SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15a-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated
 
November 29, 2021

Partner Communications Company Ltd.
(Translation of Registrant’s Name Into English)
 
8 Amal Street
Afeq Industrial Park
Rosh Ha’ayin 48103
Israel
                       
(Address of Principal Executive Offices)
 
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
 
Form 20-F ☒ Form 40-F ☐
 
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
 
Yes ☐  No ☒
 
(If “Yes” is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-               )
 
This Form 6-K is incorporated by reference into the Company’s Registration Statements on Form S-8 filed with the Securities and Exchange Commission on December 4, 2002 (Registration No. 333-101652), September 5, 2006 (Registration No. 333-137102), September 11, 2008 (Registration No. 333-153419), August 17, 2015 (Registration No. 333-206420), November 12, 2015 (Registration No. 333-207946), March 14, 2016 (Registration No. 333-210151) and on December 27, 2017 (Registration No. 333-222294), November 21, 2018 (Registration No. 333-228502)
 
Enclosure: Partner Communications reports third quarter 2021 results
 


 
PARTNER COMMUNICATIONS REPORTS
THIRD QUARTER 2021 RESULTS1
 
QUARTERLY ADJUSTED EBITDA2 TOTALED NIS 250 MILLION
 
NET DEBT2 TOTALED NIS 662 MILLION
 
QUARTERLY CELLULAR SUBSCRIBER GROWTH TOTALED 49 THOUSAND
 
PARTNER’S FIBER-OPTIC SUBSCRIBER BASE TOTALS MORE THAN 200 THOUSAND
AS OF TODAY
 
 THE NUMBER OF HOUSEHOLDS IN BUILDINGS CONNECTED TO PARTNER’S FIBER-
OPTIC INFRASTRUCTURE TOTALS MORE THAN 660 THOUSAND AS OF TODAY
 
COMPLETION OF MAJOR ROLLOUT PHASE OF FIBER-OPTIC INFRASTRUCTURE
BROUGHT FORWARD TO END OF 2022 INSTEAD OF DURING 2023
 
 
Third quarter 2021 highlights (compared with third quarter 2020)
 
Total Revenues: NIS 837 million (US$ 259 million), an increase of 5%
Service Revenues: NIS 672 million (US$ 208 million), an increase of 6%
Equipment Revenues: NIS 165 million (US$ 51 million), a decrease of 2%
Total Operating Expenses (OPEX)2: NIS 467 million (US$ 145 million), a decrease of 2%
Adjusted EBITDA: NIS 250 million (US$ 77 million), an increase of 23%
Profit for the Period: NIS 24 million (US$ 7 million), an increase of NIS 29 million
Adjusted Free Cash Flow (before interest)2: NIS 9 million (US$ 3 million), a decrease of NIS 12 million
Cellular ARPU: NIS 48 (US$ 15), a decrease of 6%
Cellular Subscriber Base: approximately 3.02 million at quarter-end, an increase of 9%
Fiber-Optic Subscriber Base: 192 thousand subscribers at quarter-end, an increase of 72 thousand subscribers since Q3 2020, and an increase of 19 thousand in the quarter
Homes Connected (HC) to Partner's Fiber-Optic Infrastructure: 624 thousand at quarter-end, an increase of 192 thousand since Q3 2020, and an increase of 53 thousand in the quarter
Infrastructure-Based Internet Subscriber Base: 365 thousand subscribers at quarter-end, an increase of 54 thousand subscribers since Q3 2020, and an increase of 11 thousand in the quarter
TV Subscriber Base: 226 thousand subscribers at quarter-end, an increase of 2 thousand subscribers since Q3 2020, and an increase of 3 thousand in the quarter3.



1 The quarterly financial results are unaudited.
2  For the definition of this and other Non-GAAP financial measures, see “Use of Non-GAAP Financial Measures” in this press release.
3 In the second quarter of 2021, the Company removed from its TV subscriber base approximately 21,000 subscribers who had joined the company at various times and had remained in trial periods of over six months without charge or usage.

2

 
Rosh Ha’ayin, Israel, November 29, 2021 – Partner Communications Company Ltd. (“Partner” or the “Company”) (NASDAQ and TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter ended September 30, 2021.

Ms. Osnat Ronen, Chairperson of Partner’s board of directors, noted:
 
"Partner continues to execute its business strategy, maintain a strong balance sheet, continue the accelerated fiber deployment, grow in the cellular segment, and hit its financial goals. The Company achieved a quarter of healthy growth in its core operations, in both the cellular and fixed-line segments. On behalf of Partner's Board of Directors, I would like to thank Partner’s management, headed by Avi Zvi, for their efforts and for the good results."
 
