1.
|
Cellcom Israel Announces Third Quarter 2010 Results
|
2.
|
Cellcom Israel Ltd. and Subsidiaries - Financial Statements as at September 30, 2010
|
§
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Total Revenues (including revenues from end-user equipment) increased 3.2% to NIS 1,729 million ($472 million)
|
§
|
Revenues from content and value added services (including SMS) increased 24.9%, reaching 19% of services revenues
|
§
|
Total Revenues from services increased 1.1% to NIS 1,509 million ($412 million)
|
§
|
EBITDA2 increased 9.3% to NIS 716 million ($195 million); EBITDA margin 41.4%, up from 39.1%2
|
§
|
Operating income increased 14.1% to NIS 534 million ($146 million)
|
§
|
Net income3 increased 14.9% to NIS 332 million ($91 million)
|
§
|
Free cash flow1 increased 13% to NIS 513 million ($140 million)
|
§
|
Subscriber base increased approx. 35,000 during the third quarter 2010, all post-paid subscribers; reaching approx. 3.376 million at the end of September 2010
|
§
|
3G subscribers reached approx. 1.114 million at the end of September 2010, net addition of approx. 38,000 in the third quarter 2010
|
§
|
The Company Declared third quarter dividend of NIS 4.03 per share
|
Q3/2010
|
Q3/2009
|
% Change
|
Q3/2010
|
Q3/2009
|
|
million NIS
|
million US$
(convenience translation)
|
||||
Total revenues
|
1,729
|
1,675
|
3.2%
|
471.8
|
457.0
|
Total Services revenues (including revenues from content and value added services)
|
1,509
|
1,493
|
1.1%
|
411.7
|
407.4
|
Revenues from content and value added services
|
286
|
229
|
24.9%
|
78.0
|
62.5
|
Handset and accessories revenues
|
220
|
182
|
20.9%
|
60.0
|
49.7
|
Operating Income
|
534
|
468
|
14.1%
|
145.7
|
127.7
|
Net Income5
|
332
|
289
|
14.9%
|
90.6
|
78.9
|
Free cash flow
|
513
|
454
|
13.0%
|
140.0
|
123.9
|
EBITDA6
|
716
|
655
|
9.3%
|
195.4
|
178.7
|
EBITDA, as percent of Revenues6
|
41.4%
|
39.1%
|
5.9%
|
||
Subscribers end of period
(in thousands)
|
3,376
|
3,259
|
3.6%
|
||
Monthly ARPU
|
145.9
|
150.4
|
(3.0%)
|
39.8
|
41.0
|
Average Monthly MOU
|
334
|
338
|
(1.2%)
|
·
|
to reduce the maximum interconnect tariff payable by a landline operator or a cellular operator for the completion of a call on another cellular network from the current tariff of NIS 0.251 per minute to NIS 0.0687 per minute from January 1, 2011; to 0.0634 per minute from January 1, 2012; to NIS 0.0591 per minute from January 1, 2013; and to NIS 0.0555 from January 1, 2014.
|
·
|
to reduce the maximum interconnect tariff payable by a cellular operator for sending an SMS message to another cellular network from the current tariff of NIS 0.0285 to NIS 0.0016 from January 1, 2011; to NIS 0.0015 from January 1, 2012; to NIS 0.0014 from January 1, 2013; and to NIS 0.0013 from January 1, 2014.
|
·
|
the tariffs do not include VAT and will be updated annually from January 1, 2011, based on the change in the Israeli CPI published in November of the year preceding to the update date from the average annual Israeli CPI for 2009. The tariffs will also be increased by the percentage of royalties payable to the MOC by the operator.
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US Dial-in Number: 1 888 407 2553
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UK Dial-in Number: 0 800 917 5108
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Israel Dial-in Number: 03 918 0610
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International Dial-in Number: +972 3 918 0610
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Company Contact
Yaacov Heen
Chief Financial Officer
investors@cellcom.co.il
Tel: +972 52 998 9755
|
IR Contacts
Porat Saar & Kristin Knies
CCG Investor Relations Israel & US
cellcom@ccgisrael.com
Tel: +1 646 233 2161
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Convenience
|
||||||||||||||||
translation
|
||||||||||||||||
into US dollar
|
||||||||||||||||
September 30,
|
September 30,
|
September 30,
|
December 31,
|
|||||||||||||
2010
|
2010
|
2009
|
2009
|
|||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|||||||||||||
Assets
|
||||||||||||||||
Cash and cash equivalents
|
777 | 212 | 976 | 903 | ||||||||||||
Current investments, including derivatives
|
414 | 113 | 213 | 272 | ||||||||||||
Trade receivables
|
1,563 | 427 | 1,584 | 1,579 | ||||||||||||
Other receivables
|
75 | 20 | 73 | 63 | ||||||||||||
Inventory
|
115 | 31 | 123 | 149 | ||||||||||||
Total current assets
|
2,944 | 803 | 2,969 | 2,966 | ||||||||||||
Trade and other receivables
|
597 | 163 | 622 | 606 | ||||||||||||
Property, plant and equipment, net
|
2,043 | 557 | 2,066 | 2,096 | ||||||||||||
Intangible assets, net
|
765 | 209 | 707 | 711 | ||||||||||||
Total non- current assets
|
3,405 | 929 | 3,395 | 3,413 | ||||||||||||
Total assets
|
6,349 | 1,732 | 6,364 | 6,379 | ||||||||||||
Liabilities
|
||||||||||||||||
Debentures current maturities
|
347 | 95 | 341 | 350 | ||||||||||||
Trade payables and accrued expenses
|
697 | 190 | 788 | 806 | ||||||||||||
Current tax liabilities
|
161 | 44 | 127 | 67 | ||||||||||||
Provisions
|
107 | 29 | 78 | 84 | ||||||||||||
Other current liabilities, including derivatives
|
317 | 86 | 345 | 405 | ||||||||||||
Dividend declared
|
310 | 85 | - | - | ||||||||||||
Total current liabilities
|
1,939 | 529 | 1,679 | 1,712 | ||||||||||||
Debentures
|
3,891 | 1,062 | 4,179 | 4,185 | ||||||||||||
Provisions
|
18 | 5 | 17 | 16 | ||||||||||||
Other long-term liabilities
|
1 | - | 1 | 1 | ||||||||||||
Deferred taxes
|
74 | 20 | 99 | 91 | ||||||||||||
