Cellcom Israel Announces Third Quarter 2017 Results

NETANYA, Israel, Nov. 22, 2017

• Total Revenues totaled NIS 975 million ($276 million) compared to NIS 992 million ($281 million) in the third quarter last year, a decrease of 1.7% 
• Service revenues totaled NIS 737 million ($209 million) compared to NIS 758 million ($215 million) in the third quarter last year, a decrease of 2.8%
• Operating income totaled NIS 83 million ($23 million) compared to NIS 73 million ($21 million) in the third quarter last year, an increase of 13.7%
• Net income totaled NIS 32 million ($9 million) compared to NIS 33 million ($9 million) in the third quarter last year, a decrease of 3.0%
• Net income margin 3.3%, same as the third quarter last year
• EBITDA¹ totaled NIS 226 million ($64 million) compared to NIS 209 million ($59 million) in the third quarter last year, an increase of 8.1%
• EBITDA margin 23.2%, an increase from 21.1% in the third quarter last year
• Net cash from operating activities totaled NIS 205 million ($58 million) compared to NIS 160 million ($45 million) in the third quarter last year, an increase of 28.1%
• Free cash flow¹ totaled NIS 105 million ($30 million) compared to NIS 81 million ($23 million) in the third quarter last year, an increase of 29.6%
• Cellular subscriber base totaled approximately 2.805 million subscribers (at the end of September 2017)

Nir Sztern, the Company's Chief Executive Officer, referred to the results of the third quarter of 2017:

"The influence of the competition is reflected in the cellular segment results; however, our varied activities as a telecommunications group in the fixed-line segment are bearing fruit and partially compensated for the cellular segment results. In this quarter, the Company reported an increase of 8% in EBITDA to NIS 226 million, and an increase of 13.7% in operating profit, compared to the third quarter of last year.

Cellcom tv operations shifted to profitability and to a positive contribution to the Company's results in the third quarter of 2017. This is a quarter with a record recruitment to Cellcom tv with 17,000 households who joined Israel's revolutionary TV service. Cellcom tv's position as a revolution generator in the TV market and a market changer is also strengthened with the transition of other players in the market to TV products similar to Cellcom Israel's. As of the end of the third quarter of 2017, Cellcom tv has 154,000 households, which represent more than 10% of the Israeli TV market. In this quarter, we added to the rich content world four desired children's channels, a documentary quality channel and movies library, series and blockbuster movies, while maintaining an attractive price and significant savings for the customer. We see that our attractive offer to the customer encourages most of our customers to choose joining our TV services combined with the internet, home telephony and cellular services in the triple and quattro packages and strengthens their loyalty to the Group.

We are vigorously evaluating various alternatives of independent deployment of an optic-fiber infrastructure, which will revolutionize the internet infrastructures in Israel, whether through self-deployment of fibers in residential neighborhoods, a joint-deployment of fibers in residential neighborhoods together with Partner, and/or an investment by the Company in the IBC fiber Initiative, in order to accelerate the deployment pace of an additional fiber infrastructure in Israel, and reduce the investments required for that purpose."