Q2 2020 Cellcom Israel Ltd Earnings Call
Ladies and gentlemen, thank you for standing by welcome to sell comps quarter to 720 results conference call all participants.
The only mode. Following management's focus on T. shirts instruction to like event for the question answer session.
As a reminder, this conference is being recorded.
She's been else companies, especially if you have not received it please contact the investor relations team.
Hey, Investor and public Relations 16466, 80, 559 or Pos in the news section of the company's website Www Dot Cellcom Duchy old I know I would now like to handover. The call mystery had helped of GK Investor Relations Mr. Hope would you like to begin.
Thank you operator or back to work on what have you secondly is our second quarter 2020 results conference call.
Now I'd like to check management.
What does on the line are you starting up by the CEO Mr. already Baker acting CFO.
Pick up I would open by providing a summary of the quarterly loss.
Followed by already Baker, who who will summarize the conscious and then we'll open the call for the question that decision.
First on the call it almost become I'd like to remind all listeners and this could imagine that remarks may contain forward looking statement, which are subject to risks uncertainties and engine may make any additional holding statements to respond to your question.
Therefore, the company grant what's action on the Safe Harbor pull forward looking statements and he's containing the private Securities Litigation Reform Act of 99 five.
He is already security so 96 gene.
I know Thats your is definitely thats it from those expressed today and therefore, we refer you to be more discussion.
70.
The company's finding we securities and exchange.
Including on the receptor Inter company I reported a year ended December 30 cents.
Ranking side on the default Twentyish each is filed on March 23, 2020 with yet.
In addition, any projections as to the company's future performance will present.
As Dave said.
The company is going to keep an obligation to update these projections in the future as market conditions may change.
I would now like to another Costa Rica and Goodbye.
Thank you [laughter] day to all of you in Logan.
No.
Hey, Colby 19 era and.
I wish you all else and.
Sure.
And during the second factor either phase.
Let me shut down because of the Corona.
Virus and.
Prices caused.
Greenstein, our revenues from roaming the companys customer rolled in phone.
Look like but.
Actually there.
There were no choice to needs writing this.
Yeah.
And in addition, there was a decrease in their weapons revenues is resolved.
Temporary closure of service center than before just selling the malls and outside in the outlets et cetera.
And that we expect that Dan.
Prices resolved she'd be continue for the lease for the remainder of.
[laughter] yeah. Thanks, a quick response by the management and very good corporations. The Union and then laser preservatives view, we actually were able to quickly reduced operating expenses and offset them.
Significant parts of the impact of these crisis.
And.
Even though we placed employees on unpaid leave in mid February slow most of them from ortho selling points, we maintain the business continuity throughout in the shutdown and.
Continued to service our customers.
So all the country with all their communication needs and.
You know quite.
Absolutely yes.
And we needed for.
However, I mean, so less on the Internet TV all worked well.
And we continue to do these despite the limitation of the do not just such a distance working.
Our men's and.
The comps.
The issue of the new way also managing people.
And all that few past months, we we took and continue to take.
From a comprehensive actions to streamline our expenses will continue to two streamed on our books was based on.
I haven't plan.
All right, let's say actually enabled us to maintain a positive EBITDA and free cash flow in the second quarter. However.
I note that say.
The expense cuts such as certain.
Better reductions as well as lower rent and maintenance.
We're short term and therefore are expected to return back to normal during Q3.
This means our profitability we've made declined somewhat in Q3.
Overall, we believe that add the steps taken have enabled us to successfully deal with physical what my prices combined with our efforts to.
Through the balance sheet.
This year.
We believe that our business is well structured to whether the current economic environments, and we expect to emerge from the crisis and more efficient and mainly and more focused company.
And I just would like to spend a few moments updating you on our strategic steps, which support our long term ankle.
And this fixed it just seems generation issue.
Fifth generation technology.
As Tom noted for the solar networks is set so dramatically operating communication capabilities in Israel.
And.
[noise] and all goes just so we can go in attendance.
Thats fully completed participating.
You can see tendering, Israel, which including the fifth generation frequencies.
We're very pleased with the results, which will allow us to launch both in new advanced in fact, Fiveg and network for our customers as well as enlarge our existing Fourg network infrastructure under a broad and further high quality deployments.
About the fiber and IVC and as you remember at the end of the last last year.
We completed the investment dealing ibcs and so far on fiber network to answer essential areas to RBC.
This allows cellcom to to be very well positioned to benefit from the growth of the fiber optic markets in Israel was the one gigabyte Internet, which is 25 times the speed of today's average of 14 megabyte. It's you can use.
Over the years so.
For the Furthermore, it allows us to reduce our led by all success fees by shifting our customer currently using the basic infrastructure infrastructure. So the optical fiber network of RBC.
And then this continues to proceed.
Very helpful.
The process.
And I'd be see goal is to connect 1 million households to infrastructure within the next four years and today I perceive strings will touch on reach over a 400.
1000 households in connected building throughout the country.
Grows every quarter.
And the long term growth potential for IVC and ultimately Cellcom Israel.
As a potential savings from payments for infrastructure over the coming years.
Very significant.
At both our TV.
Services are OTI TV service continues to gain momentum, especially current times when many people prefer to stand tall order entertainment.