Total non- current liabilities
|
3,984 | 1,087 | 4,296 | 4,293 | ||||||||||||
Total liabilities
|
5,923 | 1,616 | 5,975 | 6,005 | ||||||||||||
Shareholders’ equity
|
||||||||||||||||
Share capital
|
1 | - | 1 | 1 | ||||||||||||
Cash flow hedge reserve
|
(17 | ) | (4 | ) | (24 | ) | (23 | ) | ||||||||
Retained earnings
|
442 | 120 | 412 | 396 | ||||||||||||
Total shareholders’ equity
|
426 | 116 | 389 | 374 | ||||||||||||
Total liabilities and shareholders’ equity
|
6,349 | 1,732 | 6,364 | 6,379 |
Nine-month period ended
September 30,
|
Three-month period ended
September 30,
|
Year ended
December 31,
|
||||||||||||||||||||||||||
Convenience
|
Convenience
|
|||||||||||||||||||||||||||
translation
|
translation
|
|||||||||||||||||||||||||||
into US dollar
|
into US dollar
|
|||||||||||||||||||||||||||
2010
|
2010
|
2009
|
2010
|
2010
|
2009
|
2009
|
||||||||||||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
||||||||||||||||||||||
Revenues
|
5,000 | 1,364 | 4,844 | 1,729 | 472 | 1,675 | 6,483 | |||||||||||||||||||||
Cost of revenues
|
2,477 | 676 | 2,486 | 838 | 229 | 856 | 3,333 | |||||||||||||||||||||
Gross profit
|
2,523 | 688 | 2,358 | 891 | 243 | 819 | 3,150 | |||||||||||||||||||||
Selling and marketing expenses
|
554 | 151 | 520 | 193 | 53 | 185 | 716 | |||||||||||||||||||||
General and administrative expenses
|
477 | 130 | 485 | 163 | 44 | 166 | 660 | |||||||||||||||||||||
Other expenses, net
|
2 | - | 4 | 1 | - | - | 6 | |||||||||||||||||||||
Operating income
|
1,490 | 407 | 1,349 | 534 | 146 | 468 | 1,768 | |||||||||||||||||||||
Financing income
|
68 | 18 | 141 | 23 | 6 | 29 | 151 | |||||||||||||||||||||
Financing expenses
|
(253 | ) | (69 | ) | (302 | ) | (111 | ) | (30 | ) | (151 | ) | (370 | ) | ||||||||||||||
Financing income (expenses), net
|
(185 | ) | (51 | ) | (161 | ) | (88 | ) | (24 | ) | (122 | ) | (219 | ) | ||||||||||||||
Income before income tax
|
1,305 | 356 | 1,188 | 446 | 122 | 346 | 1,549 | |||||||||||||||||||||
Income tax
|
333 | 91 | 277 | 114 | 31 | 57 | 367 | |||||||||||||||||||||
Net income
|
972 | 265 | 911 | 332 | 91 | 289 | 1,182 | |||||||||||||||||||||
Earnings per share
|
||||||||||||||||||||||||||||
Basic earnings per share in NIS
|
9.83 | 2.68 | 9.26 | 3.36 | 0.92 | 2.94 | 12.01 | |||||||||||||||||||||
Diluted earnings per share in NIS
|
9.77 | 2.67 | 9.17 | 3.34 | 0.91 | 2.91 | 11.90 | |||||||||||||||||||||
Nine-month period ended
September 30,
|
Three-month period ended
September 30,
|
Year ended
December 31,
|
||||||||||||||||||||||||||
Convenience
|
Convenience
|
|||||||||||||||||||||||||||
translation
|
translation
|
|||||||||||||||||||||||||||
into US dollar
|
into US dollar
|
|||||||||||||||||||||||||||
2010
|
2010
|
2009
|
2010
|
2010
|
2009
|
2009
|
||||||||||||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
||||||||||||||||||||||
Cash flows from operating activities
|
||||||||||||||||||||||||||||
Net income for the period
|
972 | 265 | 911 | 332 | 91 | 289 | 1,182 | |||||||||||||||||||||
Adjustments for:
|
||||||||||||||||||||||||||||
Depreciation and Amortization
|
544 | 148 | 566 | 181 | 49 | 187 | 755 | |||||||||||||||||||||
Share based payments
|
1 | - | 1 | 1 | - | 1 | 1 | |||||||||||||||||||||
Loss (gain) on sale of assets
|
2 | - | 5 | 1 | - | 1 | 6 | |||||||||||||||||||||
Income tax expense
|
333 | 91 | 277 | 114 | 31 | 57 | 367 | |||||||||||||||||||||
Financial (income) expenses, net
|
185 | 51 | 161 | 88 | 24 | 122 | 219 | |||||||||||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||||||||||||||
Changes in inventories
|
(3 | ) | (1 | ) | (57 | ) | 2 | 1 | (29 | ) | (105 | ) | ||||||||||||||||
Changes in trade receivables (including long- term amounts)
|
76 | 21 | (85 | ) | 13 | 3 | (34 | ) | (69 | ) | ||||||||||||||||||
Changes in other receivables (including long- term amounts)
|
(30 | ) | (8 | ) | (45 | ) | (17 | ) | (4 | ) | 43 | 2 | ||||||||||||||||
Changes in trade payables, accrued expenses and provisions
|
(23 | ) | (6 | ) | 182 | 13 | 3 | 58 | 152 | |||||||||||||||||||
Changes in other liabilities (including long-term amounts)
|
(21 | ) | (6 | ) | (4 | ) | (8 | ) | (2 | ) | 5 | (4 | ) | |||||||||||||||
Proceeds (Payments) for derivative hedging contracts, net
|
(13 | ) | (4 | ) | 22 | (1 | ) | - | 5 | 21 | ||||||||||||||||||
Income tax paid
|
(233 | ) | (63 | ) | (290 | ) | (62 | ) | (17 | ) | (101 | ) | (447 | ) | ||||||||||||||
Net cash from operating activities
|
1,790 | 488 | 1,644 | 657 | 179 | 604 | 2,080 |
Nine-month period ended
September 30,
|
Three-month period ended
September 30,
|
Year ended
December 31,
|
||||||||||||||||||||||||||
Convenience
|
Convenience
|
|||||||||||||||||||||||||||
translation
|
translation
|
|||||||||||||||||||||||||||
into US dollar
|
into US dollar
|
|||||||||||||||||||||||||||
2010
|
2010
|
2009
|
2010
|
2010
|
2009
|
2009
|
||||||||||||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
||||||||||||||||||||||
Cash flows from investing activities
|
||||||||||||||||||||||||||||
Acquisition of property, plant, and equipment
|
(318 | ) | (87 | ) | (285 | ) | (106 | ) | (29 | ) | (89 | ) | (404 | ) | ||||||||||||||
Acquisition of intangible assets
|
(140 | ) | (38 | ) | (137 | ) | (40 | ) | (11 | ) | (48 | ) | (173 | ) | ||||||||||||||
Acquisition of operation, net of cash acquired*
|
(108 | ) | (29 | ) | - | - | - | - | - | |||||||||||||||||||
Change in current investments, net
|
(145 | ) | (40 | ) | (124 | ) | (7 | ) | (2 | ) | (124 | ) | (212 | ) | ||||||||||||||