Commenting on the results for the third quarter 2021, Mr. Avi Zvi, CEO of Partner, noted:
 
"Partner exceeded the three million cellular subscribers mark for the first time in almost a decade, and continued to reduce the churn rate to the lowest level since 2011. This achievement is a major part of our strategy to invest in customer service and technology, in order to maintain our customers' high loyalty levels owing to their satisfaction with the service we provide.
 
Along with the improvement in operational indicators, the Company has been engaged over recent months in assembling a new management team and formulating Partner's strategy for the coming years, continuing the 5G cellular network deployment and, of course, accelerating the 'Private Fiber' infrastructure deployment, that expands the Company's value chain, from a services provider to a provider of services and infrastructure.
 
As of today, Partner has more than 200 thousand fiber-optic subscribers, from within over 660 thousand households in dozens of municipalities around the country that have the ability to connect to Partner's fiber-optic network without delay. By the end of 2022, we expect that approximately one million households will be able to connect and enjoy Partner's fiber-optic experience across the country.
 
In an era of frequent technological changes that have an impact on consumer behavior, Partner aspires to position itself as a leading company in the Israeli communications market on account of its standing as the driving force in the fiber-optic revolution in Israel and being the first to implement a ‘Super-Aggregator’ model in television services.
 
Indeed, during the current quarter we continued to transform the Partner Group and its work processes to become simpler and more accessible, in particular regarding our customers’ service experience, at the same time as working to preserve the human capital which is the source of the Company's strength.
 
In the last few days we were notified of the signing of an agreement for the sale of the controlling shares of Partner to a group of investors led by Shlomo Rodav and Avi Gabbay. This acquisition, should it be completed subject to the required approvals, is first and foremost a vote of confidence in Partner's strength and in the capabilities of the Company and its employees.

I would like to thank Partner’s devoted employees and the Board of Directors for striving for excellence, for setting challenging goals and for their full backing.”

3

 
Mr. Tamir Amar, Partner's Deputy CEO & Chief Financial Officer, commented on the results:
 
This was another quarter where growth in cellular service and fiber-optic service subscribers together with a moderate return of roaming service revenues led to service revenues 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 three million subscribers for the first time since 2012, an increase of 49 thousand in the quarter, of which 16 thousand were subscribers of voice packages provided to students with a fixed twelve-month package by the Ministry of Education. The churn rate in the third quarter of 2021, which totaled 6.4% compared to 7.3% in the corresponding quarter last year, was positively impacted by the Jewish holiday period that was held in the third quarter this year and by the continued decline in the level of subscriber switching in the market.  ARPU totaled NIS 48 in the quarter compared to NIS 51 in the corresponding quarter last year, the decrease mainly reflecting the continued price erosion, although to a lesser degree, together with an ease in the impact of COVID-19 as was reflected in a decrease in interconnect revenues from incoming calls, on the one hand, and a moderate increase in roaming service revenues on the other hand, as stated above.
 
In the fixed-line segment, the acceleration of the fiber-optic deployment continues. The Company now expects to complete the major rollout phase of its fiber-optic infrastructure by the end of 2022, earlier than the previous expectation to complete the major rollout phase during the year 2023.
 
The number of Homes Connected (HC) within buildings connected to our fiber-optic infrastructure reached 624 thousand at the end of the quarter, an increase of 53 thousand in the quarter compared to an increase of 36 thousand in the corresponding quarter last year, despite the negative impact of the Jewish holiday period on the number of workdays. Partner’s fiber-optic subscriber base totaled 192 thousand at the end of the quarter, reflecting a 31% penetration rate from potential customers in connected buildings. Partner’s fiber-optic subscriber base increased by 19 thousand in the quarter, similar to the increase in the corresponding quarter last year, and by 53 thousand since the beginning 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 three thousand in the third quarter of 2021.
 
4

The level of OPEX decreased compared to the corresponding quarter last year, impacted mainly by decreases in interconnect expenses and in wholesale internet expenses, which were partially offset by an increase in payroll and related expenses, largely reflecting the positive impact of COVID-19 on payroll expenses in the corresponding quarter last year.

Adjusted EBITDA in the third quarter of 2021 totaled NIS 250 million, 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 revenues will continue compared to the corresponding quarter last year, but to a lesser degree than in 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.
 
Adjusted Free Cash Flow (before interest and including lease payments) for the quarter totaled NIS 9 million, and CAPEX payments for the quarter totaled NIS 172 million.
 
Net debt stood at NIS 662 million at the end of the quarter, compared with NIS 646 million at the end of the corresponding quarter last year, an increase of NIS 16 million. The Company's net debt to Adjusted EBITDA ratio was 0.8 at the end of the quarter, demonstrating the continued financial robustness of the Company.”
 
