Partner Communications (Nasdaq: PTNR; TASE: PTNR; LSE: PCCD) today announced its results for the year and quarter ended December 31st, 2004.
In 2004, the company's net profit was NIS 471.6 million, or NIS 2.56 per share, compared to NIS 1.162 billion, or NIS 6.34 per share in 2003.
Net profit for Q4 2004 was NIS 131.4 million, compared to NIS 804.2 million in Q4 2003.
The decrease in net income for 2004 compared to net income for 2003 as well as Q4 2004 compared to Q4 2003 was attributed primarily to the utilization of accumulated tax loss carry forwards and the creation of deferred tax assets in Q4 2003, in the amount of NIS 633 million.
Revenues in 2004 were a record NIS 5.14 billion, up 15.1% from NIS 4.467 billion in 2003.
Q4 2004 revenues increased by 13.4% to NIS 1.319 billion, compared to Q4 2003 revenues of NIS 1.163 billion.
The increases in revenue were attributed to increased revenue from services (including data and content) and equipment.
Partner CEO Amikam Cohen said, "We expect 2005 to be a challenging year for Partner and we are ready to meet these challenges. Specifically we have plans in place to maintain the levels of profitability we reached in 2004 and to mitigate the effects of the inter-carrier termination rate reductions that were mandated by the regulator. Measures we have implemented and are considering in order to achieve these results include cost cutting, price increases, and repackaging our product offerings."
Gross profit for 2004 was NIS 1.525 billion, 29.7% of revenues, up 14.6% from NIS 1.331 billion, 29.8% of revenues, in 2003.
Gross profit for Q4 2004 was NIS 368.1 million, 27.9% of revenues, up 3.5% from NIS 355.7 million, 30.6% of revenues in Q4 2003.
Gross profit margin decreased in Q4 2004, compared to Q4 2003. This was attributed primarily to increased depreciation, amortization, network expenses and handset subsidies from the launch of the company's 3G network and 2004 year-end sales promotions.
In 2004, the company generated cash flow from operating activities, net of cash flows from investing activities, of NIS 599.2 million, and reduced its bank debt by NIS 624 million. Compared to 2003, cash flow from operating activities increased by 23.4%, an increase of NIS 241.3 million. Cash flow from operating activities, net of cash flow from investing activities, in 2004 decreased by 8.5% (NIS 55.5 million) as compared to 2003, from NIS 654.7 million. The primary reason for the decrease was additional expenditures of NIS 259.5 million in 2004 for fixed assets, primarily for the 3G network.
As of December 31, 2004, the NIS equivalent of $268 million was drawn under the company's bank facilities, leaving available credit of $155 million.
Partner CFO Alan Gelman said, "Our 2004 results further strengthened our balance sheet and leverage ratios. We intend, subject to market conditions, to call our $175 million 13% subordinated notes in August 2005. In order to facilitate the call, and provide the company with a more flexible and appropriate financial structure, we are currently renegotiating our bank facility and considering other financing alternatives which might include notes with substantially lower coupons."
Partner's active subscriber base as of December 31, 2004 was 2,340,000, accounting for an approximate market share of 32%, up from 31% at the end of 2003. The subscriber base comprises 1,208,000 post-paid private subscribers (51.6% of the base) 700,000 prepaid subscribers (29.9% of the base) and 433,000 business subscribers (18.5% of the base for 2004. Net new active subscribers in the business sector accounted for approximately 36% of net new active subscribers in 2004.
During 2004, net active subscribers increased by 237,000, or 11.3%.
Gelman added: "In 2005, due to a more penetrated market, we expect a lower rate of subscriber growth, approximately 4% to 5%, compared to the 11.3% growth in our subscriber base in 2004. In addition, we will continue our efforts to control costs, with the goal of maintaining EBITDA at the levels achieved in 2004, despite the reductions in inter-carrier termination rates mandated by the Ministry of Communications.
"We expect the average monthly revenue per subscriber (ARPU) to decline by approximately 10%, following the reduction in the inter-carrier termination rates. The average subscriber acquisition cost (SAC) levels for 2005 are expected to remain stable, at 2004 average levels.
"We intend to complete our roll-out of our 3G network and expect fixed asset purchases to be approximately the same level as 2004. We don't foresee any material impact, in 2005, as a result of the adoption of the new accounting rules (Accounting for Stock-Based Compensation or FAS 123R) relating to employee stock based compensation. The company intends to implement FAS 123R beginning July 1, 2005."
Published by Globes [online], Israel business news - www.globes.co.il - on Monday, February 07, 2005