce wholesale market expenses with infrastructure investments New Growth Engines Cyber IOT 5

6 Continued growth in line services Leading the TV revolution in Israel with TV Subscribers In Thousands OTT TV service, attractive Quad and triple play offer Reaching 10.0% market share in TV 40% of wholesale market (5% from (1) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Broadband Subscribers Internet infrastructure market) (1) Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 (1) Company estimation based on Bezeq and HOT reports 6

7 Investing in fixed Line infrastructure Cellcom has the first mover advantage and accelerated growth in the fixed line segment Wholesale expenses for Bezeq and HOT are expected to grow significantly in the next few years The dependence on infrastructure to provide high-quality TV / Triple / Quad service has become substantial over time 7

8 Cellcom Partner negotiations (1) Cellcom is holding negotiations with Partner Communications regarding a potential long term cooperation agreement for the deployment of fiber infrastructure by both companies Each company will be entitled to purchase fiber optic infrastructure services in the other company's fiber optics infrastructure in residential areas The agreement will allow the companies to avoid duplicated future deployment, as well as allow the Company to reduce costs (1) The conclusion of the agreement is subject to further negotiations between the parties and if concluded, the execution of the agreement will be subject to regulatory approvals. There is no assurance that the negotiations will be concluded nor that regulatory approvals will be received or that the agreement will be executed 8

9 IBC (1) Cellcom has advanced its assessment of investing in IBC, including the changes the Company requires for such an investment to materialize We reached preliminary understandings with IEC, regarding a reduction of IEC's services prices to IBC, if the Company invests in IBC Cellcom intends to issue a non-binding letter of intent for investing (by itself or with a group of investors it may arrange) in IBC in the near future, subject to certain conditions being met (1) There is no assurance that the Company and IBC will enter negotiations, that such negotiations if conducted shall be concluded into a binding agreement, or that such agreement, if entered, will receive the necessary regulatory approvals or be executed, nor as to whether an agreement with IEC will be concluded. 9

10 Ongoing Cutting Costs Reduction of head count Dealers commission reduction 7,254 Employee Positions Reduction of advertising and sales 3,563 promotion expenses IT Systems and building maintenance expenses reduction Warranty and repair services expenses reduction Reduction in walk in centers branches and office space ,676 SG&A (M Nis)

11 New Growth Engines IOT Smart city end-to-end solution JV with the leading enterprises in this field Cyber as a Service Leading range of solutions for both private and business customers covering varied content Enables safe surfing and blocking of malicious sites Delivers leading solutions for protecting end-user equipment

12 Financial Debt (1) Net Debt (M Nis) The company substantially reduced the level of net financial debt 4,553 3,842 2,951 2,747 2, (1) The figures are based on company reports for the relevant years 2

13 Debt Structure As of September 30, 2017 Series Name Amount Coupon Duration Linkage Yield to Maturity Series F Series G Series H Series I Series J Series K Loan A Loan B Loan C % 6.99% 1.98% 4.14% 2.45% 3.55% 4.60% 5.10% 4.90% CPI Linked CPI Linked CPI Linked. 0%.97% 1.26% 1.76% 1.38% 2.32% - - Total 3,587 In June 2017, the Company entered an agreement to issue to certain Israeli institutional investors NIS 220 million additional series K debentures in July 2018, and a deferred loan agreement in a principal amount of NIS 150 million to be provided to the Company in March In July 2017, series D debentures were fully repaid. 3

14 Contact us Shlomi Fruhling Chief Financial Officer Elad Levy Investors Relations Manager Tel : Fax: