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spk03: Thank you. And thank you to all our listeners for joining us on this conference call to discuss partner communication third quarter results for the year 2021. With me on the call today is Avi Tzvi, partner CEO, and Tamir Amar, our deputy CEO and CFO. Avi will provide an update on partner business development. He will then hand over to Tamir, who will provide a detailed discussion of our quarterly financial and operational results. And finally, we will move on to the Q&A. Before we begin, I would like to draw your attention to the fact that all statements in this conference call may be forward-looking statements within the meaning of Section 27A of the U.S. Security Act of 1933 as amended, Section 21E of the U.S. Securities Exchange Act of 1934 as amended, and the Safe Harbor Provision of the U.S. Private Security Litigation Reform Act of 1995. Regarding such forward-looking statements, you should be aware that partner actual results might vary materially. from those projected in the forward looking statement. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements are contained in partners press release dated November the 29th, 2021, as well as partner filing with the US Securities and Exchange Commission on forms 20F, F1 and 6K, as well as F3 shelf registration statement, all of which are readily available. Please note that the information in this conference call related to projection or other forward-looking statements is subject to the previous Safe Harbor Statement as the date of this call. For your information, this call is also being broadcast over the Internet and can be accessed through our website. If you have any further questions following this call, please feel free to call me at 972-547-815051. I will now turn the call over to Partner CEO Avi Sri.
spk02: Avi? Thank you, Amir. Good morning, everyone, or good evening from Israel, and welcome to our quarterly earnings conference call. In this quarter, Partner exceeded the 3 million cellular subscribers mark for the first time in almost a decade. We continue to reduce our churn rate to our lowest level since 2011, going down from 7.2 to 6.4. This achievement is a major part of our strategy, to invest in our customer service and in our technology in order to maintain our customers' high loyalty levels owing to their satisfaction with the service we provide. I'm glad to share with you that along with the improvement in operational indicators, the company has been engaged over recent months in the following activities. We finished, we almost finished, I should say, assembling the new management team. We formulated or reformulated our partner's strategy for the coming years. We continued our 5G cellular network deployment, and of course, we accelerated the private fiber infrastructure deployment that expands the company's value chain from a service provider to a provider of services and infrastructure. As of today, Partner has more than 200,000 fiber optic subscribers, 204,000 to be exact, from within over 660,000 households in dozens of municipalities around the country that have the ability to connect partners' fiber optic networks without delay. By the end of 2022, we expect that approximately, or we'll be very close to that, one million households will be able to connect and enjoy partners' fiber optic experience in the country. Indeed, during the current quarter, we continue to transform Partner Group and its work processes to become simpler and more accessible, in particular regarding the customer service experience, and together at the same time worked very hard on to preserve the human capital, which is our main strength. In the last few days, we were notified of the signing of an agreement for the sale of the controlling shares of Partners to a group of investors led by Mr. Shlomo Rodav. This acquisition, should it be completed, subject to the required approvals, is the first and foremost vote of confidence in Partners' strength and in the capabilities of the company and its employees. I would like to thank Partners' devoted employees and the Board of Directors for the strive for excellence, for setting challenging goals, and for their full backing. I would like now to turn the call over to Mr. Tamir Amar, the Deputy CEO and CFO, for a detailed review of our financial results. Thank you, Avi.
spk04: This was another quarter where growth in cellular services and fiber optic service subscribers together with a moderate return of roaming service revenues led to service revenue growth. These factors, along with relatively low OPEX, resulted in a double-digit growth rate in adjusted EBITDA compared to the corresponding quarter last year. Our cellular subscriber base exceeded 3 million subscribers for the first time since 2012, an increase of 49,000 in the quarter. Chain rate in the third quarter of 2021 totaled 6.4% compared to 7.3% in the corresponding quarter last year. ARPU totaled 48 shekels in the quarter compared to 51 shekels in the corresponding quarter last year. Turning to the fixed line segment the acceleration of the fiber optic deployment continues the company now exceeds to complete the major rollout phase of its fiber optic infrastructures by the end of 2022 earlier than the previous expectation to complete the major rollout phase during the year 2023 the number of home connected within buildings connected to our fiber optic infrastructure reached 624,000 at the end of the quarter, an increase of 53,000 in the quarter. Parma Fabio Optics subscriber base totaled 192,000 at the end of the quarter, reflecting a 31% penetration rate from potential customers in connected buildings. Parma Fabio Optics subscriber base increased by 19,000 in the quarter, similar to the increase in the corresponding quarter last year. and by 53,000 since the beginning of the quarter of the year. Regarding our television services, as a result of tariff updates, a significant decrease in the rate of growth of the customer base was recorded, with the subscriber base growing by 3,000 in the third quarter of 2021. The level of OPEX decreased compared to the corresponding quarter last year, impacted mainly by decrease in interconnect expenses and in wholesale internet expenses, which were partially offset by the increase in payroll and related expenses, largely reflecting the positive impact of COVID-19 on payroll expenses in their corresponding quarter last year. Adjusted EBITDA in the third quarter of 2021 totaled 250 million shekels. an increase of 23% compared to the corresponding quarter last year. Looking ahead, the company expects that in the fourth quarter of 2021, due to the continued increase in air travel, the moderate recovery in roaming service revenue will continue compared to the corresponding quarter last year, but to a lesser degree than in the third quarter due to the impact of seasonality. However, a retreat is possible in the future, in view of possible implications of COVID-19 variants for air travel. Now let us review briefly funding and investing adjusted free cash flow before interest and including lease payments for the quarter totaled nine million shekel and capex payments for the quarter totaled 172 million shekel. Net debt stood at 662 million shekels at the end of the quarter compared with 646 million at the end of the corresponding quarter last year, an increase of 16 million. The company's net debt to adjusted EBITDA ratio was 0.8 at the end of the quarter, demonstrating the continued financial rebootedness of the company. I will now be happy to open the call for questions. Moderator, please begin the Q&A.
