Partner retired NIS 10 million due to the fear of abandoning TV subscribers

by time news

A few days after Avi Gabay and Shlomo Rodev’s group of investors submitted their offer to acquire control of Partner for about $ 300 million, the communications company publishes positive reports for the third quarter of 2021.

The quarter ended with a 5% growth in revenue to NIS 837 million, a 23% increase in adjusted EBITDA (profit excluding interest, tax, depreciation and amortization) to NIS 250 million, and a net profit of NIS 24 million, compared with a loss of NIS 5 million. NIS 1 million recorded in the corresponding quarter last year.

Since the beginning of the year, Partner’s revenues have risen by 5% to NIS 2.5 billion, and its net profit amounted to NIS 38 million, compared with NIS 12 million in the corresponding period in 2020.

The quarterly free cash flow decreased by 57% to a level of NIS 9 million. Net debt at the end of the quarter was NIS 662 million, an increase of 2.5% from the corresponding quarter last year.

At the same time as the reports, Partner announced that it was considering issuing a new series of bonds of up to NIS 150 million, and taking out bank financing of a similar amount.

More than 3 million mobile subscribers

In early August, Partner reported an increase in the rates of its TV packages, which mainly includes a reduction in subsidies for packages that the company markets with Netflix. For example, the price of the “Triple Netflix” package, at a browsing rate of 100 megabits, increased by NIS 10 to NIS 199 per month. In the past, Partner sometimes offered the package at a considerable discount for the first four months (NIS 139), but now it carries a fixed price.

Partner’s bottom line was adversely affected by a provision of NIS 10 million. The company noted that as a result of changes made to packages that combine Internet and television services, which included updating tariffs (raising prices) for certain programs, it expects the abandonment of some customers, and therefore set aside NIS 10 million for certain, tangible and intangible assets. No further deletions are expected at this time.

Operationally, Partner is showing an increase in the number of cellular subscribers to over 3 million, mainly due to a tender from the Ministry of Education that added data subscribers to it. The number of fiber optic subscribers increased to 192,000, an increase of 19,000 in the quarter. The number of TV subscribers increased by 3,000 to 226,000, in contrast to Cellcom and Hot competitors that did not grow in this section.

The cellular sector generated revenues of NIS 571 million for Partner, an increase of 4% from the corresponding quarter, of which NIS 435 million was revenues from services. Sectoral operating profit jumped by 230% to NIS 66 million, and adjusted EBITDA increased by 28% to NIS 172 million.

On the one hand, the increase in international roaming services (against the background of the increase in flights abroad) led to an increase in revenues from cellular services, but on the other hand this was partially offset by a decrease in calls, which introduced less connectivity fees. Similar to the previous quarter, and compared to NIS 51 in the corresponding quarter.

In the fixed line segment (television and Internet), revenues also grew, by 4% to NIS 299 million, but in contrast to the corresponding quarter, in which there was an operating balance, Partner recorded an operating loss of NIS 17 million (mainly due to the provision of NIS 10 million). Adjusted EBITDA increased by 11% to NIS 78 million.

“Low abandonment rate since 2011”

Avi Zvi, CEO of Partner, said: “Partner has crossed the 3 million cellular subscriber threshold, for the first time in a decade, and has continued to reduce the abandonment rate to the lowest level since 2011. This achievement is a key part of our strategy for investing in service and technology, in order to maintain the high loyalty of our customers, thanks to the satisfaction with the service they receive from us. “

Zvi added that Partner expects that by the end of 2022, about a million households will be able to connect to its fiber network. The number of households connected to Partner’s fiber optic infrastructure was 624,000 at the end of the quarter, compared with 571,000 in the previous quarter, and as of today, according to the company, the number already reaches 660,000 households.

As mentioned, last week it was announced that a group of investors led by Avi Gabay, Shlomo Rodev and the Phoenix Insurance Group submitted an offer to purchase controlling shares in Partner (27.1%). These shares are now in the hands of a receiver, after Chaim Saban, the previous controlling shareholder, gave them up.

The shares were pledged to secure a $ 300 million debt to Hutchison of Hong Kong, a debt inherited by Saban from a former controlling shareholder in Partner, Ilan Ben Dov. Completion of the transaction will repay the debt in full to Hutchison.

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