Communications company Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), part of the Discount Investments group, is preparing to raise up to NIS 300 million through expansion of its existing Series 11 and Series 12 bonds. S&P Maalot rated the bonds ilA plus.
Cellcom had NIS 1.2 billion in cash and investments at the end of the third quarter, compared with a NIS 2.9 billion debt: NIS 334 million in long-term debt to financial institutions and NIS 2.5 billion to bondholders. Cellcom notified the TASE that the execution, timing, terms, and extent of the bond issue had not yet been set, and were subject to approval by the company board of directors and the fulfillment of certain conditions.
S&P Maalot's economists wrote that Cellcom would use the bond issue proceeds for current activity. The rating company did not provide details about the rating, referring investors to a previous rating published in August, when the main considerations for the rating were continual exposure to changes in the communications market, including regulatory changes and intensifying competition; maintenance of a leading position in the mobile market; waning operating profit margins, and expansion of the composition of activity in a variety of communications sectors. S&P Maalot wrote at that time that Cellcom's financial profile was stable in the long term; its free cash flow (net of investments) was positive in the long term, but significantly smaller than in previous years; and the company's liquidity was described as appropriate.
S&P Maalot predicted that Cellcom's revenue would decline in 2018 and fluctuate afterwards. At the same time, it was assumed that EBITDA would fall, given competition and investments in content and marketing. S&P Maalot believes that Cellcom will not distribute a dividend.
Cellcom works in two areas: mobile communications, and television and Internet in the landline sector. The company's revenue totaled NIS 910 million in the third quarter, NIS 589 million of which was in the mobile sector. Cellcom's net profit in the quarter was only NIS 1 million, compared with NIS 32 million in the corresponding quarter last year and a NIS 32 million net loss in the preceding quarter caused by one-time provisions.
Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) yesterday completed a NIS 578 million expansion of its Series 9 bonds in an issue for investment institutions under an agreement signed by Bezeq last year. The issue was at NIS 1.05 per bond, reflecting a 2.7% annual yield. S&P Maalot rated the bonds ilAA and Midroog rated them Aa2.il.
Published by Globes, Israel business news - en.globes.co.il - on December 5, 2018
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