6-K 1 zk1822037.htm 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15a-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated
 
August 15, 2018
 
Partner Communications Company Ltd.
(Translation of Registrant’s Name Into English)
 
8 Amal Street
Afeq Industrial Park
Rosh Ha’ayin 48103
Israel
                       
(Address of Principal Executive Offices)
 
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
 
Form 20-F ☒          Form 40-F ☐
 
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
 
Yes ☐          No ☒
 
(If “Yes” is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- ___________)
 
This Form 6-K is incorporated by reference into the Company’s Registration Statements on Form S-8 filed with the Securities and Exchange Commission on December 4, 2002 (Registration No. 333-101652), September 5, 2006 (Registration No. 333-137102), September 11, 2008 (Registration No. 333-153419), August 17, 2015 (Registration No. 333-206420), November 12, 2015 (Registration No. 333-207946), March 14, 2016 (Registration No. 333-210151) and on December 27, 2017 (Registration No. 333-222294)
 
Enclosure: Partner Communications reports second quarter 2018 results


 
PARTNER COMMUNICATIONS REPORTS
SECOND QUARTER 2018 RESULTS1
 
ADJUSTED EBITDA2 TOTALED NIS 172 MILLION
 
CELLULAR POST-PAID SUBSCRIBERS BASE INCREASED BY 9 THOUSAND
 
CELLULAR ARPU, EXCLUDING A ONE-TIME PROVISION, TOTALED NIS 59 COMPARED TO
NIS 58 IN Q1 2018
 
ISAAC BENBENISTI, PARTNER CEO NOTED: "WITHIN THE FIRST YEAR OF COMMERCIAL
LAUNCH, PARTNER TV IS DISRUPTING THE MULTI-CHANNEL TV MARKET AND TODAY
OVER 100,000 HOUSEHOLDS ARE CONNECTED TO THE SERVICE.  PARTNER TV IS THE
FASTEST GROWING TV SERVICE IN ISRAEL. IN ADDITION, WE HAVE MADE SUBSTANTIAL
PROGRESS ON OUR FIBER OPTIC INFRASTRUCTURE DEPLOYMENT, REACHING OVER
170,000 HOUSEHOLDS IN DOZENS OF CITIES THROUGHOUT ISRAEL, WITH FIBER
INFRASTRUCTURE ENABLING SPEEDS OF UP TO 1,000 MBPS."
 
IN ACCORDANCE WITH THE COMPANY'S ORDINARY SHARES BUY-BACK PLAN IN A
TOTAL AMOUNT OF UP TO NIS 200 MILLION, THE COMPANY'S BOARD OF DIRECTORS
APPROVED THE REPURCHASE OF A SECOND TRANCHE IN AN AGGREGATE AMOUNT OF
UP TO NIS 50 MILLION
 
Second quarter 2018 highlights (compared with second quarter 2017)
 
·
Total Revenues: NIS 797 million (US$ 218 million), a decrease of 1%
·
Service Revenues: NIS 620 million (US$ 170 million), a decrease of 4%
·
Equipment Revenues: NIS 177 million (US$ 48 million), an increase of 11%
·
Total Operating Expenses (OPEX2): NIS 492 million (US$ 135 million), an increase of 4%
·
Adjusted EBITDA: NIS 172 million (US$ 47 million), a decrease of 36%
·
Adjusted EBITDA Margin2: 22% of total revenues compared with 33%
·
Profit for the Period: NIS 2 million (US$ 1 million), a decrease of NIS 44 million
·
Net Debt2: NIS 893 million (US$ 245 million), a decrease of NIS 188 million
·
Adjusted Free Cash Flow (before interest) 2: NIS 55 million (US$ 15 million), a decrease of NIS 153 million
·
Cellular ARPU: NIS 57 (US$ 16), a decrease of 8%
·
Cellular Subscriber Base: approximately 2.65 million at quarter-end, a decrease of 1%
·
TV Subscriber Base: 83 thousand households at quarter-end
 
1 The quarterly financial results are unaudited.
2  For the definition of this and other Non-GAAP financial measures, see “Use of Non-GAAP Financial Measures” in this press release.

Rosh Ha’ayin, Israel, August 15, 2018 – Partner Communications Company Ltd. (“Partner” or the “Company”) (NASDAQ and TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter ended June 30, 2018.
 
Commenting on the second quarter 2018 results, Mr. Isaac Benbenisti, CEO of Partner noted:
 
"This is the twelfth consecutive quarter in which we report growth in our cellular Post-Paid subscriber base. In the second quarter we continued to grow in Post-Paid subscribers with a net add of 9 thousand subscribers, totaling 25 thousand net adds of Post-Paid subscribers since the beginning of the year. In the second quarter of 2018, we expanded the VoLTE (Voice over LTE) implementation in Partner's core cellular network and we continue to lead the market with added value offerings, unique services, wide network deployment and excellent customer service for the group's customers.
 
A year ago, we started the commercial phase of two strategic activities – TV services and internet based on independent optic fiber infrastructure. Within only one year, Partner TV caused a disruption in the multi-channel TV market and today over 100,000 households are already connected to the service. Partner TV is the fastest growing TV service in Israel thanks to, among other reasons, the innovative viewing experience that it provides to viewers. In July, we launched the wholesale market service based on HOT's infrastructure, with bundle and triple offerings, and with this the company was the first to offer internet services over all the main platforms including optic fiber, LTE and the infrastructures of Bezeq and HOT. The launch of the wholesale market service based on HOT's infrastructure eases the transition from cable service to Partner's advanced TV service.
 
At the same time, Partner continues to deploy fiber optic infrastructure independently throughout Israel at a faster deployment rate compared to other companies, as part of the deployment of Partner Fiber, which we announced a year ago. We have already reached more than 170,000 households in dozens of cities, with fiber infrastructure enabling speeds of up to 1,000 mbps and with attractive offers which also incorporate Partner TV.
 
In addition, as part of the company's strategy, we continue to examine new potential growth engines, among others, in the fintech and finance industries, including through a company acquisition or independent, organic activity.”
 
Mr. Tamir Amar, Partner's Chief Financial Officer, commented on the second quarter 2018 results:
 
“The second quarter of 2018 was characterized by increased competition in the cellular market with the entry of a sixth operator to the market, as reflected in the increase in the level of subscriber porting between operators and overall price pressures in the cellular market - although these trends have slowed since the peak in May. Partner experienced an increase in the quarterly cellular churn rate which increased to 10%. Nevertheless, even under current competitive market conditions, Partner reported an increase in the Post-Paid cellular subscriber base of 9 thousand in the second quarter. In addition, our cellular ARPU, excluding a one-time provision, totaled NIS 59, an increase of NIS 1 compared with the first quarter of the year.
 
2
In the fixed-line segment, Partner continued to report growth with recruitment of TV subscribers, and this growth engine, together with growth in internet services (including the impact of revenues from optic fiber subscribers) resulted in a quarterly net growth in revenues of NIS 8 million compared to the first quarter of 2018. This is the fourth consecutive quarter in which we report revenue growth from fixed line services, and compared to the second quarter of 2017, fixed line services revenues increased by 9%.
 