And Cellcom TV currently has so unless it's 45000 cut some sub subscribers.
I know that we recently changed our accounting methods for subscriber which resulted in writing off 5000 subscriber in this quarter.
And Bob Loughran deal.
We're very happy that we received.
All the regulatory approval for the acquisition of color.
No. We don't have any specific limitations that will prevent us from in constructing and the synergies between.
Companies.
We believe that acquisition of Golan is a significant win win for large Cellcom, Israel and we see significant showed synergies.
Joint savings, which means that.
The combined entity will be greater than some spots.
Deal will improve cellphones users position as a leading communication company and is expected to make a significant addition to our adjusted EBITDA and free cash.
Just to summarize at the second quarter was a difficult periods not just for Cellcom Israel, but.
Everyone around the world.
We continue to support of several customers royalties roads with older communication needs.
With TV.
Definitely in the seller and that ends my summary, and I would like to turned over to really back there are acting CFO. Please.
Thank you, obviously and then as a two overview.
I will provide you know a summary of our results. The details can be found in the press release, we issued earlier today.
The quarterly revenues revenues for the second quarter over 2020 sort all the 865 and check growth compared with 920 million SEC.
Reported in the second quarter last year.
Out of those the service revenues were 683 million sector slightly below 695 seconds reported in the second quarter of last year.
I would like to highlight the fixed line segment services revenue grew 9% over the second quarter of last year to 339, you're going to show.
These increases resulted mainly from a net increase in revenues from Internet and TV services.
Adjusted EBITDA in the second quarter of 2020 was 222 million sector or 26% revenues of 5% decrease compared with 233 million checkers or 25.3% derivatives in the second quarter last year.
Adjusted EBITDA from the six led segment was 97 million shekel compared with 70 million circle last year.
An increase of 39% and adjusted EBITDA from the saw segment was 125 million checkers.
First we 163 million checks as last year.
Net loss in the second quarter of 2020 totaled 46 million Chicago compared to our net loss of 35 going to check growth in the second quarter last year.
Free cash flow in the second quarter 2020 was 24 immune check growth versus 55 million in Chicago in the second quarter of last year.
Degrees and free cash flow resulted mainly from grant payments in respect of a voluntary retirement plan recorders recorded in 2019, the mountains of 40 million shakes.
Our cash capital expenditures for the second quarter of 2020 totaled 114, we don't checkers business 113, unchecked goes into second quarter of last year.
As of the end of the second quarter 2020, our net debt stood at approximately 1.8, you're going to shake too.
We have a total of approximately 1.4 billion seconds in cash on our balance sheets, while our overall debt repayments of interest and traffic, though that's our due until the end of 2021 amounts to 1 billion shakes.
A subscriber base.
The second quarter of twins, when either company had approximately 2.7 million. So our subscribers. The churn rates also a subscribers in the second quarter of 2020 was 8.7 per cent compared with 11.3% in the second quarter of over 2019.
That is mainly because of the first quarter upswing 20, but churn rates includes only the negative net churn.
Im subscribers in order to eliminate changes do not change that amount of lives held by the customers.
Finally, I am also we sell our ARPU for the second quarter of 220 was 46.9 shekel compared with 61.9 shekels into second quarter last year.
The primary reason for the lower ARPU is because of the lack of roaming revenues during the second quarter without that we'd like to open the call two questions buxom operator.
Thank you ladies and gentlemen at this time will begin question answer session.
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Yes.
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The first question is some Mickey sell that Upsilon. Please go ahead. Please.
Yes.
In Q4 was intervention.
Well, let me say goodbye.
I wanted to you.
You can share with us so little bit so your priority focus areas for the upcoming.
The up off the upcoming get half.
And.
In general what all your main priorities and objectives to achieving this thing.
[noise] was very good question and last meeting yields and well you know about priorities are.
First of all the completing the is a good on that.
Acquisition and to actually two too.
Enjoying the benefits of the synergies from this acquisition.
I'm going to happen very soon.
Second.
Is the rollout of the Fiveg in the Fourg.
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Generation I mean, we have to rollout this and improve our network.
We believe that.
And deploying these networks will improve and.
Basically the network in the according to that will improve the services for our customers.
We will reduce the.
The numbers of customers that are no conducting our contact centers et cetera.
Third one is in fiber we want to two proven.
And the costs.
Morning, guys is fiber and they're mainly the cost of acquisition customers and you know there.
Installations in the over two rounds.
Any new fiber customer.
And we all always always always.
Very focused on the improving our cost structure and improving our a customer service because we believe this.
You cannot you cannot improve your cost service cost.
If you don't improve service.
Improving our service, we just closing the.
And preventing the custom rose from the reason that they cook and the lid on call us and if we we provide service in the first time and the notes in the second time, so it cost us less so we're very focused on costs and improving our service.
If there any additional questions. Please press star line, if you wish to catch your question. Please press star. Please standby we pull for questions.
Yes.
There are no further questions at this time, Mr. Nobody would you like to make her concluding statement.
Yes, I would like thank you all of you for joining our conference call and Europe continued interest in our company and I look forward to hosting you again that our next call have a good day and keep health.
Thank you [laughter] Cellcom, Israel LCP second quarter 2020 results conference call. Thank you for your participation you May go ahead.
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