Proceeds (payments) for other derivative contracts, net**
|
(9 | ) | (2 | ) | 19 | (1 | ) | - | (15 | ) | 8 | |||||||||||||||||
Proceeds from sales of property, plant and equipment
|
1 | - | 2 | - | - | 2 | 2 | |||||||||||||||||||||
Interest received
|
7 | 2 | 4 | 3 | 1 | - | 5 | |||||||||||||||||||||
Net cash used in investing activities
|
(712 | ) | (194 | ) | (521 | ) | (151 | ) | (41 | ) | (274 | ) | (774 | ) | ||||||||||||||
Cash flows from financing activities
|
||||||||||||||||||||||||||||
Proceeds from derivative contracts, net
|
12 | 3 | 9 | (5 | ) | (1 | ) | 5 | 33 | |||||||||||||||||||
Proceeds (Payments) for short term borrowings
|
(8 | ) | (2 | ) | - | - | - | - | 8 | |||||||||||||||||||
Repayment of debentures
|
(343 | ) | (94 | ) | (332 | ) | (172 | ) | (47 | ) | (168 | ) | (332 | ) | ||||||||||||||
Proceeds from issuance of debentures, net of issuance costs
|
- | - | 989 | - | - | - | 989 | |||||||||||||||||||||
Dividend paid
|
(640 | ) | (174 | ) | (898 | ) | (29 | ) | (8 | ) | (302 | ) | (1,186 | ) | ||||||||||||||
Interest paid
|
(225 | ) | (61 | ) | (190 | ) | (108 | ) | (30 | ) | (112 | ) | (190 | ) | ||||||||||||||
Net cash used in financing activities
|
(1,204 | ) | (328 | ) | (422 | ) | (314 | ) | (86 | ) | (577 | ) | (678 | ) | ||||||||||||||
Changes in cash and cash equivalents
|
(126 | ) | (34 | ) | 701 | 192 | 52 | (247 | ) | 628 | ||||||||||||||||||
Balance of cash and cash equivalents at beginning of the period
|
903 | 246 | 275 | 585 | 160 | 1,223 | 275 | |||||||||||||||||||||
Balance of cash and cash equivalents at end of the period
|
777 | 212 | 976 | 777 | 212 | 976 | 903 |
Three-month period ended
September 30,
|
Year ended
December 31,
|
|||||||||||||||
Convenience
translation
into US dollar
|
||||||||||||||||
2010
NIS millions
(Unaudited)
|
2010
US$ millions
|
2009 *
NIS millions
(Unaudited)
|
2009
NIS millions
(Audited)
|
|||||||||||||
Net income
|
332 | 91 | 289 | 1,182 | ||||||||||||
Income taxes
|
114 | 31 | 57 | 367 | ||||||||||||
Financing income
|
(23 | ) | (6 | ) | (29 | ) | (151 | ) | ||||||||
Financing expenses
|
111 | 30 | 151 | 370 | ||||||||||||
Other expenses
|
1 | - | - | 6 | ||||||||||||
Depreciation and amortization
|
181 | 49 | 187 | 755 | ||||||||||||
EBITDA
|
716 | 195 | 655 | 2,529 |
Three-month period ended
September 30,
|
Year ended
December 31,
|
|||||||||||||||
Convenience
translation
into US dollar
|
||||||||||||||||
2010
NIS millions
(Unaudited)
|
2010
US$ millions
|
2009
NIS millions
(Unaudited)
|
2009
NIS millions
(Audited)
|
|||||||||||||
Cash flows from operating activities
|
657 | 179 | 604 | 2,080 | ||||||||||||
Cash flows from investing activities
|
(151 | ) | (41 | ) | (274 | ) | (774 | ) | ||||||||
short-term Investment in tradable debentures
|
7 | 2 | 124 | 212 | ||||||||||||
Free Cash Flow
|
513 | 140 | 454 | 1,518 |
Cellcom Israel Ltd.
and Subsidiaries
Financial Statements
As at September 30, 2010
(Unaudited)
|
Page
|
|
Condensed Consolidated Interim Statements of Financial position
|
3
|
Condensed Consolidated Interim Statements of Income
|
4
|
Condensed Consolidated Interim Statements of Comprehensive Income
|
5
|
Condensed Consolidated Interim Statements of Changes in shareholders' equity
|
6
|
Condensed Consolidated Interim Statements of Cash Flows
|
8
|
Condensed notes to the Interim Consolidated Financial Statements
|
10
|
Convenience
Translation
into US dollar
|
||||||||||||||||
(Note 2D)
|
||||||||||||||||
September 30,
|
September 30,
|
September 30,
|
December 31,
|
|||||||||||||
2010
|
2010
|
2009
|
2009
|
|||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Assets
|
||||||||||||||||
Cash and cash equivalents
|
777 | 212 | 976 | 903 | ||||||||||||
Current investments, including derivatives
|
414 | 113 | 213 | 272 | ||||||||||||
Trade receivables
|
1,563 | 427 | 1,584 | 1,579 | ||||||||||||
Other receivables
|
75 | 20 | 73 | 63 | ||||||||||||
Inventory
|
115 | 31 | 123 | 149 | ||||||||||||
Total current assets
|
2,944 | 803 | 2,969 | 2,966 | ||||||||||||
Trade and other receivables
|
597 | 163 | 622 | 606 | ||||||||||||
Property, plant and equipment, net
|
2,043 | 557 | 2,066 | 2,096 | ||||||||||||
Intangible assets, net
|
765 | 209 | 707 | 711 | ||||||||||||
Total non- current assets
|
3,405 | 929 | 3,395 | 3,413 | ||||||||||||
Total assets
|
6,349 | 1,732 | 6,364 | 6,379 | ||||||||||||
Liabilities
|
||||||||||||||||
Debentures current maturities
|
347 | 95 | 341 | 350 | ||||||||||||
Trade payables and accrued expenses
|
697 | 190 | 788 | 806 | ||||||||||||
Current tax liabilities
|
161 | 44 | 127 | 67 | ||||||||||||
Provisions
|
107 | 29 | 78 | 84 | ||||||||||||
Other current liabilities, including derivatives
|
317 | 86 | 345 | 405 | ||||||||||||
Dividend declared
|
310 | 85 | - | - | ||||||||||||
Total current liabilities
|
1,939 | 529 | 1,679 | 1,712 | ||||||||||||
Debentures
|
3,891 | 1,062 | 4,179 | 4,185 | ||||||||||||
Provisions
|
18 | 5 | 17 | 16 | ||||||||||||
Other long-term liabilities
|
1 | - | 1 | 1 | ||||||||||||
Deferred taxes
|
74 | 20 | 99 | 91 | ||||||||||||
Total non- current liabilities
|
3,984 | 1,087 | 4,296 | 4,293 | ||||||||||||
Total liabilities
|
5,923 | 1,616 | 5,975 | 6,005 | ||||||||||||
Shareholders’ equity
|
||||||||||||||||
Share capital
|
1 | - | 1 | 1 | ||||||||||||
Cash flow hedge reserve
|
(17 | ) | (4 | ) | (24 | ) | (23 | ) | ||||||||
Retained earnings
|
442 | 120 | 412 | 396 | ||||||||||||
Total shareholders’ equity
|
426 | 116 | 389 | 374 | ||||||||||||
Total liabilities and shareholders’ equity