Free Cash Flow for the quarter totaled NIS 55 million, following investments in our fiber optic infrastructure and TV service - investments which we believe will constitute growth engines for the Company in the coming years. The rapid growth rate in Partner TV households is already reflected in revenue growth. In addition, the accelerated fiber deployment, reflected by a growth of over 25 thousand households from the end of the second quarter, with a reach of 145 thousand households, and until today, with a reach of over 170 thousand households, supports our TV offering and improves the economic returns compared with the wholesale market service which is implemented today, in addition to the technological advantages of this infrastructure compared to the alternatives.
 
On the debt side, we ended the quarter with a net debt of less than NIS 0.9 billion, and the effect of the decline in our debt during the past year, as well as the decrease in our average interest rate, is reflected in a decrease in our finance expenses. Our strong balance sheet structure continues to offer us the ability to examine additional growth opportunities and opportunities that differentiate us from our competitors.
 
In addition, last week we completed the first tranche under our share buyback plan with the repurchase of approximately 3.6 million of the Company's shares, in an amount of NIS 50 million (including commissions), at an average price of NIS 13.75 per share which reflects a yield of approximately 2.2% to our shareholders.”
 
3

NIS Million
    
Q2’18
      
Q1’18
  
Comments
Service Revenues
    
620
      
625
  
Excluding a one-time provision for a class action in cellular service revenues, service revenues would have increased to NIS 635 million, reflecting growth in fixed line service revenues
Equipment Revenues
    
177
      
201
    
Total Revenues
    
797
      
826
    
Gross profit from equipment sales
    
37
      
43
    
OPEX
    
492
      
498
    
Adjusted EBITDA
    
172
      
177
  
The decline resulted from the decline in service revenues (mainly as a result of a provision for a class action)  and in gross profit from equipment, partially offset by a decline in OPEX
Profit for the Period
    
2
      
9
    
Capital Expenditures (additions)
    
98
      
113
    
Adjusted free cash flow (before interest payments)
    
55
      
21
  
The increase mainly reflected a decrease in CAPEX
Net Debt
    
893
      
919
    
 
     
Q2’18
      
Q1’18
  
Comments
Cellular Post-Paid Subscribers
(end of period, thousands)
    
2,345
      
2,336
  
Increase of 9 thousand subscribers
Cellular Pre-Paid Subscribers
(end of period, thousands)
    
300
      
331
  
Decrease of 31 thousand subscribers
Monthly Average Revenue per Cellular User (ARPU) (NIS)
    
57
      
58
  
The decline resulted from a provision for a class action, excluding which ARPU would have been NIS 59
Quarterly Cellular Churn Rate (%)
    
10.0
%
    
8.8
%
Increase in both Post-Paid and Pre-Paid churn rates
 
Key Financial Results
 
NIS MILLION (except EPS)
  
Q2'18
    
Q2'17
    
% Change
  
Revenues
    
797
      
805
      
-1
%
Cost of revenues
    
661
      
637
      
+4
%
Gross profit
    
136
      
168
      
-19
%
Operating profit
    
22
      
118
      
-81
%
Profit for the period
    
2
      
46
      
-96
%
Earnings per share (basic, NIS)
    
0.01
      
0.29
          
Adjusted free cash flow (before interest)
    
55
      
208
      
-74
%
 
4
 
Key Operating Indicators
 
   
Q2'18
    
Q2'17
    
Change
  
Adjusted EBITDA (NIS million)
    
172
      
269
      
-36
%
Adjusted EBITDA (as a % of total revenues)
    
22
%
    
33
%
    
-11
  
Cellular Subscribers (end of period, thousands)
    
2,645
      
2,662
      
-17
  
Quarterly Cellular Churn Rate (%)
    
10.0
%
    
9.0
%
    
+1.0
  
Monthly Average Revenue per Cellular User (ARPU) (NIS)
    
57
      
62
      
-5
  
 
Partner Consolidated Results
 
   
Cellular Segment
    
Fixed-Line Segment
    
Elimination
    
Consolidated
  
NIS Million
  
Q2'18
    
Q2'17
    
Change %
    
Q2'18
    
Q2'17
    
Change %
    
Q2'18
    
Q2'17
    
Q2'18
    
Q2'17
    
Change %
  
Total Revenues
    
611
      
642
      
-5
%
    
230
      
206
      
+12
%
    
(44
)
    
(43
)
    
797
      
805
      
-1
%
Service Revenues
    
454
      
497
      
-9
%
    
210
      
192
      
+9
%
    
(44
)
    
(43
)
    
620
      
646
      
-4
%
Equipment Revenues
    
157
      
145
      
+8
%
    
20
      
14
      
+43
%
                    
177
      
159
      
+11
%
Operating Profit
    
12
      
93
      
-87
%
    
10
      
25
      
-60
%
                    
22
      
118
      
-81
%
Adjusted EBITDA
    
126
      
210
      
-40
%
    
46
      
59
      
-22
%
                    
172
      
269
      
-36
%
 
Financial Review
 
In Q2 2018, total revenues were NIS 797 million (US$ 218 million), a decrease of 1% from NIS 805 million in Q2 2017.
 
Service revenues in Q2 2018 totaled NIS 620 million (US$ 170 million), a decrease of 4% from NIS 646 million in Q2 2017.
 
Service revenues for the cellular segment in Q2 2018 totaled NIS 454 million (US$ 124 million), a decrease of 9% from NIS 497 million in Q2 2017. The decrease was mainly the result of the continued price erosion of cellular services (both Post-Paid and Pre-Paid) due to the continued competitive market conditions, and a one-time provision in an amount of NIS 15 million in respect to a class action. Excluding the one-time provision, service revenues would have decreased by 6%.
 
Service revenues for the fixed-line segment in Q2 2018 totaled NIS 210 million (US$ 58 million), an increase of 9% from NIS 192 million in Q2 2017. The increase reflected the revenues from TV services (which started in Q3 2017) and internet services, which were partially offset principally by the decline in revenues from international calling services.
 
5
Equipment revenues in Q2 2018 totaled NIS 177 million (US$ 48 million), an increase of 11% from NIS 159 million in Q2 2017, largely reflecting higher volumes of equipment sales as well as a change in the product mix.
 
Gross profit from equipment sales in Q2 2018 was NIS 37 million (US$ 10 million), compared with NIS 33 million in Q2 2017, an increase of 12%, mainly reflecting the higher sales volumes and higher profit margins from sales due to a change in the product mix.
 
Total operating expenses (‘OPEX’) totaled NIS 492 million (US$ 135 million) in Q2 2018, an increase of 4% or NIS 20 million from Q2 2017. The increase mainly reflected the additional expenses relating to the Company's TV service and the growth in internet services. In addition, Q2 2018 OPEX included a one-time cancellation of a provision for a class action in an amount of NIS 8 million. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q2 2018 increased by 3% compared with Q2 2017.
 
Operating profit for Q2 2018 was NIS 22 million (US$ 6 million), a decrease of 81% compared with NIS 118 million in Q2 2017. See Adjusted EBITDA analysis for each segment below.
 
Adjusted EBITDA in Q2 2018 totaled NIS 172 million (US$ 47 million), a decrease of 36% from NIS 269 million in Q2 2017. As a percentage of total revenues, Adjusted EBITDA in Q2 2018 was 22% compared with 33% in Q2 2017.
 
Adjusted EBITDA for the cellular segment was NIS 126 million (US$ 35 million) in Q2 2018, a decrease of 40% from NIS 210 million in Q2 2017, mainly reflecting the decrease in cellular service revenues and the fact that since Q3 2017 the Company does not record any income with respect to the settlement agreement with Orange. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment in Q2 2018 was 21% compared with 33% in Q2 2017.
 