5

 
Q3 2021 compared with Q3 2020
 
NIS Million (except EPS)
Q3’20
Q3’21
Comments
Service Revenues
631
672
The increase reflected growth in fixed-line and cellular services from subscriber growth in cellular and fiber-optics, with an increase in cellular roaming services
Equipment Revenues
169
165
The decrease reflected lower revenues in the fixed-line segment that was partially offset by a higher volume of equipment sales in the cellular segment
Total Revenues
800
837
 
Gross profit from equipment sales
38
37
 
OPEX
475
467
The decrease mainly reflects decreases in interconnect expenses and in wholesale internet expenses, which were partially offset by an increase in payroll and related expenses, largely reflecting the positive impact of COVID-19 on payroll expenses in Q3 2020
Operating profit
20
49
 
Adjusted EBITDA
204
250
 
Adjusted EBITDA as a percentage of total revenues
26%
30%
 
Profit (Loss) for the period
(5)
24
 
Earnings (Losses) per share (basic, NIS)
(0.03)
0.13
 
Capital Expenditures (cash)
147
172
 
Adjusted free cash flow (before interest payments)
21
9
 
Net Debt
646
662
 

Key Performance Indicators
 
 
Q3'20
Q2’21
Q3’21
Change QoQ
Cellular Subscribers (end of period, thousands)
2,762
2,970
3,019
Post-Paid: Increase of 49 thousand from Q2’21 (including 16 thousand voice packages from Ministry of Education)
Pre-Paid: Unchanged from Q2'21
Monthly Average Revenue per Cellular User (ARPU) (NIS)
51
48
48
 
Quarterly Cellular Churn Rate (%)
7.3%
7.2%
6.4%
 
Fiber-Optic Subscribers (end of period, thousands)
120
173
192
Increase of 19 thousand subscribers
Homes Connected to the Fiber-Optic Infrastructure (HC), (end of period, thousands)
432
571
624
Increase of 53 thousand households
Infrastructure-Based Internet Subscribers (end of period, thousands)
311
354
365
Increase of 11 thousand subscribers
TV Subscribers (end of period, thousands)
224
223
226
Increase of 3 thousand subscribers.
 

6

Partner Consolidated Results
 
 

NIS Million
Cellular Segment
Fixed-Line Segment
Elimination
Consolidated
Q3'20
Q3'21
Change %
Q3'20
Q3'21
Change %
Q3'20
Q3'21
Q3'20
Q3'21
Change %
Total Revenues
549
571
+4%
287
299
+4%
(36)
(33)
800
837
+5%
Service Revenues
415
435
+5%
252
270
+7%
(36)
(33)
631
672
+6%
Equipment Revenues
134
136
+1%
35
29
-17%
-
-
169
165
-2%
Operating Profit (Loss)
20
66
+230%
0
(17)
 
-
-
20
49
+145%
Adjusted EBITDA
134
172
+28%
70
78
+11%
-
-
204
250
+23%

Financial Review
 
In Q3 2021, total revenues were NIS 837 million (US$ 259 million), an increase of 5% from NIS 800 million in Q3 2020.
 
Service revenues in Q3 2021 totaled NIS 672 million (US$ 208 million), an increase of 6% from NIS 631 million in Q3 2020.
 
Service revenues for the cellular segment in Q3 2021 totaled NIS 435 million (US$ 135 million), an increase of 5% from NIS 415 million in Q3 2020. The increase was mainly the result of higher roaming service revenues and the growth of the cellular subscriber base, which were partially offset by a decrease in interconnect revenues.
 
Service revenues for the fixed-line segment in Q3 2021 totaled NIS 270 million (US$ 84 million), an increase of 7% from NIS 252 million in Q3 2020. The increase mainly reflected higher revenues from the growth in internet and TV services, which were partially offset by a continued decline in revenues from international calling services.
 
Equipment revenues in Q3 2021 totaled NIS 165 million (US$ 51 million), a decrease of 2% from NIS 169 million in Q3 2020, mainly reflecting lower sales in the fixed-line segment that were partially offset by higher volumes in the cellular segment.
 
Gross profit from equipment sales in Q3 2021 was NIS 37 million (US$ 11 million), compared with NIS 38 million in Q3 2020, a decrease of 3%, primarily reflecting the decrease in sales in the fixed-line segment, together with a change in product mix.
 
Total operating expenses (‘OPEX’) totaled NIS 467 million (US$ 145 million) in Q3 2021, a decrease of 2% or NIS 8 million from Q3 2020. The decrease mainly reflected decreases in interconnect expenses and in wholesale internet expenses, which were partially offset by an increase in payroll and related expenses, largely reflecting the positive impact of COVID-19 on payroll expenses in Q3 2020.

 
7

 
OPEX including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation) increased in Q3 2021 by NIS 9 million compared with Q3 2020. As a result of changes made to packages which combine Internet and television services that included, among other things, tariff updates for a number of packages, the Company expects that this change is likely to lead to the churn of some of the customers in these packages and therefore included, in Q3 2021, a provision for an impairment in the amount of NIS 10 million regarding certain tangible and intangible assets in connection with those customers.
 