spk00: Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Please ask your question in a loud and clear voice. Your questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from Tavi Rosner of Barclays. Please go ahead.
spk01: Hi, good afternoon. Thanks for taking my questions. I wanted to start with the cyber a little bit. You mentioned in your preferred remarks that you were going to achieve your targets by 22 instead of 23. Can you just remind us what the targets are? How do you see the environment, you know, given the competition from, you know, BASIC and cell phone? And I guess in terms of pricing, you know, does the fact that there is three competitor kind of ways on your website in potential, you know, raising prices down the road, that would be helpful.
spk04: Okay, so this is Tamir. First of all, our targets to achieve our target in 2023 in the, let's say, last year, We are about to achieve this target in the end of 2022, and the target is to reach 1 million home-connected at the end of the road. This is not the final number, but we are understanding that this target, when it will be achieved, the increase the year after will be much more moderate. This is the first thing. Regarding the price, there is competition in Israel between these three infrastructure companies. but although this we are focused on pricing that the partner defined, and following the last two months we increased prices in the fiber optic services, so although the competition is in place, we indeed succeed in increasing the prices.
spk01: Understood. And then just in terms of rollouts, does that mean that you're going to incur a higher capex in 2022 compared to your previous plan, and then therefore will be more, you know, kind of capex-like, higher profitability?
spk04: Regarding capex, this year we accelerated already. We assume that we will achieve a little bit higher acceleration, but the capex is supposed to be more or less the same like this year. Maybe a little bit more, but more or less the same level.
spk01: Understood. And then maybe just the last one on the cellular side. I mean, do you see any kind of rising pressure in terms of prices? I mean, compared to a year ago, there's one less player out there. So I guess, do you feel the impact? And would you be comfortable kind of raising prices down the road?
spk02: You're talking about the mobile services?
spk01: Yes.
spk02: It's tough to say. From one point of view, we see that customers moving between the companies are doing it in a much slower rate than a year ago. If a year ago, on an average week, we would see between 70,000 and 75,000 customers changing their service provider, in the last four or five months, that number has gone down to around 28,000, 29,000. which means that the level of competition or the level of attention of the customers to the competition is significantly lower. On the other side, we don't see the prices going up yet. We see that below the line, every company is still fighting for its market share. We at the partner, most of the time, we don't join the party. We invest our money in the customer service and the technology, and we're aiming to work from the other side, not on the recruitment, much as on lowering the churn rate. Looking forward, as 5G will be deployed and more and more customer base will have a handheld that has the ability to get 5G services, I think that the 5G deployment and rollout in the next 12, 24, and 36 months will be the accelerators for the revenue growth in the mobile sector.
spk01: Great. Thanks for the caller. I'll go back to the queue.
spk00: If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by while we pull for more questions. There are no further questions at this time. Before I ask Mr. Tzvi to go ahead with his closing statement, I'd like to remind participants that a replay of this call is scheduled to begin in two hours. In the U.S., please call 1-888-254-7270. In Israel, please call 0392-55921. And internationally, please call 927-972-3255. The recording is also available on the company's website, www.partner.co.il. Mr. Zvi, would you like to make your concluding statement?
spk02: Just a short statement. Thank you all again for joining. We are of course at your service. If you have any additional questions, please contact us. This is an exciting era with a lot of technological changes in the market. and they have an impact on the consumer behavior, and we're going to try and capitalize on that. We aspire to position ourselves as a leading communications company in the market. We are leading the fiber optic revolution, and we're being, ahead of the competition, the first to implement the super aggregator strategy on our content and television business. We look forward, again, to speaking to you next quarter. Thank you for your time. Have a good day.
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