|
6,349 | 1,732 | 6,364 | 6,379 |
Nine-month period ended
September 30,
|
Three-month period ended
September 30,
|
Year ended
December 31,
|
||||||||||||||||||||||||||
Convenience
|
Convenience
|
|||||||||||||||||||||||||||
translation
|
translation
|
|||||||||||||||||||||||||||
into US dollar
|
into US dollar
|
|||||||||||||||||||||||||||
(Note 2D)
|
(Note 2D)
|
|||||||||||||||||||||||||||
2010
|
2010
|
2009
|
2010
|
2010
|
2009
|
2009
|
||||||||||||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
||||||||||||||||||||||
Revenues
|
5,000 | 1,364 | 4,844 | 1,729 | 472 | 1,675 | 6,483 | |||||||||||||||||||||
Cost of revenues
|
2,477 | 676 | 2,486 | 838 | 229 | 856 | 3,333 | |||||||||||||||||||||
Gross profit
|
2,523 | 688 | 2,358 | 891 | 243 | 819 | 3,150 | |||||||||||||||||||||
Selling and marketing expenses
|
554 | 151 | 520 | 193 | 53 | 185 | 716 | |||||||||||||||||||||
General and administrative expenses
|
477 | 130 | 485 | 163 | 44 | 166 | 660 | |||||||||||||||||||||
Other expenses, net
|
2 | - | 4 | 1 | - | - | 6 | |||||||||||||||||||||
Operating income
|
1,490 | 407 | 1,349 | 534 | 146 | 468 | 1,768 | |||||||||||||||||||||
Financing income
|
68 | 18 | 141 | 23 | 6 | 29 | 151 | |||||||||||||||||||||
Financing expenses
|
(253 | ) | (69 | ) | (302 | ) | (111 | ) | (30 | ) | (151 | ) | (370 | ) | ||||||||||||||
Financing expenses, net
|
(185 | ) | (51 | ) | (161 | ) | (88 | ) | (24 | ) | (122 | ) | (219 | ) | ||||||||||||||
Income before income tax
|
1,305 | 356 | 1,188 | 446 | 122 | 346 | 1,549 | |||||||||||||||||||||
Income tax
|
333 | 91 | 277 | 114 | 31 | 57 | 367 | |||||||||||||||||||||
Net income
|
972 | 265 | 911 | 332 | 91 | 289 | 1,182 | |||||||||||||||||||||
Earnings per share
|
||||||||||||||||||||||||||||
Basic earnings per share in NIS
|
9.83 | 2.68 | 9.26 | 3.36 | 0.92 | 2.94 | 12.01 | |||||||||||||||||||||
Diluted earnings per share in NIS
|
9.77 | 2.67 | 9.17 | 3.34 | 0.91 | 2.91 | 11.90 |
Nine-month period ended
September 30,
|
Three-month period ended
September 30,
|
Year ended
December 31,
|
||||||||||||||||||||||||||
Convenience
|
Convenience
|
|||||||||||||||||||||||||||
translation
|
translation
|
|||||||||||||||||||||||||||
into US dollar
|
into US dollar
|
|||||||||||||||||||||||||||
(Note 2D)
|
(Note 2D)
|
|||||||||||||||||||||||||||
2010
|
2010
|
2009
|
2010
|
2010
|
2009
|
2009
|
||||||||||||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
||||||||||||||||||||||
Net change in fair value of cash flow hedges transferred to profit and loss
|
16 | 4 | (14 | ) | 4 | - | (6 | ) | (14 | ) | ||||||||||||||||||
Changes in fair value of cash flow hedges, net
|
(6 | ) | (2 | ) | (3 | ) | (11 | ) | (3 | ) | (9 | ) | (2 | ) | ||||||||||||||
Income tax on other comprehensive income
|
(4 | ) | - | 4 | (1 | ) | - | 2 | 4 | |||||||||||||||||||
Other comprehensive income, net of income tax
|
6 | 2 | (13 | ) | (8 | ) | (3 | ) | (13 | ) | (12 | ) | ||||||||||||||||
Net income for the period
|
972 | 265 | 911 | 332 | 91 | 289 | 1,182 | |||||||||||||||||||||
Total comprehensive income for the period
|
978 | 267 | 898 | 324 | 88 | 276 | 1,170 |
Share capital
amount
|
Cash flow
hedge reserve
|
Retained
earnings
|
Total
|
Convenience
translation
into US dollar
(Note 2D)
|
||||||||||||||||
NIS millions
|
US$ millions
|
|||||||||||||||||||
For the Nine -month period ended September 30, 2010 (Unaudited)
|
||||||||||||||||||||
Balance as of January 1, 2010
(Audited)
|
1 | (23 | ) | 396 | 374 | 102 | ||||||||||||||
Comprehensive income for the period
|
- | 6 | 972 | 978 | 267 | |||||||||||||||
Share based payments
|
- | - | 1 | 1 | - | |||||||||||||||
Dividend declared
|
- | - | (310 | ) | (310 | ) | (85 | ) | ||||||||||||
Cash dividend paid
|
- | - | (617 | ) | (617 | ) | (168 | ) | ||||||||||||
Balance as of September 30, 2010
(Unaudited)
|
1 | (17 | ) | 442 | 426 | 116 |
Share capital
amount
|
Cash flow
hedge reserve
|
Retained
earnings
|
Total
|
|||||||||||||||||
NIS millions
|
||||||||||||||||||||
For the Nine –month period ended September 30, 2009 (Unaudited)
|
||||||||||||||||||||
Balance as of January 1, 2009
(Audited)
|
1 | (11 | ) | 400 | 390 | |||||||||||||||
Comprehensive income for the period
|
- | (13 | ) | 911 | 898 | |||||||||||||||
Share based payments
|
- | - | 1 | 1 | ||||||||||||||||
Cash dividend paid
|
- | - | (900 | ) | (900 | ) | ||||||||||||||
Balance as of September 30, 2009
(Unaudited)
|
1 | (24 | ) | 412 | 389 |
Share capital
amount
|
Cash flow
hedge reserve
|
Retained
earnings
|
Total
|
|||||||||||||||||
NIS millions
|
||||||||||||||||||||
For the Three –month period ended September 30, 2010 (Unaudited)
|
||||||||||||||||||||
Balance as of July 1, 2010
(Audited)
|
1 | (9 | ) | 419 | 411 | |||||||||||||||
Comprehensive income for the period
|
- | (8 | ) | 332 | 324 | |||||||||||||||
Share based payment
|
- | - | 1 | 1 | ||||||||||||||||
Dividend declared
|
- | - | (310 | ) | (310 | ) | ||||||||||||||
Balance as of September 30, 2010
(Unaudited)
|
1 | (17 | ) | 442 | 426 |
Share capital
amount
|
Cash flow
hedge reserve
|
Retained
earnings
|
Total
|
|||||||||||||||||
NIS millions
|
||||||||||||||||||||
For the Three –month period ended September 30, 2009 (Unaudited)
|
||||||||||||||||||||
Balance as of July 1, 2009
(Audited)
|
1 | (11 | ) | 422 | 412 | |||||||||||||||
Comprehensive income for the period
|
- | (13 | ) | 289 | 276 | |||||||||||||||
Share based payments
|
- | - | 1 | 1 | ||||||||||||||||
Cash dividend paid
|
- | - | (300 | ) | (300 | ) | ||||||||||||||