Operating profit for Q3 2021 was 49 million (US$ 15 million), an increase of 145% compared with NIS 20 million in Q3 2020.
 
Adjusted EBITDA in Q3 2021 totaled NIS 250 million (US$ 77 million), an increase of 23% from NIS 204 million in Q3 2020. Adjusted EBITDA margin in Q3 2021 was 30% compared with 26% in Q3 2020.
 
Adjusted EBITDA for the cellular segment was NIS 172 million (US$ 53 million) in Q3 2021, an increase of 28% from NIS 134 million in Q3 2020. The increase largely reflected the increase in revenues, as well as a decrease in interconnect expenses and a one-time decrease in network maintenance expenses. Adjusted EBITDA margin for the cellular segment was 30% in Q3 2021, compared with 24% in Q3 2020.
 
Adjusted EBITDA for the fixed-line segment was NIS 78 million (US$ 24 million) in Q3 2021, an increase of 11% from NIS 70 million in Q3 2020. The increase mainly reflected the increase in revenues and the decrease in wholesale internet expenses, which were partially offset by increases in fixed-line segment employee and related expenses and in TV content expenses. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment was 26% in Q3 2021, compared with 24% in Q3 2020.
 
Finance costs, net in Q3 2021 were NIS 15 million (US$ 5 million), a decrease of 38% compared with NIS 24 million in Q3 2020, largely reflecting the one-time expenses in an amount of approximately NIS 7 million in Q3 2020 which were related to the partial early repayment of the Company’s Notes Series F during that quarter.
 
Income tax expenses in Q3 2021 were NIS 10 million (US$ 3 million), an increase of NIS 9 million compared with NIS 1 million in Q3 2020.
 
Profit in Q3 2021 was NIS 24 million (US$ 7 million), an increase in profit of NIS 29 million compared with a loss of NIS 5 million in Q3 2020.
 
Based on the weighted average number of shares outstanding during Q3 2021, basic earnings per share or ADS, was NIS 0.13 (US$ 0.04) compared with basic losses per share of NIS 0.03 in Q3 2020.

8

 
Cellular Segment Operational Review
 
At the end of Q3 2021, the Company's cellular subscriber base (including mobile data, 012 Mobile subscribers and M2M subscriptions) was approximately 3.02 million, including approximately 2.66 million Post-Paid subscribers or 88% of the base, and 355 thousand Pre-Paid subscribers, or 12% of the subscriber base.
 
During the third quarter of 2021, the cellular subscriber base increased, net, by 49 thousand subscribers. The Post-Paid subscriber base increased, net, by 49 thousand subscribers and the Pre-Paid subscriber base remained unchanged. The increase in the Post-Paid subscriber base included approximately 16 thousand subscribers of voice packages provided to students with a fixed twelve-month period by the Ministry of Education.
 
Total cellular market share (based on the number of subscribers) at the end of Q3 2021 was estimated to be approximately 28%, compared with 28% at the end of Q2 2021 and 26% at the end of Q3 2020.
 
The quarterly churn rate for cellular subscribers in Q3 2021 was 6.4%, compared with 7.2% in Q2 2021 and 7.3% in Q3 2020.
 
The monthly Average Revenue per User (“ARPU”) for cellular subscribers in Q3 2021 was NIS 48 (US$ 15), a decrease of 6% from NIS 51 in Q3 2020, the decrease mainly reflecting the continued price erosion, although to a lesser degree, together with an ease in the impact of COVID-19 as was reflected in a decrease in interconnect revenues from incoming calls, on the one hand, and a moderate increase in roaming service revenues on the other hand.
 
Fixed-Line Segment Operational Review
 
At the end of Q3 2021:
 
The Company's fiber-optic subscriber base was 192 thousand subscribers, an increase, net, of 19 thousand subscribers during the third quarter of 2021.
 
The Company's infrastructure-based internet subscriber base (fiber subscribers and wholesale market subscribers) was 365 thousand subscribers, an increase, net, of 11 thousand subscribers during the third quarter of 2021.
 
Households in buildings connected to our fiber-optic infrastructure (HC) totaled 624 thousand, an increase of 53 thousand during the third quarter of 2021.
 
The Company's TV subscriber base totaled 226 thousand subscribers, an increase, net, of 3 thousand subscribers during the third quarter of 2021, largely reflecting the impact of the strategic business change in TV services and tariff updates during the quarter.

 
9

 
Funding and Investing Review
 
In Q3 2021, Adjusted Free Cash Flow (including lease payments) totaled NIS 9 million (US$ 3 million), a decrease of NIS 12 million compared with NIS 21 million in Q3 2020.
 