Adjusted EBITDA for the fixed-line segment was NIS 46 million (US$ 13 million) in Q2 2018, a decrease of 22% from NIS 59 million in Q2 2017, mainly reflecting the increase in OPEX, partially offset by the increase in service revenues. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment in Q2 2018 was 20%, compared with 29% in Q2 2017.
 
Finance costs, net in Q2 2018 were NIS 13 million (US$ 4 million), a decrease of 76% compared with NIS 54 million in Q2 2017. The decrease largely reflected one-time early repayment expenses recorded in Q2 2017 as well as lower interest expenses in view of the lower debt level and lower average debt interest rate.
 
Income tax expenses for Q2 2018 were NIS 7 million (US$ 2 million), compared with NIS 18 million in Q2 2017.
 
Profit in Q2 2018 was NIS 2 million (US$ 1 million), compared with NIS 46 million in Q2 2017, a decrease of NIS 44 million.
 
6
Based on the weighted average number of shares outstanding during Q2 2018, basic earnings per share or ADS, was NIS 0.01 (US$ 0.003), compared to basic earnings per share of NIS 0.29 in Q2 2017.
 
Cellular Segment Operational Review
 
At the end of Q2 2018, the Company's cellular subscriber base (including mobile data and 012 Mobile subscribers) was approximately 2.65 million, including approximately 2.35 million Post-Paid subscribers or 89% of the base, and approximately 300 thousand Pre-Paid subscribers, or 11% of the subscriber base.
 
During the second quarter of 2018, the cellular subscriber base decreased by approximately 22 thousand subscribers. The Post-Paid subscriber base increased by approximately 9 thousand subscribers, while the Pre-Paid subscriber base decreased by approximately 31 thousand subscribers.
 
The quarterly churn rate for cellular subscribers in Q2 2018 was 10.0%, compared with 9.0% in Q2 2017.
 
The cellular market share (based on the number of subscribers) at the end of Q2 2018 was estimated to be approximately 25%, compared to 26% in Q2 2017.
 
The monthly Average Revenue per User (“ARPU”) for cellular subscribers in Q2 2018 was NIS 57 (US$ 16), a decrease of 8% from NIS 62 in Q2 2017. The decrease mainly reflected the continued price erosion in key cellular services due to the competition in the cellular market and a one time provision for a class action in an amount of NIS 15 million. Excluding the effect of the provision recorded in Q2 2018, ARPU would have been NIS 59.
 
Funding and Investing Review
 
In Q2 2018, Adjusted Free Cash Flow totaled NIS 55 million (US$ 15 million), a decrease of 74% from NIS 208 million in Q2 2017.
 
Cash generated from operations decreased by 44% to NIS 159 million (US$ 44 million) in Q2 2018 from NIS 284 million in Q2 2017. The decrease mainly reflected the decrease in Adjusted EBITDA and the smaller decrease in operating assets and liabilities, and in particular in trade receivables.
 
Cash capital expenditures (‘CAPEX payments’), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 104 million (US$ 28 million) in Q2 2018, an increase of 37% from NIS 76 million in Q2 2017. The increase mainly reflected the increase in investments related to the fiber optic infrastructure deployment and TV services.
 
The level of Net Debt at the end of Q2 2018 amounted to NIS 893 million (US$ 245 million), compared with NIS 1,081 million at the end of Q2 2017, a decrease of NIS 188 million.
 
7
Other Developments
 
Further to the Company's announcement on August 6, 2018 of the completion of the first tranche of the Company's Buy-back Plan ("the Plan"), the Company's Board of Directors approved on August 14, 2018, the repurchase of a second tranche, in accordance with the Plan, of up to an aggregate amount of NIS 50 million of the Company's ordinary shares.
 
IFRS 16
 
IFRS 16, Leases (“the Standard”), was issued in January 2016 and will supersede IAS 17 Leases. The Standard is mandatory for financial years commencing on or after January 1, 2019, and early application is permitted. The Company will adopt the standard from its mandatory adoption date of January 1, 2019 (transition date).
 
The Standard removes the distinction between operating and finance leases for lessees. Under the new Standard, with certain exceptions, the assets (the right to use the leased item) and the financial liabilities to pay rentals will be recognized in our Statement of Financial Position, and are expected to be material. The accounting for lessors will not change significantly. In our Statement of Income, finance costs on the financial liabilities and depreciation expenses related to the rights-of-use assets will be recognized in place of rental expenses. In our Statement of Cash Flows, rental payments will be recognized as repayment of the financial liabilities and will be presented as cash used in financing activities in place of cash provided by operating activities. The implementation of the new Standard is expected to have a material positive impact on our operating profit and Adjusted EBITDA. Our profit is not expected to be materially affected.
 
The Company is in the process of implementing the required adjustments into the Company's information systems. The Company is currently unable to quantify the impact of the implementation of the Standard.
 
The Company plans to apply the Standard using the modified retrospective approach and will not restate comparative amounts for the years prior to the transition date. Any transitional adjustments will be recognized in retained earnings with the cumulative effect as of the transition date.
 
Conference Call Details
 
Partner will hold a conference call on Wednesday, August 15, 2018 at 10.00AM Eastern Time / 5.00PM Israel Time.
To join the call, please dial the following numbers (at least 10 minutes before the scheduled time):
International: +972.3.918.0691
North America toll-free: +1.866.229.7198
A live webcast of the call will also be available on Partner's Investors Relations website at: www.partner.co.il/en/Investors-Relations/lobby/
If you are unavailable to join live, the replay of the call will be available from August 15, 2018 until September 19, 2018, at the following numbers:
International: +972.3.925.5945
North America toll-free: +1.866.276.1485
In addition, the archived webcast of the call will be available on Partner's Investor Relations website at the above address for approximately three months.

8
Forward-Looking Statements
 
This press release includes forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Words such as "estimate", “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “project”, “goal”, “target” and similar expressions often identify forward-looking statements but are not the only way we identify these statements. Specific statements have been made regarding the Company's examination of new potential growth engines, among others in the fintech and financial sectors, including through company acquisitions or independent, organic activity; the belief that the investment in the Company's fiber optic infrastructure and TV service will constitute growth engines for the Company in the coming years; the support of the accelerated fiber deployment of our TV offering and its improvement on the economic returns compared with the wholesale market service as well as its technological advantages compared to the alternatives; and the Company’s plan to continue and repurchase its shares under its buyback plan. In addition, all statements other than statements of historical fact included in this press release regarding our future performance are forward-looking statements. We have based these forward-looking statements on our current knowledge and our present beliefs and expectations regarding possible future events. These forward-looking statements are subject to risks, uncertainties and assumptions, including, the availability of financing to enable the Company to pursue the anticipated pace and volume of the Company’s fiber optic infrastructure deployment; the absence of changes in the competitive and regulatory environment which would prevent the Company from continuing its accelerated optic fiber infrastructure deployment; the Company’s ability to continue its commercial success and maintain investment and operating costs  permitting it to realize the anticipated benefits from the investment in the Company's fiber optic infrastructure and TV service; whether the Company will have the financial resources needed to continue to increase the number of customers served by its fiber optic infrastructure; as well as the risks entailed in the entry into new sectors and markets. The future results may differ materially from those anticipated herein. For further information regarding risks, uncertainties and assumptions about Partner, trends in the Israeli telecommunications industry in general, the impact of current global economic conditions and possible regulatory and legal developments, and other risks we face, see “Item 3. Key Information - 3D. Risk Factors”, “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects”, “Item 8. Financial Information - 8A. Consolidated Financial Statements and Other Financial Information - 8A.1 Legal and Administrative Proceedings” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Reports on Form 20-F filed with the SEC, as well as its immediate reports on Form 6-K furnished to the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
The quarterly financial results presented in this press release are unaudited financial results.
 
