Partner Communications Revenues/Profits Up - Warns on Outlook

Israeli operator, Partner (which trades under the Orange brandname) has reported a rise in full-year revenues for 2008 of 3.5% to NIS 6,329.5 million (US$1,664.8 million). Net income reached NIS 1,051,479 (US$276.6 million), a rise of 11.9% on 2007.

Total network minutes in 2008 increased by approximately 13% compared to 2007, resulting mainly from an expanding subscriber base, which grew by approximately 3.5% in 2008, as well as from an approximate 8.6% increase in the average minutes of use per subscriber. The effect of these increases on annual service revenues was partially offset by an approximate 7.4% dilution in the average network revenue per minute (including incoming calls). The dilution was a result of competitive market pressures, the increase in the weight of business subscribers in the total customer base and regulatory intervention including the approximate 14% reduction in interconnect tariffs which went into effect on March 1 2008.

Approximately 99,000 net active subscribers joined the Company in 2008, compared with approximately 192,000 in 2007, including 16,000 net additions in Q4 2008. The business sector accounted for approximately 84% of annual net new active subscribers. At the end of December 2008, the Company's active subscriber base was approximately 2,898,000.

2008 year-end market share is estimated to be approximately 31.3%, compared with approximately 31.7% at the end of 2007. The slight reduction in market share reflects the introduction in 2008 of a more conservative and rigorous policy for recognizing prepaid subscribers which had the effect of reducing the subscriber base on January 1, 2008 by approximately 61,000 subscribers.

The Company added approximately 318,000 subscribers to its 3G network in 2008, with its 3G subscriber base reaching approximately 951,000 by year-end.

Data and content revenues excluding SMS messages increased by 24.3% in 2008 to NIS 528.8 million (US$139.1 million), which represents 9.5% of service revenues in 2008 compared with 8% of service revenues in 2007.

Commenting on the Company's outlook, Mr. Emanuel Avner, Partner's Chief Financial Officer said: "Whilst the severity and duration of the current global downturn is still unknown, the core areas of the business are on solid foundations. However, we are already seeing a significant adverse impact in roaming activity and in larger provisions for doubtful debt expenses. Furthermore, in the last few weeks we have seen some indications of a possible halt in the growth of average minutes per user (MOU). Our intention is to mitigate, as much as possible, the effects of the downturn through efficiency and cost-cutting measures where appropriate. However, should the downturn continue through 2009, profit levels could be lower than in 2008."

Posted to the site on 23rd February 2009