Cash generated from operating activities totaled NIS 224 million (US$ 69 million) in Q3 2021, an increase of 8% from NIS 207 million in Q3 2020, largely reflecting the increase in Adjusted EBITDA.
 
Lease payments (principal and interest), recorded in cash flows from financing activities under IFRS 16, totaled NIS 43 million (US$ 13 million) in Q3 2021, an increase of 10% from NIS 39 million in Q3 2020.
 
Cash capital expenditures (CAPEX payments), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 172 million (US$ 53 million) in Q3 2021, an increase of 17% from NIS 147 million in Q3 2020.
 
The level of net debt at the end of Q3 2021 amounted to NIS 662 million (US$ 205 million), compared with NIS 646 million at the end of Q3 2020, an increase of NIS 16 million.
 
Regarding CAPEX additions, in October 2021 the Company received a letter from the MOC confirming that the Company has met the criteria entitling it to a grant for deployment of its 5G network, in the amount of NIS 37 million. The Grant shall be paid in accordance with the schedule set out in the license and after the Company has paid the 5G license fee, expected in 2022. Since the MOC has confirmed entitlement to the grant and the reception of the grant is only subject to the Company's payment of the 5G license fee, which is under the Company's control, the grant was recognized in its entirety as by Sep 30, 2021 under other non-current receivables against a reduction in property and equipment in its present value amount of NIS 36 million.
 
Regulatory Developments
 
Cellular license renewal
 
On November 18, 2021, the Ministry of Communications renewed the Company's cellular license for an additional period of ten years until February 1, 2032.
 
First annual incentive tender for the deployment of FTTH networks
 
Further to the description in the Company's 2020 Annual Report-Item 4B-12e-vii "Amendment to the Communications law regarding the deployment of fiber-optic infrastructures in Israel", in October 2021, the MoC published its first annual incentive tender for the rollout of FTTH (fiber to the home) networks in non-economically feasible areas where Bezeq has decided not to deploy its FTTH network.
 
The tender mechanism was described in the Company's second quarter results for 2021. The tender process is due to take place during December of 2021 and January of 2022. The Company is formulating its strategy regarding the incentive tender and has registered to participate in it.

10

 
First annual payment to the incentive fund for deployment of FTTH networks
 
Further to the description in the Company's 2020 Annual Report-Item 4B-12e-vii "Amendment to the Communications law regarding the deployment of fiber-optic infrastructures in Israel", the MoC has established a fund for incentivizing the rollout of FTTH networks in non-economically feasible areas where Bezeq has decided not to deploy its FTTH network (the "Incentive Fund").
 
The Incentive Fund is funded by a tax on all relevant telecommunications operators (including Bezeq and Partner) at an annual rate of 0.5% of income (deducting Interconnection fees and fees paid for use of other operators’ networks).
 
In October 2021, the MoC notified the Company that its first annual payment to the Incentive Fund was to be NIS 12 million, to be paid by the end of the year.
 
A hearing regarding a change to the call interconnection tariff regime
 
Further to the Company's immediate report dated September 14, 2021 with respect to a hearing process regarding the potential reduction of the interconnect tariff, the Company filed its position regarding this hearing and argued against the change to the current tariff regime. The Company’s results of operation may be negatively affected by the results of this hearing.
 
Reform regarding communication devices
 
A recent reform of the MoC that amended the Planning and Building Law with respect to communication devices, is intended to facilitate cellular operators' ability to deploy telecommunication infrastructure. As part of the reform, the cellular infrastructure has been classified as a national infrastructure and as such the Licensing Authority of the National Infrastructure Committee has been authorized to discuss and approve communication devices. The reform includes exemptions from building permits in the following cases:
 

Under certain conditions for communication devices that do not exceed 6 meters or 2/3 of the height of the building on which it is placed (the lower of the two);
 

Replacement of broadcasting devices; and
 

Under certain conditions for the addition of an antenna to an existing device with a permit.

11


 
Business Developments

Advocate Ehud Sol, applied to the court for the approval of a transaction subject to closing conditions to sell the company's shares under his receivership
 
On November 24, 2021, that Advocate Ehud Sol, as the permanent receiver over 49,862,800 of the Company’s shares held by S.B. Israel Telecom Ltd. (“SBIT”), that constitute approximately 27% of the Company’s issued and outstanding share capital (the “Shares”), notified SBIT and the Company (the “Notice”), that he received on said date an offer to purchase the Shares from a group of parties led by the Phoenix group, Mr. Avi Gabbay and Mr. Shlomo Rodav (the “Offeror”), on an “as is” basis, in consideration for US $ 300,000,000 (the “Offer) and that he supports the Offer and will apply to the Tel Aviv District Court in front of which the receivership proceedings are being conducted (the “Court”) for its approval. Such request for approval has been submitted to the Court on November 28, 2021. Additionally, the holders of the Fixed Rate Secured Notes of SBIT have informed Advocate Ehud Sol that they support the Offer.