The results were prepared in accordance with IFRS, other than the non-GAAP financial measures presented in the section, “Use of Non-GAAP Financial Measures”.

The financial information is presented in NIS millions (unless otherwise stated) and the figures presented are rounded accordingly.

The convenience translations of the New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at June 30, 2018: US $1.00 equals NIS 3.65. The translations were made purely for the convenience of the reader.

9
 
Use of Non-GAAP Financial Measures
 
The following non-GAAP measures are used in this report. These measures are not financial measures under IFRS and may not be comparable to other similarly titled measures for other companies. Further, the measures may not be indicative of the Company’s historic operating results nor are meant to be predictive of potential future results.
 
Non-GAAP Measure
Calculation
Most Comparable IFRS Financial Measure
Adjusted EBITDA*
 
 
 
 
 
 
Adjusted EBITDA:
Profit (Loss)
add
Income tax expenses,
Finance costs, net,
Depreciation and amortization expenses (including amortization of intangible assets, deferred expenses-right of use and impairment charges), Other expenses (mainly amortization of share based compensation)
 
Profit (Loss)
Adjusted EBITDA margin (%)
Adjusted EBITDA margin (%):
Adjusted EBITDA
divided by
Total revenues
  
Adjusted Free Cash Flow**
Adjusted Free Cash Flow:
Cash flows from operating activities
deduct
Cash flows from investing activities
add
Short-term investment in (proceeds from) deposits
Cash flows from operating activities
deduct
Cash flows from investing activities
Total Operating Expenses (OPEX)
Total Operating Expenses:
Cost of service revenues
add
Selling and marketing expenses
add
General and administrative expenses
deduct
Depreciation and amortization expenses,
Other expenses (mainly amortization of employee share based compensation)
Sum of:
Cost of service revenues,
Selling and marketing expenses,
General and administrative expenses
Net Debt
Net Debt:
Current maturities of notes payable and borrowings
add
Notes payable
add
Borrowings from banks and others
deduct
Cash and cash equivalents
deduct
Short-term deposits
Sum of:
Current maturities of notes payable and borrowings,
Notes payable,
Borrowings from banks and others
 
 
*  Adjusted EBITDA is fully comparable with EBITDA measure which was provided in reports for prior periods.
**Adjusted Free Cash Flow measure is fully comparable to Free Cash Flow measure which was provided in reports for prior periods.

10
About Partner Communications
 
Partner Communications Company Ltd. is a leading Israeli provider of telecommunications services (cellular, fixed-line telephony, internet services and television services). Partner’s ADSs are quoted on the NASDAQ Global Select Market™ and its shares are traded on the Tel Aviv Stock Exchange (NASDAQ and TASE: PTNR).
 
For more information about Partner, see: http://www.partner.co.il/en/Investors-Relations/lobby
 
Contacts:
Tamir Amar
Chief Financial Officer
Tel: +972-54-781-4951
 
Liat Glazer Shaft
Head of Investor Relations and Corporate Projects
Tel: +972-54-781-5051
E-mail: investors@partner.co.il

11
 
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

   
New Israeli Shekels
    
Convenience translation into U.S. Dollars
  
   
June 30,
    
December 31,
    
June 30,
  
   
2018
    
2017
    
2018
  
   
(Unaudited)
    
(Audited)
    
(Unaudited)
  
   
In millions
  
CURRENT ASSETS
                  
Cash and cash equivalents
    
366
      
867
      
100
  
Short-term deposits
    
291
      
150
      
80
  
Trade receivables
    
728
      
808
      
200
  
Other receivables and prepaid expenses
    
47
      
48
      
13
  
Deferred expenses – right of use
    
45
      
43
      
12
  
Inventories
    
74
      
93
      
20
  
     
1,551
      
2,009
      
425
  
                         
NON CURRENT ASSETS
                        
Trade receivables
    
235
      
232
      
64
  
Prepaid expenses and other
    
6
      
5
      
2
  
Deferred expenses – right of use
    
157
      
133
      
43
  
Property and equipment
    
1,165
      
1,180
      
319
  
Intangible and other assets
    
656
      
697
      
180
  
Goodwill
    
407
      
407
      
112
  
Deferred income tax asset
    
48
      
55
      
13
  
     
2,674
      
2,709
      
733
  
                         
TOTAL ASSETS
    
4,225
      
4,718
      
1,158
  

12
 
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
   
New Israeli Shekels
    
Convenience translation into U.S. Dollars
  
   
June 30,
    
December 31,
    
June 30,
  
   
2018
    
2017
    
2018
  
   
(Unaudited)
    
(Audited)
    
(Unaudited)
  
   
In millions
  
CURRENT LIABILITIES
                  
Current maturities of notes payable and borrowings
    
358
      
705
      
98
  
Trade payables
    
696
      
787
      
191
  
Payables in respect of employees
    
88
      
91
      
24
  
Other payables (mainly institutions)
    
21
      
31
      
6
  
Income tax payable
    
54
      
50
      
15
  
Deferred revenues from HOT mobile
    
31
      
31
      
8
  
Other deferred revenues
    
39
      
41
      
11
  
Provisions
    
71
      
75
      
19
  
     
1,358
      
1,811
      
372
  
NON CURRENT LIABILITIES
                        
Notes payable
    
975
      
975
      
267
  
Borrowings from banks and others
    
217
      
243
      
59
  
Liability for employee rights upon retirement, net
    
41
      
40
      
11
  
Dismantling and restoring sites obligation
    
21
      
27
      
6
  
 Deferred revenues from HOT mobile
    
148
      
164
      
42
  
      Other non-current liabilities
    
27
      
24
      
7
  
     
1,429
      
1,473
      
392
  
                         
TOTAL LIABILITIES
    
2,787
      
3,284
      
764
  
                         
EQUITY
                        
Share capital - ordinary shares of NIS 0.01 par value: authorized - December 31, 2017
   and June 30, 2018 - 235,000,000 shares; issued and outstanding -
    
2
      
2
      
1
  
December 31, 2017 –*168,243,913 shares
                        
June 30, 2018 – *167,273,930 shares
                        
Capital surplus
    
1,151
      
1,164
      
315
  
Accumulated retained earnings
    
510
      
491
      
140
  
Treasury shares, at cost 
    December 31, 2017 – **2,850,472 shares 
    June 30, 2018 – **3,821,809 shares
    
(225
)
    
(223
)
    
(62
)
TOTAL EQUITY
    
1,438
      
1,434
      
394
  
TOTAL LIABILITIES AND EQUITY
    
4,225
      
4,718
      
1,158
  
 
*   Net of treasury shares.
** Including, restricted shares in amount of 1,376,381 and 1,310,457 as of and December 31, 2017 and June 30, 2018, respectively, held by a trustee under the Company's Equity Incentive Plan, such shares may become outstanding upon completion of vesting conditions.