Balance as of September 30, 2009
(Unaudited)
|
1 | (24 | ) | 412 | 389 |
Share capital
amount
|
Cash flow
hedge reserve
|
Retained
earnings
|
Total
|
|||||||||||||||||
NIS millions
|
||||||||||||||||||||
For the year ended December 31, 2009
(Audited)
|
||||||||||||||||||||
(Audited)
|
1 | (11 | ) | 400 | 390 | |||||||||||||||
Comprehensive income for the period
|
- | (12 | ) | 1,182 | 1,170 | |||||||||||||||
Share based payments
|
- | - | 1 | 1 | ||||||||||||||||
Cash dividend paid
|
- | - | (1,187 | ) | (1,187 | ) | ||||||||||||||
Balance as of December 31, 2009
(Audited)
|
1 | (23 | ) | 396 | 374 |
Nine-month period ended
September 30,
|
Three-month period ended
September 30,
|
Year ended
December 31,
|
||||||||||||||||||||||||||
Convenience
|
Convenience
|
|||||||||||||||||||||||||||
translation
|
translation
|
|||||||||||||||||||||||||||
into US dollar
|
into US dollar
|
|||||||||||||||||||||||||||
(Note 2D)
|
(Note 2D)
|
|||||||||||||||||||||||||||
2010
|
2010
|
2009
|
2010
|
2010
|
2009
|
2009
|
||||||||||||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
||||||||||||||||||||||
Cash flows from operating activities
|
||||||||||||||||||||||||||||
Net income for the period
|
972 | 265 | 911 | 332 | 91 | 289 | 1,182 | |||||||||||||||||||||
Adjustments for:
|
||||||||||||||||||||||||||||
Depreciation and Amortization
|
544 | 148 | 566 | 181 | 49 | 187 | 755 | |||||||||||||||||||||
Share based payments
|
1 | - | 1 | 1 | - | 1 | 1 | |||||||||||||||||||||
Loss on sale of assets
|
2 | - | 5 | 1 | - | 1 | 6 | |||||||||||||||||||||
Income tax expense
|
333 | 91 | 277 | 114 | 31 | 57 | 367 | |||||||||||||||||||||
Financial expenses, net
|
185 | 51 | 161 | 88 | 24 | 122 | 219 | |||||||||||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||||||||||||||
Changes in inventories
|
(3 | ) | (1 | ) | (57 | ) | 2 | 1 | (29 | ) | (105 | ) | ||||||||||||||||
Changes in trade receivables (including long- term amounts)
|
76 | 21 | (85 | ) | 13 | 3 | (34 | ) | (69 | ) | ||||||||||||||||||
Changes in other receivables (including long- term amounts)
|
(30 | ) | (8 | ) | (45 | ) | (17 | ) | (4 | ) | 43 | 2 | ||||||||||||||||
Changes in trade payables, accrued expenses and provisions
|
(23 | ) | (6 | ) | 182 | 13 | 3 | 58 | 152 | |||||||||||||||||||
Changes in other liabilities
|
(21 | ) | (6 | ) | (4 | ) | (8 | ) | (2 | ) | 5 | (4 | ) | |||||||||||||||
Proceeds (Payments) for derivative hedging contracts, net
|
(13 | ) | (4 | ) | 22 | (1 | ) | - | 5 | 21 | ||||||||||||||||||
Income tax paid
|
(233 | ) | (63 | ) | (290 | ) | (62 | ) | (17 | ) | (101 | ) | (447 | ) | ||||||||||||||
Net cash from operating activities
|
1,790 | 488 | 1,644 | 657 | 179 | 604 | 2,080 |
Nine-month period ended
September 30,
|
Three-month period ended
September 30,
|
Year ended
December 31,
|
||||||||||||||||||||||||||
Convenience
|
Convenience
|
|||||||||||||||||||||||||||
translation
|
translation
|
|||||||||||||||||||||||||||
into US dollar
|
into US dollar
|
|||||||||||||||||||||||||||
(Note 2D)
|
(Note 2D)
|
|||||||||||||||||||||||||||
2010
|
2010
|
2009
|
2010
|
2010
|
2009
|
2009
|
||||||||||||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
US$ millions
|
NIS millions
|
NIS millions
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
||||||||||||||||||||||
Cash flows from investing activities
|
||||||||||||||||||||||||||||
Acquisition of property, plant, and equipment
|
(318 | ) | (87 | ) | (285 | ) | (106 | ) | (29 | ) | (89 | ) | (404 | ) | ||||||||||||||
Acquisition of intangible assets
|
(140 | ) | (38 | ) | (137 | ) | (40 | ) | (11 | ) | (48 | ) | (173 | ) | ||||||||||||||
Acquisition of operation, net of cash acquired*
|
(108 | ) | (29 | ) | - | - | - | - | - | |||||||||||||||||||
Change in current investments, net
|
(145 | ) | (40 | ) | (124 | ) | (7 | ) | (2 | ) | (124 | ) | (212 | ) | ||||||||||||||
Proceeds (payments) for other derivative contracts, net**
|
(9 | ) | (2 | ) | 19 | (1 | ) | - | (15 | ) | 8 | |||||||||||||||||
Proceeds from sales of property, plant and equipment
|
1 | - | 2 | - | - | 2 | 2 | |||||||||||||||||||||
Interest received
|
7 | 2 | 4 | 3 | 1 | - | 5 | |||||||||||||||||||||
Net cash used in investing activities
|
(712 | ) | (194 | ) | (521 | ) | (151 | ) | (41 | ) | (274 | ) | (774 | ) | ||||||||||||||
Cash flows from financing activities
|
||||||||||||||||||||||||||||
Proceeds from derivative contracts, net
|
12 | 3 | 9 | (5 | ) | (1 | ) | 5 | 33 | |||||||||||||||||||
Proceeds (Payments) for short term borrowings
|
(8 | ) | (2 | ) | - | - | - | - | 8 | |||||||||||||||||||
Repayment of debentures
|
(343 | ) | (94 | ) | (332 | ) | (172 | ) | (47 | ) | (168 | ) | (332 | ) | ||||||||||||||
Proceeds from issuance of debentures, net of issuance costs
|
- | - | 989 | - | - | - | 989 | |||||||||||||||||||||
Dividend paid
|
(640 | ) | (174 | ) | (898 | ) | (29 | ) | (8 | ) | (302 | ) | (1,186 | ) | ||||||||||||||
Interest paid
|
(225 | ) | (61 | ) | (190 | ) | (108 | ) | (30 | ) | (112 | ) | (190 | ) | ||||||||||||||
Net cash used in financing activities
|
(1,204 | ) | (328 | ) | (422 | ) | (314 | ) | (86 | ) | (577 | ) | (678 | ) | ||||||||||||||
Changes in cash and cash equivalents
|
(126 | ) | (34 | ) | 701 | 192 | 52 | (247 | ) | 628 | ||||||||||||||||||
Balance of cash and cash equivalents at beginning of the period
|
903 | 246 | 275 | 585 | 160 | 1,223 | 275 | |||||||||||||||||||||
Balance of cash and cash equivalents at end of the period
|
777 | 212 | 976 | 777 | 212 | 976 | 903 |
A.