According to the Notice, several Israeli institutional investors are joining the Offeror, and their payment commitments under the Offer are backed by a guarantee of entities in the Phoenix group.

The Notice states that the Offer includes customary closing conditions, including approval of the transaction by the Court and by the Ministry of Communications and the Competition Authority, and must close within 120 days of the date of the Court approval, with the Offeror having an option to extend by an additional 30 days, otherwise the transaction will terminate.

License to supply electricity without means of production
 
On October 18, 2021, the Minister of Energy granted Partner a license to supply electricity without means of production (the "License"). The License will allow the Company to purchase electricity for sale to consumers that have online meters. The License is granted to Partner for a period of 5 years.
 
Passive Infrastructure Sharing
 
On November 14, 2021, P.H.I. Networks (2015) a Limited Partnership, held by the Company at a rate of 50%, entered into a framework agreement with Pelephone Communications Ltd. and Cellcom Israel Ltd, to expand the cooperation between the parties in the field of passive infrastructure sharing for cellular sites, which will allow for the unification of existing and new passive infrastructures for cellular sites, and may lead to cost and investment savings entailed in establishing passive infrastructures for cellular sites. A pre-condition for the agreement to enter into force is the receipt of the approvals required by law. There is no certainty that such approvals will be received.

12

Conference Call Details
 
Partner will host a conference call to discuss its financial results on Monday, November 29, 2021 at 10.00 a.m. Eastern Time / 5.00 p.m. Israel Time.
 
Please dial the following numbers (at least 10 minutes before the scheduled time) in order to participate:
 
International: +972.3.918.0687

North America toll-free: +1.866.860.9642
 
A live webcast of the call will also be available on Partner's Investors Relations website at:
 
http://www.partner.co.il/en/Investors-Relations/lobby
 
If you are unavailable to join live, the replay of the call will be available from November 29, 2021 until December 13, 2021, at the following numbers:
 
International: +972.3.925.5921

North America toll-free: +1.888.254.7270
 
In addition, the archived webcast of the call will be available on Partner's Investor Relations website at the above address for approximately three months.

13

Forward-Looking Statements
 
This press release includes forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Words such as "estimate", “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “project”, “goal”, “target” and similar expressions often identify forward-looking statements but are not the only way we identify these statements. In particular, this press release communicates our belief regarding (i) the completion of the major rollout phase of the Company's fiber-optic infrastructure by the end of 2022 and (ii) the continued moderate recovery in roaming service revenues. In addition, all statements other than statements of historical fact included in this press release regarding our future performance are forward-looking statements.
 
We have based these forward-looking statements on our current knowledge and our present beliefs and expectations regarding possible future events. These forward-looking statements are subject to risks, uncertainties and assumptions, including in particular (i) the severity and duration of the impact on our business of the current health crisis and (ii) unexpected technical issues which may arise as we deploy our fiber optic infrastructure. In light of the current unreliability of predictions as to the ultimate severity and duration of the health crisis, as well as the specific regulatory and business risks facing our business, future results may differ materially from those currently anticipated. For further information regarding risks, uncertainties and assumptions about Partner, trends in the Israeli telecommunications industry in general, the impact of current global economic conditions and possible regulatory and legal developments, and other risks we face, see “Item 3. Key Information - 3D. Risk Factors”, “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects”, “Item 8. Financial Information - 8A. Consolidated Financial Statements and Other Financial Information - 8A.1 Legal and Administrative Proceedings” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Reports on Form 20-F filed with the SEC, as well as its immediate reports on Form 6-K furnished to the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
The quarterly financial results presented in this press release are unaudited financial results. The results were prepared in accordance with IFRS, other than the non-GAAP financial measures presented in the section, “Use of Non-GAAP Financial Measures”.
 
The financial information is presented in NIS millions (unless otherwise stated) and the figures presented are rounded accordingly. The convenience translations of the New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at September  30, 2021: US $1.00 equals NIS 3.229. The translations were made purely for the convenience of the reader.
 
14


Use of Non-GAAP Financial Measures

The following non-GAAP measures are used in this report. These measures are not financial measures under IFRS and may not be comparable to other similarly titled measures for other companies. Further, the measures may not be indicative of the Company’s historic operating results nor are meant to be predictive of potential future results.