13
 
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

   
New Israeli shekels
    
Convenience translation into U.S. dollars
  
   
6 month
period ended
 June 30
    
3 month
period ended
 June 30
    
6 month
period ended
 June 30,
    
3 month
period ended
 June 30,
  
   
2018
    
2017
    
2018
    
2017
    
2018
    
2018
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
   
In millions (except per share data)
  
Revenues, net
    
1,623
      
1,608
      
797
      
805
      
445
      
218
  
Cost of revenues
    
1,349
      
1,291
      
661
      
637
      
370
      
181
  
Gross profit
    
274
      
317
      
136
      
168
      
75
      
37
  
                                                 
Selling and marketing expenses
    
143
      
119
      
75
      
62
      
39
      
21
  
General and administrative expenses
    
91
      
100
      
46
      
50
      
25
      
12
  
Income with respect to settlement agreement with Orange
            
108
              
54
                  
Other income, net
    
14
      
17
      
7
      
8
      
4
      
2
  
Operating profit
    
54
      
223
      
22
      
118
      
15
      
6
  
Finance income
    
3
      
1
      
1
      
1
      
1
          
Finance expenses
    
34
      
78
      
14
      
55
      
10
      
4
  
Finance costs, net
    
31
      
77
      
13
      
54
      
9
      
4
  
Profit before income tax
    
23
      
146
      
9
      
64
      
6
      
2
  
Income tax expenses
    
12
      
36
      
7
      
18
      
3
      
1
  
Profit for the period
    
11
      
110
      
2
      
46
      
3
      
1
  
                                                 
Earnings per share
                                                
Basic
    
0.06
      
0.70
      
0.01
      
0.29
      
0.02
      
0.003
  
Diluted
    
0.06
      
0.69
      
0.01
      
0.29
      
0.02
      
0.003
  
                                                 
Weighted average number of shares outstanding
(in thousands)
                                                
Basic
    
168,319
      
157,746
      
168,291
      
158,442
      
168,319
      
168,291
  
Diluted
    
169,207
      
159,555
      
169,098
      
159,970
      
169,207
      
169,098
  
 
14
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME

   
New Israeli shekels
    
Convenience translation into U.S. dollars
  
   
6 month
period ended
 June 30,
    
3 month
period ended
 June 30,
    
6 month
period ended
 June 30,
    
3 month
period ended
 June 30,
  
   
2018
    
2017
    
2018
    
2017
    
2018
    
2018
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
   
In millions
  
Profit for the period
    
11
      
110
      
2
      
46
      
3
      
1
  
Other comprehensive income
     for the period, net of income tax
    
-
      
-
      
-
      
-
      
-
      
-
  
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
    
11
      
110
      
2
      
46
      
3
      
1
  
 
15
 
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

   
New Israeli Shekels
    
New Israeli Shekels
  
   
Six months ended June 30, 2018
    
Six months ended June 30, 2017
  
   
In millions (Unaudited)
    
In millions (Unaudited)
  
 
  
Cellular segment
    
Fixed line segment
    
Reconciliation
for
consolidation
    
Consolidated
    
Cellular
segment
    
Fixed line
segment
    
Reconciliation
for
consolidation
    
Consolidated
  
Segment revenue - Services
    
911
      
334
            
1,245
      
977
      
309
            
1,286
  
Inter-segment revenue - Services
    
9
      
78
      
(87
)
            
9
      
77
      
(86
)
        
Segment revenue - Equipment
    
335
      
43
              
378
      
290
      
32
              
322
  
Total revenues
    
1,255
      
455
      
(87
)
    
1,623
      
1,276
      
418
      
(86
)
    
1,608
  
Segment cost of revenues – Services
    
717
      
334
              
1,051
      
735
      
293
              
1,028
  
Inter-segment cost of  revenues- Services
    
78
      
9
      
(87
)
            
76
      
10
      
(86
)
        
Segment cost of revenues - Equipment
    
266
      
32
              
298
      
240
      
23
              
263
  
Cost of revenues
    
1,061
      
375
      
(87
)
    
1,349
      
1,051
      
326
      
(86
)
    
1,291
  
Gross profit
    
194
      
80
              
274
      
225
      
92
              
317
  
Operating expenses (3)
    
173
      
61
              
234
      
181
      
38
              
219
  
Income with respect to settlement
   agreement with Orange
                                    
108
                      
108
  
Other income, net
    
13
      
1
              
14
      
16
      
1
              
17
  
Operating profit
    
34
      
20
              
54
      
168
      
55
              
223
  
Adjustments to presentation of 
   segment Adjusted  EBITDA
                                                                
    –Depreciation and amortization
    
219
      
69
                      
218
      
68
                  
    –Other (1)
    
7
                              
11
                          
Segment Adjusted EBITDA (2)
    
260
      
89
                      
397
      
123
                  
Reconciliation of  segment subtotal
  Adjusted EBITDA to profit for the
  period
                                                                
Segments subtotal Adjusted
  EBITDA (2)
                            
349
                              
520
  
    -  Depreciation and amortization
                            
(288
)
                            
(286
)
    -  Finance costs, net
                            
(31
)
                            
(77
)
    -  Income tax expenses
                            
(12
)
                            
(36
)
    -  Other (1)
                            
(7
)
                            
(11
)
Profit for the period
                            
11
                              
110
  
 
16
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

   
New Israeli Shekels
    
New Israeli Shekels
  
   
Three months ended June 30, 2018
    
Three months ended June 30, 2017
  
   
In millions (Unaudited)
    
In millions (Unaudited)
  
 
  
Cellular segment
    
Fixed line segment
    
Reconciliation
for
consolidation
    
Consolidated
    
Cellular
segment
    
Fixed line
segment
    
Reconciliation
for
consolidation
    
Consolidated
  
Segment revenue - Services
    
450
      
170
            
620
      
493
      
153
            
646
  
Inter-segment revenue - Services
    
4
      
40
      
(44
)
            
4
      
39
      
(43
)
        
Segment revenue - Equipment
    
157
      
20
              
177
      
145
      
14
              
159
  
Total revenues
    
611
      
230
      
(44
)
    
797
      
642
      
206
      
(43
)
    
805
  
Segment cost of revenues – Services
    
352
      
169
              
521
      
363
      
148
              
511
  
Inter-segment cost of  revenues- Services
    
40
      
4
      
(44
)
            
38
      
5
      
(43
)
        
Segment cost of revenues - Equipment
    
126
      
14
              
140
      
117
      
9
              
126
  
Cost of revenues
    
518
      
187
      
(44
)
    
661
      
518
      
162
      
(43
)
    
637
  
Gross profit
    
93
      
43
              
136
      
124
      
44
              
168
  
Operating expenses (3)
    
87
      
34
              
121
      
93
      
19
              
112
  
Income with respect to settlement
   agreement with Orange
                                    
54
                      
54
  
Other income, net
    
6
      
1
              
7
      
8
                      
8
  
Operating profit
    
12
      
10
              
22
      
93
      
25
              
118
  
Adjustments to presentation of 
   segment Adjusted  EBITDA
                                                                
    –Depreciation and amortization
    
110
      
36
                      
109
      
35
                  
    –Other (1)
    
4
                              
8
      
(1
)
                
Segment Adjusted EBITDA (2)
    
126
      
46
                      
210
      
59
                  
Reconciliation of  segment subtotal
  Adjusted EBITDA to profit for the
  period
                                                                
Segments subtotal Adjusted
   EBITDA (2)
                            
172
                              
269
  
    -  Depreciation and amortization
                            
(146
)
                            
(144
)
    -  Finance costs, net
                            
(13
)
                            
(54
)
    -  Income tax expenses
                            
(7
)
                            
(18
)
    -  Other (1)
                            
(4
)
                            
(7
)
Profit for the period
                            
2
                              
46
  
 
17
 
 PARTNER COMMUNICATIONS COMPANY LTD.
   (An Israeli Corporation)
   INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(1)
Mainly amortization of employee share based compensation.
 