|
Statement of compliance
|
B.
|
Functional and presentation currency
|
C.
|
Basis of measurement
|
D.
|
Convenience translation into U.S. dollars (“dollars” or “$”)
|
E.
|
Use of estimates and judgments
|
F.
|
Exchange rates and Consumer Price Indexes are as follows:
|
Exchange rates
of US$
|
Consumer Price
Index (points)
|
|||||||
As of September 30, 2010
|
3.665 | 210.1 | ||||||
As of September 30, 2009
|
3.758 | 205.2 | ||||||
As of December 31, 2009
|
3.775 | 206.2 | ||||||
Increase (decrease) during the period:
|
||||||||
Nine months ended September 30, 2010
|
(2.9 | %) | 1.9 | % | ||||
Nine months ended September 30, 2009
|
(1.2 | %) | 3.4 | % | ||||
Three months ended September 30, 2010
|
(5.4 | %) | 1.2 | % | ||||
Three months ended September 30, 2009
|
(4.1 | %) | 1.2 | % | ||||
Year ended December 31, 2009
|
(0.7 | %) | 3.9 | % |
G.
|
The company reclassified proceeds (payments) for other derivative contracts, net from cash flows from operating activities to cash flows from investing activities in the consolidated statements of cash flows for all periods presented.
|
A.
|
First adoption of new standards and interpretations
|
1.
|
IFRS 3 Business Combinations and IAS 27 Consolidated and Separate Financial Statements, revised (hereinafter - the Standards). The main revisions to the new Standards are: a revised definition of business and business combinations, a change in the measurement method of carried forward items in business combinations, providing two measurement options regarding non-controlling rights, a change in the accounting treatment of transaction costs, the accounting treatment regarding piece by
|
2.
|
Amendment to IAS 17, Leases – Classification of leases of land and buildings (hereinafter – the Amendment) – In accordance with the Amendment, a lease of land does not have to be classified as an operating lease in every case that ownership is not expected to pass to the lessee at the end of the lease period. In accordance with the amended standard, a land lease is to be examined according to the regular criteria for classifying a lease as a finance lease or as an operating lease.
|
3.
|
As from January 1, 2010 the Company early adopted the revision to IAS 1, Presentation of Financial Statements, which was issued in the framework of annual improvements to IFRSs 2010, pursuant to which the Company presents in the statement of changes in equity, for each component of equity, a reconciliation between the carrying amount at the beginning of the period and the carrying amount at its end, and provides separate disclosure for each change resulting from profit or loss, other comprehensive income, and transactions with the owners in their capacity as owners. The Company provides disclosure for the said reconciliation with separate disclosure for each change resulting from each component of other comprehensive income as part of the notes to the annual financial statements.
|
Pre-acquisition
|
Recognized values
|
|||||||
Carrying amounts
|
on acquisition
|
|||||||
NIS millions
|
NIS millions
|
|||||||
Fixed assets
|
6 | 6 | ||||||
Intangible assets
|
- | 25 | ||||||
Net identifiable assets and liabilities
|
6 | 31 | ||||||
Goodwill on acquisition
|
77 | |||||||
Cost of business combination
|
108 | |||||||
Consideration paid in cash
|
108 | |||||||
Cash acquired
|
- | |||||||
Net cash outflow
|
108 |
Nine-month period ended
|
Three-month period ended
|
|||||||||||||||
September 30, 2010
|
September 30, 2010
|
|||||||||||||||
Convenience
translation
|
Convenience
translation
|
|||||||||||||||
into US dollars
|
into US dollars
|
|||||||||||||||
(Note 2D)
|
(Note 2D)
|
|||||||||||||||
NIS millions
|
US$ millions
|
NIS millions
|
US$ millions
|
|||||||||||||
2.60 NIS per share
|
257 | 70 | - | - | ||||||||||||
3.64 NIS per share
|
360 | 98 | - | - | ||||||||||||
3.13 NIS per share
|
310 | 85 | 310 | 85 | ||||||||||||
927 | 253 | 310 | 85 |
1.
|
In August 2001, a purported class action lawsuit was filed against the Company in the District Court of Tel-Aviv–Jaffa by one of the Company’s subscribers in connection with the Company's outgoing call tariffs on the ‘Talkman’ (pre-paid) plan and the collection of a distribution fee for ‘Talkman’ calling cards. In June 2004, the motion for certification as a class action was denied. In September 2004, this decision was appealed to the Israeli Supreme Court. In July 2007, pursuant to the appeal, the Israeli Supreme Court granted a petition filed by both parties with mutual consent, in light of the Israeli Class Action Law, 2006, to resubmit the
|
2.