Non-GAAP Measure
Calculation
Most Comparable IFRS Financial Measure
Adjusted EBITDA
 
 
 
 
 
Profit (Loss)
add
Income tax expenses,
Finance costs, net,
Depreciation and amortization expenses (including amortization of intangible assets, deferred expenses-right of use and impairment charges), Other expenses (mainly amortization of share based compensation)
Profit (Loss)
     
Adjusted EBITDA margin (%)
Adjusted EBITDA
divided by
Total revenues
 
     
Adjusted Free Cash Flow
Net cash provided by operating activities
add
Net cash used in investing activities
deduct
Proceeds from (investment in) deposits, net
deduct
Lease principal payments
deduct
Lease interest payments
Net cash provided by operating activities
add
Net cash used in investing activities
     
Total Operating Expenses (OPEX)
Cost of service revenues
add
Selling and marketing expenses
add
General and administrative expenses
deduct
Depreciation and amortization expenses,
Other expenses (mainly amortization of employee share based compensation)
Sum of:
Cost of service revenues,
Selling and marketing expenses,
General and administrative expenses
 
     
Net Debt
Current maturities of notes payable and borrowings
add
Notes payable
add
Borrowings from banks
add
Financial liability at fair value
deduct
Cash and cash equivalents
deduct
Short-term and long-term deposits
Sum of:
Current maturities of notes payable and borrowings,
Notes payable,
Borrowings from banks,
Financial liability at fair value
Less
Sum of:
Cash and cash equivalents,
Short-term deposits,
Long-term deposits.


15

 
About Partner Communications
 
Partner Communications Company Ltd. is a leading Israeli provider of telecommunications services (cellular, fixed-line telephony, internet services and TV services). Partner’s ADSs are quoted on the NASDAQ Global Select Market™ and its shares are traded on the Tel Aviv Stock Exchange (NASDAQ and TASE: PTNR).

For more information about Partner, see: http://www.partner.co.il/en/Investors-Relations/lobby

Contacts:

Mr. Tamir Amar
Deputy CEO & Chief Financial Officer
Tel: +972-54-781-4951
 
Mr. Amir Adar
Head of Investor Relations and Corporate Projects
Tel: +972-54-781-5051
E-mail: investors@partner.co.il

16

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

   



New Israeli Shekels
   
Convenience
translation
into
U.S. Dollars
 
   
December 31,
   
September 30,
   
September 30,
 
   
2020
   
2021
   
2021
 
   
(Audited)
   
(Unaudited)
   
(Unaudited)
 
   
In millions
 
CURRENT ASSETS
                 
Cash and cash equivalents
   
376
     
270
     
84
 
Short-term deposits
   
411
     
521
     
161
 
Trade receivables
   
560
     
568
     
176
 
Other receivables and prepaid expenses
   
46
     
38
     
12
 
Deferred expenses – right of use
   
26
     
27
     
8
 
Inventories
   
77
     
91
     
28
 
     
1,496
     
1,515
     
469
 
                         
NON CURRENT ASSETS
                       
Long-term deposits
   
155
                 
Trade receivables
   
232
     
242
     
75
 
Deferred expenses – right of use
   
118
     
136
     
42
 
Lease – right of use
   
663
     
691
     
214
 
Property and equipment
   
1,495
     
1,533
     
475
 
Intangible and other assets
   
521
     
484
     
150
 
Goodwill
   
407
     
407
     
126
 
Deferred income tax asset
   
29
     
17
     
5
 
Other non-current receivables
   
9
     
36
     
11
 
     
3,629
     
3,546
     
1,098
 
                         
TOTAL ASSETS
   
5,125
     
5,061
     
1,567
 

17


PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
   



New Israeli Shekels
   
Convenience
translation
into
U.S. Dollars
 
   
December 31,
   
September 30,
   
September 30,
 
   
2020
   
2021
   
2021
 
   
(Audited)
   
(Unaudited)
   
(Unaudited)
 
   
In millions
 
CURRENT LIABILITIES
                 
 Current maturities of notes payable and borrowings
   
290
     
377
     
117
 
Trade payables
   
666
     
653
     
202
 
Payables in respect of employees
   
58
     
79
     
24
 
Other payables (mainly institutions)
   
29
     
59
     
18
 
Income tax payable
   
27
     
33
     
10
 
Current maturities of lease liabilities
   
120
     
128
     
40
 
Deferred revenues from HOT mobile
   
31
     
32
     
10
 
Other deferred revenues
   
100
     
114
     
35
 
Provisions
   
13
     
18
     
6
 
     
1,334
     
1,493
     
462
 
NON CURRENT LIABILITIES
                       
Notes payable
   
1,219
     
1,029
     
319
 
Borrowings from banks
   
86
     
47
     
15
 
Financial liability at fair value
   
4
                 
Liability for employee rights upon retirement, net
   
42
     
45
     
14
 
 Lease liabilities
   
582
     
596
     
185
 
       Deferred revenues from HOT mobile
   
71
     
47
     
14
 
 Provisions and other non-current liabilities
   
64
     
35
     
10
 
     
2,068
     
1,799
     
557
 
                         
TOTAL LIABILITIES
   
3,402
     
3,292
     
1,019
 
                         
EQUITY
                       
Share capital - ordinary shares of NIS 0.01
   par value: authorized - December 31, 2020
   and September 30, 2021 - 235,000,000 shares;
   issued and outstanding -
   