(2)
Adjusted EBITDA as reviewed by the CODM represents Earnings Before Interest (finance costs, net), Taxes, Depreciation and Amortization (including amortization of intangible assets, deferred expenses-right of use and impairment charges) and Other expenses (mainly amortization of share based compensation). Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures for other companies. Adjusted EBITDA may not be indicative of the Group's historic operating results nor is it meant to be predictive of potential future results. The usage of the term "Adjusted EBITDA" is to highlight the fact that the Amortization includes amortization of deferred expenses – right of use and amortization of employee share based compensation and impairment charges; it is fully comparable to EBITDA information which has been previously provided for prior periods.
 
(3)
Operating expenses include selling and marketing expenses and general and administrative expenses.

18
 
  PARTNER COMMUNICATIONS COMPANY LTD.
   (An Israeli Corporation)
   INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   

 
New Israeli Shekels
    
Convenience translation into
 U.S. Dollars
  
   
6 months ended June 30,
  
   
2018
    
2017
    
2018
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
   
In millions
  
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
Cash generated from operations (Appendix)
    
317
      
493
      
87
  
Income tax paid
    
(1
)
    
(2
)
    
*
  
Net cash provided by operating activities
    
316
      
491
      
87
  
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
Acquisition of property and equipment
    
(167
)
    
(86
)
    
(46
)
Acquisition of intangible and other assets
    
(75
)
    
(72
)
    
(21
)
Proceeds from (investment in) short-term deposits, net
    
(141
)
    
452
      
(39
)
Interest received
            
1
          
Proceeds from (repayment of) derivative financial instruments, net
    
*
      
*
          
    Consideration received from sales of property and equipment
    
2
              
1
  
Net cash provided by (used in) investing activities
    
(381
)
    
295
      
(105
)
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
Share issuance
            
190
          
Acquisition of treasury shares
    
(15
)
            
(4
)
Interest paid
    
(46
)
    
(75
)
    
(13
)
Repayment of non-current borrowings
    
(375
)
    
(720
)
    
(103
)
Net cash used in financing activities
    
(436
)
    
(605
)
    
(120
)
                         
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
(501
)
    
181
      
(138
)
                         
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
867
      
716
      
238
  
                         
CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
366
      
897
      
100
  
 
* Representing an amount of less than 1 million.
 
19
 
  PARTNER COMMUNICATIONS COMPANY LTD.
   (An Israeli Corporation)
   INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Appendix - Cash generated from operations and supplemental information
 
   
New Israeli Shekels
    
Convenience translation into
 U.S. Dollars
  
   
6 months ended June 30,
  
   
2018
    
2017
    
2018
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
   
In millions
  
                   
Cash generated from operations:
                  
Profit for the period
    
11
      
110
      
3
  
Adjustments for:
                        
Depreciation and amortization
    
267
      
268
      
73
  
Amortization of deferred expenses - Right of use
    
21
      
18
      
6
  
Employee share based compensation expenses
    
8
      
11
      
2
  
Liability for employee rights upon retirement, net
    
1
      
(3
)
    
*
  
Finance costs, net
    
(1
)
    
*
      
*
  
Change in fair value of derivative financial instruments
            
(1
)
        
Interest paid
    
46
      
75
      
13
  
Interest received
            
(1
)
        
Deferred income taxes
    
6
      
2
      
2
  
Income tax paid
    
1
      
2
      
*
  
Changes in operating assets and liabilities:
                        
Decrease in accounts receivable:
                        
Trade
    
77
      
215
      
21
  
Other
            
3
          
Decrease in accounts payable and accruals:
                        
Trade
    
(61
)
    
(12
)
    
(17
)
Other payables
    
(14
)
    
(43
)
    
(4
)
Provisions
    
(4
)
    
(2
)
    
(1
)
Deferred income with respect to settlement agreement with Orange
            
(108
)
        
Deferred revenues from HOT mobile
    
(16
)
    
(15
)
    
(4
)
Other deferred revenues
    
(1
)
    
2
      
*
  
Increase in deferred expenses - Right of use
    
(47
)
    
(61
)
    
(13
)
Current income tax
    
4
      
33
      
1
  
Decrease in inventories
    
19
      
*
      
5
  
Cash generated from operations
    
317
      
493
      
87
  
 
* Representing an amount of less than 1 million.
 
At June 30, 2018 and 2017, trade and other payables include NIS 136 million ($37 million) and NIS 101 million, respectively, in respect of acquisition of intangible assets and property and equipment; payments in respect thereof are presented in cash flows from investing activities.
 
These balances are recognized in the cash flow statements upon payment.
 
20
Reconciliation of Non-GAAP Measures:
 
Adjusted Free Cash Flow
  
New Israeli Shekels
    
Convenience translation into
 U.S. Dollars
    
Convenience translation into
 U.S. Dollars
  
   
6 months
period ended
June 30,
    
6 months
period ended
June 30,
    
3 months
period ended
June 30,
    
3 months
period ended
June 30,
    
6 months
period ended
June 30,
    
3 months
period ended
June 30,
  
   
2018
    
2017
    
2018
    
2017
    
2018
    
2018
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
   
In millions
  
Net cash provided by operating activities
    
316
      
491
      
159
      
284
      
87
      
43
  
Net cash used in investing activities
    
(381
)
    
295
      
(95
)
    
174
      
(105
)
    
(26
)
Short-term investment in deposits
    
141
      
(452
)
    
(9
)
    
(250
)
    
39
      
(2
)
Adjusted Free Cash Flow
    
76
      
334
      
55
      
208
      
21
      
15
  
                                                 
Interest paid
    
(46
)
    
(75
)
    
(11
)
    
(58
)
    
(13
)
    
(3
)
Adjusted Free Cash Flow After Interest
    
30
      
259
      
44
      
150
      
8
      
12
  

Total Operating Expenses (OPEX)
  

New Israeli Shekels
    
Convenience translation into
 U.S. Dollars
    
Convenience translation into
 U.S. Dollars
  
   
6 months
period ended
June 30,
    
6 months
period ended
June 30,
    
3 months
period ended
June 30,
    
3 months
period ended
June 30,
    
6 months
period ended
June 30,
    
3 months
period ended
June 30,
  
   
2018
    
2017
    
2018
    
2017
    
2018
    
2018
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
   
In millions
  
Cost of revenues – Services
    
1,051
      
1,028
      
521
      
511
      
288
      
143
  
Selling and marketing expenses
    
143
      
119
      
75
      
62
      
39
      
21
  
General and administrative expenses
    
91
      
100
      
46
      
50
      
25
      
12
  
Depreciation and amortization (2)
    
(288
)
    
(286
)
    
(146
)
    
(144
)
    
(79
)
    
(40
)
Other (1)
    
(7
)
    
(11
)
    
(4
)
    
(7
)
    
(2
)
    
(1
)
OPEX
    
990
      
950
      
492
      
472
      
271
      
135
  
 
(1)
Mainly amortization of employee share based compensation.