|
In December 2002, a purported class action lawsuit was filed against the Company and another cellular operator in the District Court of Tel-Aviv–Jaffa in connection with the Company’s incoming call tariff to subscribers of other operators when calling the Company’s subscribers during the period prior to the regulation of interconnect fees. In December 2008, the motion for certification as a class action was dismissed with prejudice. In January 2009, an appeal was filed with the Supreme Court challenging the dismissal. In May 2010, the Supreme Court dismissed the appeal following its withdrawal by the appellants at the recommendation of the Supreme Court. Had the lawsuit been certified as a class action, the amount claimed was estimated by the plaintiffs to be NIS 1.6 billion.
|
3.
|
In August 2003, a purported class action lawsuit was filed against the Company in the District Court of Tel-Aviv–Jaffa (and later transferred to the District Court of Central Region) by one of the Company’s subscribers in connection with the Company's method of rounding the rates of calls, the Company's method of linking rates of calls to the consumer price index and an alleged unlawful approval of a certain rate that was approved by the Ministry of Communications in 1996. In March 2006, the plaintiff filed an amended statement of its claim, following the amendment to the Consumer Protection Law in December 2005, to which the Company has replied. If the lawsuit is certified as a class action, the amount claimed is estimated by the plaintiff to be NIS 150 million. In August 2009 and September 2010, during preliminary proceedings, the court rejected most of the alleged causes of action and the request to certify the lawsuit as class action shall continue to be heard in regards to one allegation only, that the Company did not provide its customers full information prior to entering a pricing plan in regards to the maximum airtime tariff set in the pricing plan and the Company's license. The Company cannot quantify which portion of the amount claimed is represented by this cause of action in the lawsuit.
|
4.
|
In August 2006, a purported class action lawsuit was filed against the Company (and two other cellular operators) in the District Court of Tel-Aviv–Jaffa, by plaintiffs alleging to be subscribers of the defendants, in connection with sums allegedly unlawfully charged for a segment of a call that was not actually carried out. In November 2010, subsequent to the reporting date, the purported class action was dismissed with prejudice. Had the lawsuit been certified as a class action, the total amount claimed was estimated by the plaintiffs to exceed NIS 100 million, without specifying the amount claimed from the Company.
|
5.
|
In February 2008, a purported class action lawsuit was filed against the Company in the District Court of Central Region, by plaintiffs claiming to be subscribers of the Company, in connection with amounts the Company allegedly overcharged, when the Company raised its tariffs for SMS packages. In April 2010, the court approved the settlement submitted by the parties, by which the lawsuit is approved as a class action and the Company returns a certain insignificant amount to its subscribers for the dismissal of the lawsuit. The amount originally claimed was estimated by the plaintiffs to be approximately NIS 43 million.
|
6.
|
In March 2008, a purported class action lawsuit was filed against the Company in the District Court of Central Region, by plaintiffs alleging to be the Company's subscribers in connection with allegations that the Company has unlawfully charged its' subscribers for providing them with call details records. In August 2009, the request to try the lawsuit as a class action was approved in relation to an allegation that the Company breached the agreements with its subscribers by charging them for the service it previously provided free of charge, without obtaining their consent. The Company appealed the decision. In May 2010, the Israeli Supreme Court did not accept its appeal on a decision to approve the motion to certify the lawsuit as class action, for reasons not related to the merits of the matter, and the lawsuit will continue to be tried in the District Court as class action in relation to such allegation. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiffs to be approximately NIS 440 million.
|
7.
|
In May 2008, a purported class action lawsuit was filed against the Company and two other cellular operators in the District Court of Tel Aviv-Jaffa, by plaintiffs alleging to be subscribers of the defendants in connection with allegations that the defendants have unlawfully charged their subscribers for certain failed calls attempts made by the subscribers, while abroad. In June 2010, the motion for certification as class action and the lawsuit were dismissed with prejudice, at the plaintiff's request. Had the lawsuit been certified as a class action, the total amount claimed from all three defendants was estimated by the plaintiffs to be approximately NIS 50 million, without specifying the amount attributed to the Company.
|
8.
|
In July 2008, a purported class action lawsuit was filed against the Company in the District Court of Tel Aviv-Jaffa, by a plaintiff alleging to be a subscriber of the Company in connection with allegations that the Company misleads and unlawfully charges its subscribers for a certain automatic call completion service, even if not used. In April 2010, the motion for certification as class action was dismissed without prejudice and the lawsuit was dismissed with prejudice, at the plaintiff's request. Had the lawsuit been certified as a class action, the amount claimed was estimated by the plaintiff to be approximately NIS 179 million.
|
9.
|
In March 2009, a purported class action lawsuit was filed against the Company, its chief executive officer and some of its directors, in the District Court of Central Region, by a plaintiff alleging to be a subscriber of the Company in connection with allegations that the Company unlawfully sent its subscribers commercial messages. In April 2010, the purported class action was dismissed without prejudice, following the request of the plaintiff and the Company's agreement to donate a certain insignificant amount to worthy causes. Had the lawsuit been certified as a class action, the total amount claimed from the Company was estimated by the plaintiff to be approximately NIS 800 million.
|
10.
|
In August 2009, a purported class action was filed against the Company, another cellular operator and two content providers, in the District Court of Central Region, by two plaintiffs alleging to be subscribers of the cellular operators, in connection with sums allegedly charged by the defendants in respect of content services the subscribers allegedly did not order or which did not comply with certain legal requirements. In June 2010, the motion for certification as class action was dismissed without prejudice and the lawsuit was dismissed with prejudice, at the plaintiff's request. Had the lawsuit been certified as a class action, the total amount claimed from the defendants was estimated by the plaintiffs to be approximately NIS 347 million, of which approximately NIS 119 million was attributed to the Company.
|
11.
|
In November 2009, a purported class action lawsuit was filed against the Company, two other cellular operators and the Minister of Communications, in the District Court of Jerusalem, by four plaintiffs alleging to be subscribers of the two other cellular operators in connection with an allegation that the defendant cellular operators unlawfully discriminated against non orthodox customers by offering them less favorable prices and terms. In February 2010, the motion for certification as a class action was dismissed at a preliminary stage without consideration of the merits. Had the lawsuit been certified as a class action, the total amount claimed was estimated by the plaintiffs to be approximately NIS 900 million, without specifying the amount attributed to the Company individually.
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12.
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In March 2010, a purported class action lawsuit was filed against the Company and another cellular operator, in the District Court of Tel-Aviv-Jaffa by two plaintiffs alleging to be subscribers of the defendants, in connection with allegations that the defendants breached their license by failing to purchase insurance against monetary liability which the defendants may suffer due to bodily damages that allegedly may be caused by cellular radiation. The plaintiffs request the court to award compensation in an amount equal to the insurance premiums allegedly payable for insuring such liability (estimated by the plaintiffs to be NIS 300 million per year per defendant) for the past seven years and to order the defendants to purchase such insurance coverage in the future. If the lawsuit is certified as a class action, the total amount claimed is estimated by the plaintiffs to be approximately NIS 4.2 billion, out of which NIS 2.1 billion is attributed to the Company.
