Cellcom Israel Q2 2019 1 1 FORWARD The following information - - PowerPoint PPT Presentation

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Cellcom Israel Q2 2019 1 1 FORWARD The following information - - PowerPoint PPT Presentation

Cellcom Israel Q2 2019 1 1 FORWARD The following information contains, or may be deemed to contain forward-looking statements (as LOOKING STATEMENTS defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli


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Cellcom

Israel

Q2 2019

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The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial results, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: changes to the terms of our license, new legislation or decisions by the regulator affecting our operations, the outcome of legal proceedings to which we are a party, particularly class action lawsuits, our ability to maintain or

  • btain permits to construct and operate cell sites, and other risks and uncertainties detailed from

time to time in our filings with the U.S. Securities and Exchange Commission, including under the caption “Risk Factors” in our Annual Report for the year ended December 31, 2018. Although we believe the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We assume no duty to update any of these forward-looking statements after the date hereof to conform our prior statements to actual results or revised expectations, except as otherwise required by law.

FORWARD

LOOKING STATEMENTS

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Full End-To-End Service Communications Group

Mobile Fixed line Residential Fixed line Business

  • Appx. 2.7 million

Mobile subs

  • 26% Market

share

  • Leading brand in

Israel’s mobile market

  • Appx. 278k

Broadband subs

  • 239k TV subs

(13% market share)

  • Fixed line

telephony

  • Optical fibers
  • International

calls

  • Cyber security
  • Cloud services
  • Transmission
  • Hosting services
  • Integration services

Leading the TV revolution in Israel with OTT TV service The largest cellular provider in Israel

(1) (1)
  • IOT
(1) (1) As of Q2’19 based on companies’ reports and Company’s estimation
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Cellcom Strengths

 Largest Cellular operator in Israel, with 26% market share  Cellular Network sharing agreements with two MNO’s  Leading the OTT TV revolution in Israel, with 13% TV market share  Fiber infrastructure using IRU agreement with IBC  Strong Equipment sales

(1) (1) As of Q2’19 based on companies’ reports and Company’s estimation
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Cellular Segment

 Sales of bundled packages of cellular + fixed line products. The first and only operator in Israel to offer quad play  Successful marketing of complete communications package increases our total income per household even as cellular prices decrease  Network sharing agreements with two MNO’s help reducing opex and capex  Sales of VAS products (cyber security, streaming music, backup, etc.) Maintaining Market Leadership

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 Hybrid solution of DTT linear TV plus OTT TV (VOD + channels)  Advanced intuitive user experience  Over 10,000 VOD assets for unlimited usage  Highly competitive price – NIS 99 Attractive Quad and Triple play offers  Multi screen strategy (IOS ,Android smart tv, set top boxes, Apple tv)  Partnership with Netflix Leading the TV revolution in Israel with OTT TV service

Cellcom tv

Reaching 13% Market Share

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Offering The Top Channels Viewers Really Want

All the sports Current events The leading series From The leading studios The world’s leading children’s channels Entertainment, leisure, science and nature Cellcom channels

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Fast Growth in TV and Broadband Subscribers

Broadband Subscribers TV Subscribers

Thousands Thousands

94 156 222 269 278

1 1 1 1 Q2'19

63 111 170 219 239

1 1 1 1 Q2'19

Based on company reports
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IBC

Large scale deployment in short time  Exclusive right to deploy an optical infrastructure on the IEC infrastructure  Significant advantage in deployment costs in areas with high electricity infrastructure  High performance capabilities of IEC  Reducing the need for deployment permits  Existing deployment to appx. 300,000 Home pass (appx. 450,000 street pass)

(1) On July 31, 2019, the Company and Israel Infrastructure Fund's indirect investment in IBC, and the Company's sale of independent fiber- optic infrastructure in residential areas to IBC, were both completed. For additional details see the Company's quarterly report on Form 6-K dated 15.8.2019 (2) Until 2043 (1) (2)
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IRU Agreement

High return on investment IRU main points:

  • Fiber to the home right of use for appx. 25 years
  • IRU payments per household, paid over 9 years with interest
  • Annual maintenance fee

IRU benefits for Cellcom:  Reducing the Company's investments in fiber deployment and positively impacting the Company's cash flow  Savings in cash flow and expenses for access and traffic payments to Bezeq and HOT

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IBC Households Reach

(Thousand)

Cellcom connected households (15% out of IBC Households reach)

180 135 113 75 Wholesale annual expenses saving (M’NIS) 140 105 88 59 65 Nis 151 113 95 3 70 Nis 173 130 108 80 Nis 184 138 115 85 Nis

Savings in cash flow and wholesale expenses

75 113 135 180

500 750 900 1,200 Wholesale Average Cost per household Cellcom connected households

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Cellcom Business Solutions

Independent transmission network Internet Security Cloud services Transmission Hosting Services Integration services Telephony International communication IOT

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Cellcom Smart City

Offers end-to-end solutions The ability to connect things in a smart way that will lead to efficiency, business growth and life quality improvement. Combination of various solutions including:

Energy efficiency Waste management Sensors of environmental protection Water management

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Financial Overview

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1,071 1,166 1,215

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2,162 1,929 1,730

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Service Revenues

Mitigating cellular revenues erosion effect with fixed line revenues growth

M’NIS

Fixed Line Service Revenues Cellular Service Revenues

M’NIS 300 312

Q2'18 Q2'19

434 420

Q2'18 Q2'19

Based on company reports
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Adjusted EBITDA and Operating Profit

853 660

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140 233

Q2'18 Q2'19

(1)

297 74

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  • 5
6

Q2'18 Q2'19

M’NIS

Adjusted EBITDA Operating Profit

M’NIS (1) Adjusted EBITDA figures from 2019 include impact of adoption of IFRS 16. For more details see the company’s quarterly report dated 15.08.2019 Based on company reports (1)
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Capex

325 181

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Capex and Free Cash Flow

583 593

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131 113

Q2'18 Q2'19

56 55

Q2'18 Q2'19

M’NIS

Free Cash Flow

M’NIS Based on company reports
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Net Debt

B’NIS

2.747 2.547 2.553 2.264 2.242

1 1 1 1 Q2'19

Reduction of Financial Debt

Based on company reports
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1,280 717

157

Cash 30.06.19 Repayments 2019-2020

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Conservative Financial Policy

52 105 89 72 57 41 27 196 521 527 477 519 519 368 255 123 123

1 1 3 4 Interest Principal

M’NIS

Cash vs. Debt repayment Debt Repayment Schedule

B’NIS (1)

2019-2020

(1) (1) As of June 30 2019 Based on company reports

874

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Contact us

Shlomi Fruhling

Chief Financial Officer

Elad Levy

Investors Relations Manager

Investors website: investors.cellcom.co.il E-mail: investors@Cellcom.co.il Tel : + 972 52 9989735