21
Key Financial and Operating Indicators (unaudited)*

NIS M unless otherwise stated
  
Q1' 16
    
Q2' 16
    
Q3' 16
    
Q4' 16
    
Q1' 17
    
Q2' 17
    
Q3' 17
    
Q4' 17
    
Q1' 18
    
Q2' 18
    
2016
    
2017
  
Cellular Segment Service Revenues
    
543
      
527
      
531
      
498
      
489
      
497
      
514
      
478
      
466
      
454
      
2,099
      
1,978
  
Cellular Segment Equipment Revenues
    
244
      
188
      
139
      
158
      
145
      
145
      
138
      
182
      
178
      
157
      
729
      
610
  
Fixed-Line Segment Service Revenues
    
222
      
219
      
220
      
205
      
194
      
192
      
194
      
197
      
202
      
210
      
866
      
777
  
Fixed-Line Segment Equipment Revenues
    
23
      
17
      
12
      
11
      
18
      
14
      
22
      
22
      
23
      
20
      
63
      
76
  
Reconciliation for consolidation
    
(55
)
    
(54
)
    
(53
)
    
(51
)
    
(43
)
    
(43
)
    
(42
)
    
(45
)
    
(43
)
    
(44
)
    
(213
)
    
(173
)
Total Revenues
    
977
      
897
      
849
      
821
      
803
      
805
      
826
      
834
      
826
      
797
      
3,544
      
3,268
  
Gross Profit from Equipment Sales
    
56
      
42
      
28
      
18
      
26
      
33
      
43
      
40
      
43
      
37
      
144
      
142
  
Operating Profit
    
54
      
67
      
64
      
8
      
105
      
118
      
92
      
0
      
32
      
22
      
193
      
315
  
Cellular Segment Adjusted EBITDA
    
142
      
155
      
156
      
109
      
187
      
210
      
189
      
124
      
134
      
126
      
562
      
710
  
Fixed-Line Segment Adjusted EBITDA
    
80
      
73
      
64
      
55
      
64
      
59
      
50
      
34
      
43
      
46
      
272
      
207
  
Total Adjusted EBITDA
    
222
      
228
      
220
      
164
      
251
      
269
      
239
      
158
      
177
      
172
      
834
      
917
  
Adjusted EBITDA Margin (%)
    
23
%
    
25
%
    
26
%
    
20
%
    
31
%
    
33
%
    
29
%
    
19
%
    
21
%
    
22
%
    
24
%
    
28
%
OPEX
    
612
      
572
      
570
      
570
      
478
      
472
      
477
      
519
      
498
      
492
      
2,324
      
1,946
  
Income with respect to settlement
                                                                                               
    agreement with Orange
    
54
      
54
      
55
      
54
      
54
      
54
                                      
217
      
108
  
Finance costs, net
    
24
      
28
      
30
      
23
      
23
      
54
      
15
      
88
      
18
      
13
      
105
      
180
  
Profit (loss)
    
14
      
26
      
19
      
(7
)
    
64
      
46
      
54
      
(50
)
    
9
      
2
      
52
      
114
  
Capital Expenditures (cash)
    
48
      
57
      
44
      
47
      
82
      
76
      
105
      
113
      
138
      
104
      
196
      
376
  
Capital Expenditures (additions)
    
34
      
40
      
44
      
84
      
58
      
78
      
107
      
174
      
113
      
98
      
202
      
417
  
Adjusted Free Cash Flow
    
114
      
160
      
215
      
269
      
126
      
208
      
202
      
63
      
21
      
55
      
758
      
599
  
Adjusted Free Cash Flow (after interest)
    
89
      
119
      
201
      
241
      
109
      
150
      
192
      
(17
)
    
(14
)
    
44
      
650
      
434
  
Net Debt
    
2,079
      
1,964
      
1,768
      
1,526
      
1,415
      
1,081
      
887
      
906
      
919
      
893
      
1,526
      
906
  
Cellular Subscriber Base (Thousands)
    
2,692
      
2,700
      
2,693
      
2,686
      
2,658
      
2,662
      
2,677
      
2,674
      
2,667
      
2,645
      
2,686
      
2,674
  
Post-Paid Subscriber Base (Thousands)
    
2,174
      
2,191
      
2,215
      
2,241
      
2,259
      
2,273
      
2,306
      
2,320
      
2,336
      
2,345
      
2,241
      
2,320
  
Pre-Paid Subscriber Base (Thousands)
    
518
      
509
      
478
      
445
      
399
      
389
      
371
      
354
      
331
      
300
      
445
      
354
  
Cellular ARPU (NIS)
    
67
      
65
      
66
      
62
      
61
      
62
      
64
      
59
      
58
      
57
      
65
      
62
  
Cellular Churn Rate (%)
    
11.2
%
    
9.8
%
    
9.7
%
    
9.4
%
    
9.8
%
    
9.0
%
    
9.3
%
    
9.9
%
    
8.8
%
    
10.0
%
    
40
%
    
38
%
Number of Employees (FTE)
    
2,827
      
2,740
      
2,742
      
2,686
      
2,580
      
2,582
      
2,696
      
2,797
      
2,778
      
2,808
      
2,686
      
2,797
  

* See footnote 2 regarding use of non-GAAP measures. Figures from 2017 include impact of adoption of IFRS15.

22
Disclosure for notes holders as of June 30, 2018
 
Information regarding the notes series issued by the Company, in million NIS
 
Series
Original issuance date
Principal on the date of issuance
As of 30.06.2018
Interest rate
Principal repayment dates
Interest repayment dates
Linkage
Trustee contact details
Principal book value
Linked principal book value
Interest accumulated in books
Market value
From
To
      
C
25.04.10
24.02.11*
200
444
196
215
4
219
3.35%
+
CPI
30.12.16
30.12.18
30.6, 30.12
Linked to CPI
Hermetic Trust (1975) Ltd.
Merav Offer. 113 Hayarkon St., Tel Aviv. Tel: 03-5544553.
D
25.04.10
04.05.11*
400
146
437
437
1
441
1.328%
 
(MAKAM+1.2%)
30.12.17
30.12.21
30.3, 30.6, 30.9, 30.12
Variable interest MAKAM (2)
Hermetic Trust (1975) Ltd. Merav Offer. 113 Hayarkon St., Tel Aviv. Tel: 03-5544553.
F
(1)
20.07.17
12.12.17
255
389
644
644
**
634
2.16%
25.06.20
25.06.24
25.6, 25.12
Not Linked
Hermetic Trust (1975) Ltd.
Merav Offer. 113 Hayarkon St., Tel Aviv. Tel: 03-5544553.
 