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13.
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In May 2010, a purported class action lawsuit was filed against the Company and two other defendants in the District Court of Central Region, by a plaintiff alleging to be a subscriber of the Company, in connection with allegations that the defendants unlawfully sent commercial messages to certain recipients. The plaintiff did not estimate the total amount claimed if the lawsuit is certified as a class action.
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14.
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In May 2010, a purported class action lawsuit was filed against the Company and three other Israeli cellular operators in the District Court of Central Region, by four plaintiffs alleging to be subscribers of the defendants. The plaintiffs allege that the defendants unlawfully and in violation of their license and agreements with their subscribers fail to construct cell sites in a sufficient quantity, scope and coverage in order to provide cellular services in the requisite quality; fail to test, repair and notify the subscribers that non-ionizing radiation level for repaired handsets may exceed the manufacturer's specifications and the maximum level allowed by law; fail to inform and caution the subscribers of the risks related to the manner of carrying the handset and its distance from the subscriber's body; all of which increase the level of non-ionizing radiation and health risks to which the subscribers are exposed. In September 2010, at the request of the Company and two other cellular operators, the Court instructed the transfer of this purported class action to the Tel-Aviv-Jaffa District Court, to be heard by the Judge hearing the purported class action filed against the Company in December 2007 by plaintiffs alleging that the Company and two other Israeli cellular operators have created environmental hazards by unlawfully building cell sites. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiffs to be approximately NIS 3.68 billion (the total amount claimed from the four defendants is estimated by the plaintiffs to be approximately NIS 12 billion).
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15.
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In May 2010, a purported class action lawsuit was filed against the Company in the District Court of Tel Aviv, by a plaintiff alleging to be a subscriber of the Company, in connection with the allegation that the Company unlawfully returned certain amounts to its subscribers at their
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16.
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In June 2010, a purported class action lawsuit was filed against the Company in the District Court of Haifa, by a plaintiff alleging to be a subscriber of the Company in connection with allegations that the Company charges its subscribers with debt collection expenses in violation of its license. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiffs to be approximately NIS 30 million. At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
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17.
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In July 2010, a purported class action lawsuit was filed against the Company in the District Court of Central region, by a plaintiff alleging to be a subscriber of the Company in connection with the allegation that the Company unlawfully charged its subscribers with value added tax for services provided abroad. In October 2010, the Company requested the Israeli Tax Authority be joined as defendant, being the relevant defendant of this lawsuit and this purported class action was joined with two other similar purported class actions, filed against two other Israeli cellular operators. The plaintiff did not estimate the total amount claimed if the lawsuit is certified as a class action.
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18.
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In July 2010, a purported class action lawsuit was filed against the Company in the District Court of Tel Aviv-Jaffa, by two plaintiffs alleging to be subscribers of the Company, in connection with the allegation that the Company's subscribers' agreements violate certain format requirements under the Israeli Standard Contracts Law. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiffs to be approximately NIS 100 million. At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
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19.
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In July 2010, a purported class action lawsuit was filed against the Company in the District Court of Tel Aviv-Jaffa, by a plaintiff alleging to be a subscriber of the Company, in connection with the allegation that the Company violates the Israeli Consumer Protection Law in regards to manufacturer's warranty for handsets. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiff to be approximately NIS 45 million. At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
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20.
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In September 2010, a purported class action lawsuit was filed against the Company in the District Court of Tel Aviv-Jaffa, by a plaintiff alleging to be a subscriber of the Company, in connection with the allegation that the Company's handset repair services violate the Israeli Consumer Protection Law. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiff to be approximately NIS 100 million. At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
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21.
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In September 2010, a purported class action lawsuit was filed against the Company and two other cellular operators in the District Court of Jerusalem, by a three plaintiffs alleging to be subscribers of the defendants, in connection with the allegation that the defendants violated the prohibition on any linkage between the purchase of a handset and the provision of service-related benefits, set in their license. If the lawsuit is certified as a class action, the total amount claimed from the all three defendants is estimated by the plaintiffs to be approximately NIS 90
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22.
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In September 2010, a purported class action lawsuit was filed against the Company in the District Court of Tel Aviv-Jaffa, by a plaintiff alleging to be a subscriber of the Company, in connection with the allegation that the Company's did not provide the plaintiff with a written document containing information about the right to cancel a non frontal transaction, in violation of the Israeli Consumer Protection Law. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiff to be approximately NIS 98 million. At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
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23.
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In October 2010, subsequent to the reporting date, a purported class action lawsuit was filed against the Company in the District Court of Tel Aviv-Jaffa, by a plaintiff alleging to be a subscriber of the Company and her son, in connection with the allegation that the Company is unlawfully misused data bases regarding its customers, in violation of the Israeli Privacy Protection Law. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiffs to be approximately NIS 50 million. At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
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24.
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In November 2010, subsequent to the reporting date, a purported class action lawsuit was filed against the Company in the District Court of Tel Aviv-Jaffa, by a plaintiff alleging to be a subscriber of the Company, in connection with the allegation that the Company charges its subscribers for content services without obtaining their consent. If the lawsuit is certified as a class action, the total amount claimed from the Company is estimated by the plaintiff to be approximately NIS 405 million (out of which NIS 300 million for mental anguish). At this preliminary stage, the Company is unable to assess the lawsuit's chances of success.
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·
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to reduce the maximum interconnect tariff payable by a landline operator or a cellular operator for the completion of a call on another cellular network from the current tariff of NIS 0.251 per minute to NIS 0.0687 per minute from January 1, 2011; to 0.0634 per minute from January 1, 2012; to NIS 0.0591 per minute from January 1, 2013; and to NIS 0.0555 from January 1, 2014.
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·
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to reduce the maximum interconnect tariff payable by a cellular operator for sending an SMS message to another cellular network from the current tariff of NIS 0.0285 to NIS 0.0016 from January 1, 2011; to NIS 0.0015 from January 1, 2012; to NIS 0.0014 from January 1, 2013; and to NIS 0.0013 from January 1, 2014.
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·
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the tariffs do not include VAT and will be updated annually from January 1, 2011, based on the change in the Israeli CPI published in November of the year preceding to the update date from the average annual Israeli CPI for 2009. The tariffs will also be increased by the percentage of royalties payable to the MOC by the operator.
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CELLCOM ISRAEL LTD.
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Date:
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November 10, 2010
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By:
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/s/ Liat Menahemi Stadler
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Name:
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Liat Menahemi Stadler
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Title:
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General Counsel
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