(1) In July 2017, the Company issued Series F Notes in a principal amount of NIS 255 million. In December 11, 2017, the Company issued an additional Series F Notes in a principal amount of NIS 389 million. Regarding Series F Notes, the Company is required to comply with a financial ovenant that the ratio of Net Debt to Adjusted EBITDA shall not exceed 5. Compliance will be examined and reported on a quarterly basis. For the definitions of Net Debt and Adjusted EBITDA see 'Use of non-GAAP measures' section above. For the purpose of the covenant, Adjusted EBITDA is calculated as the sum total for the last 12 month period, excluding adjustable one-time items. As of June 30, 2018, the ratio of Net Debt to Adjusted EBITDA was 1.2. Additional stipulations regarding Series F Notes mainly include: shareholders' equity shall not decrease below NIS 400 million; the Company shall not create floating liens subject to certain terms; the Company has the right for early redemption under certain conditions; the Company shall pay additional annual interest of 0.5% in the case of a two-notch downgrade in the Notes rating and an additional annual interest of 0.25% for each further single-notch downgrade, up to a maximum additional interest of 1%; the Company shall pay additional annual interest of 0.25% during a period in which there is a breach of the financial covenant.
 
In the reporting period, the Company was in compliance with all financial covenants and obligations and no cause for early repayment occurred.
 
In September 2017, December 2017 and January 2018, the Company entered into agreements with Israeli institutional investors to issue in December 2018, December 2019 and December 2019, respectively, in the framework of a private placement, additional Series F notes, in an aggregate principal amount of NIS 150 million, NIS 100 million and NIS 127 million, respectively. S&P Maalot has rated the additional deferred issuances with an 'ilA+' rating. For additional details see the Company's press releases dated September 13 and 17, 2017, December 27, 2017 and January 9, 2018.
 
(2) 'MAKAM' is a variable interest based on the yield of 12 month government bonds issued by the government of Israel. The interest rate is updated on a quarterly basis.
 
(*)   On these dates additional Notes of the series were issued. The information in the table refers to the full series.
 
(**) Representing an amount of less than NIS 1 million.
 
23
 
Disclosure for Notes holders as of June 30, 2018 (cont.)
 
Notes Rating Details*
 
Series
Rating Company
Rating as of 30.06.2018 and 15.08.2018 (1)
Rating assigned upon issuance of the Series
Recent date of rating as of 30.06.2018 and 15.08.2018
Additional ratings between the original issuance date and the recent date of rating (2)
Date
Rating
C
S&P Maalot
ilA+
ilAA-
08/2018
07/2010, 09/2010,
10/2010, 09/2012,
12/2012, 06/2013,
07/2014, 07/2015,
07/2016, 07/2017,
08/2018
ilAA-/Stable, ilAA-/Stable,
ilAA-/Negative, ilAA-/Watch Neg,
ilAA-/Negative, ilAA-/Stable,
ilAA-/Stable, ilA+/Stable,
ilA+/Stable, ilA+/Stable,
ilA+/Stable
D
S&P Maalot
ilA+
ilAA-
08/2018
E
S&P Maalot
ilA+
ilAA-
08/2018
F
S&P Maalot
ilA+
ilA+
08/2018
07/2017, 09/2017
12/2017, 01/2018,
08/2018
ilA+/Stable, ilA+/Stable
ilA+/Stable, ilA+/Stable,
ilA+/Stable
 
(1) In August 2018, S&P Maalot affirmed the Company's rating of “ilA+/Stable”.
 
(2) For details regarding the rating of the notes see the S&P Maalot report dated August 13, 2018.
 
* A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to suspension, revision or withdrawal at any time, and each rating should be evaluated independently of any other rating
 
24
Summary of Financial Undertakings (according to repayment dates) as of June 30, 2018
 
a.
Notes issued to the public by the Company and held by the public, excluding such notes held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data (in thousand NIS).
 
   
Principal payments
    
Gross interest payments (without deduction of tax)
  
   
ILS linked to CPI
    
ILS not linked to CPI
    
Euro
    
Dollar
    
Other
      
First year
    
214,634
      
109,228
      
-
      
-
      
-
      
27,858
  
Second year
    
-
      
238,035
      
-
      
-
      
-
      
17,701
  
Third year
    
-
      
238,035
      
-
      
-
      
-
      
13,403
  
Fourth year
    
-
      
238,035
      
-
      
-
      
-
      
9,105
  
Fifth year and on
    
-
      
257,613
      
-
      
-
      
-
      
8,347
  
Total
    
214,634
      
1,080,946
      
-
      
-
      
-
      
76,414
  
 
b.
Private notes and other non-bank credit, excluding such notes held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data – None.
 
c.
Credit from banks in Israel based on the Company's "Solo" financial data (in thousand NIS).
 
   
Principal payments
    
Gross interest payments (without deduction of tax)
  
   
ILS linked to CPI
    
ILS not linked to CPI
    
Euro
    
Dollar
    
Other
      
First year
    
-
      
33,419
      
-
      
-
      
-
      
5,933
  
Second year
    
-
      
52,132
      
-
      
-
      
-
      
4,823
  
Third year
    
-
      
52,132
      
-
      
-
      
-
      
3,542
  
Fourth year
    
-
      
52,132
      
-
      
-
      
-
      
2,282
  
Fifth year and on
    
-
      
60,185
      
-
      
-
      
-
      
1,412
  
Total
    
-
      
250,000
      
-
      
-
      
-
      
17,992
  
 
25
Summary of Financial Undertakings (according to repayment dates) as of June 30, 2018 (cont.)
 
d.
Credit from banks abroad based on the Company's "Solo" financial data – None.
 
e.
Total of sections a - d above, total credit from banks, non-bank credit and notes based on the Company's "Solo" financial data (in thousand NIS).
 
   
Principal payments
    
Gross interest payments (without deduction of tax)
  
   
ILS linked to CPI
    
ILS not linked to CPI
    
Euro
    
Dollar
    
Other
      
First year
    
214,634
      
142,647
      
-
      
-
      
-
      
33,791
  
Second year
    
-
      
290,167
      
-
      
-
      
-
      
22,524
  
Third year
    
-
      
290,167
      
-
      
-
      
-
      
16,945
  
Fourth year
    
-
      
290,167
      
-
      
-
      
-
      
11,387
  
Fifth year and on
    
-
      
317,798
      
-
      
-
      
-
      
9,759
  
Total
    
214,634
      
1,330,946
      
-
      
-
      
-
      
94,406
  

f.
Off-balance sheet Credit exposure based on the Company's "Solo" financial data (in thousand NIS) – 50,000 (Guarantees on behalf of an associate, without expiration date).
 
g.
Off-balance sheet Credit exposure of all the Company's consolidated companies, excluding companies that are reporting corporations and excluding the Company's data presented in section f above – None.
 
h.
Total balances of the credit from banks, non-bank credit and notes of all the consolidated companies, excluding companies that are reporting corporations and excluding Company's data presented in sections a - d above - None.
 
i.
Total balances of credit granted to the Company by the parent company or a controlling shareholder and balances of notes offered by the Company held by the parent company or the controlling shareholder - None.
 
j.
Total balances of credit granted to the Company by companies held by the parent company or the controlling shareholder, which are not controlled by the Company, and balances of notes offered by the Company held by companies held by the parent company or the controlling shareholder, which are not controlled by the Company – None.
 
k.
Total balances of credit granted to the Company by consolidated companies and balances of notes offered by the Company held by the consolidated companies - None.

26
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Partner Communications Company Ltd.
 		  
 
By:
/s/ Tamir Amar            
  
 
Name:
Tamir Amar
  
 
Title:
Chief Financial Officer
  

Dated: August 15, 2018
 
27