2
     
2
     
1
 
December 31, 2020 – *182,826,973 shares
                       
September 30, 2021 – -*183,234,366 shares
                       
Capital surplus
   
1,311
     
1,279
     
396
 
Accumulated retained earnings
   
606
     
652
     
202
 
Treasury shares, at cost
   December 31, 2020 – **7,741,784 shares                                     
   September 30, 2021 – *-*7,337,759 shares
   
(196
)
   
(164
)
   
(51
)
TOTAL EQUITY
   
1,723
     
1,769
     
548
 
TOTAL LIABILITIES AND EQUITY
   
5,125
     
5,061
     
1,567
 

*
Net of treasury shares
**
Including restricted shares in amount of 1,008,735 and 1,082,150 as of December 31, 2020 and September 30, 2021, respectively, held by a trustee under the Company's Equity Incentive Plan, such shares may become outstanding upon completion of vesting conditions.
 

18

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
   
New Israeli shekels
   
Convenience translation into U.S. dollars
 
   
9 months period ended
September 30,
   
3 months period ended
September 30,
   
9 months period ended
September 30,
   
3 months period ended
September 30,
 
   
2020
   
2021
   
2020
   
2021
   
2021
   
2021
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
   
In millions (except per share data)
 
Revenues, net
   
2,381
     
2,510
     
800
     
837
     
777
     
259
 
Cost of revenues
   
1,985
     
2,054
     
677
     
667
     
636
     
206
 
Gross profit
   
396
     
456
     
123
     
170
     
141
     
53
 
                                                 
Selling and marketing expenses
   
212
     
238
     
72
     
81
     
74
     
25
 
General and administrative expenses
   
129
     
132
     
39
     
46
     
41
     
15
 
Other income, net
   
21
     
21
     
8
     
6
     
7
     
2
 
Operating profit
   
76
     
107
     
20
     
49
     
33
     
15
 
Finance income
   
4
     
5
     
1
     
2
     
2
     
1
 
Finance expenses
   
60
     
55
     
25
     
17
     
17
     
6
 
Finance costs, net
   
56
     
50
     
24
     
15
     
15
     
5
 
Profit (loss) before income tax
   
20
     
57
     
(4
)
   
34
     
18
     
10
 
Income tax expenses
   
8
     
19
     
1
     
10
     
6
     
3
 
Profit (loss) for the period
   
12
     
38
     
(5
)
   
24
     
12
     
7
 
                                                 
Earnings (losses) per share
                                               
            Basic
   
0.06
     
0.21
     
(0.03
)
   
0.13
     
0.06
     
0.04
 
            Diluted
   
0.06
     
0.21
     
(0.03
)
   
0.13
     
0.06
     
0.04
 
Weighted average number of shares outstanding (in thousands)
                                               
           Basic
   
182,183
     
183,145
     
182,688
     
183,212
     
183,145
     
183,212
 
           Diluted
   
182,839
     
183,739
     
182,688
     
183,770
     
183,739
     
183,770
 
 

19

 
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

   
New Israeli shekels
   
Convenience translation into U.S. dollars
 
   
9 months period ended
September 30,
   
3 months period ended
September 30,
   
9 months period ended
September 30,
   
3 months period ended
September 30,
 
   
2020
   
2021
   
2020
   
2021
   
2021
   
2021
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
   
In millions
 
Profit (loss) for the period
   
12
     
38
     
(5
)
   
24
     
12
     
7
 
Other comprehensive income for
     the period, net of income tax
   
1
                                         
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD
   
13
     
38
     
(5
)
   
24
     
12
     
7
 

20


PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

   
New Israeli Shekels
   
New Israeli Shekels
 
   
9 months period ended September 30, 2021
   
9 months period ended September 30, 2020
 
   
In millions (Unaudited)
   
In millions (Unaudited)
 
 
 
Cellular
segment
   
Fixed line
segment
   
Elimination
   
Consolidated
   
Cellular
segment
   
Fixed line
segment
   
Elimination
   
Consolidated
 
Segment revenue - Services
   
1,258
     
702
           
1,960
     
1,235
     
641
           
1,876
 
Inter-segment revenue - Services
   
10
     
90
     
(100
)
           
12
     
100
     
(112
)
       
Segment revenue - Equipment
   
453
     
97
             
550
     
410
     
95
             
505
 
Total revenues
   
1,721
     
889
     
(100
)
   
2,510
     
1,657
     
836
     
(112
)
   
2,381
 
Segment cost of revenues - Services
   
906
     
716
             
1,622
     
960
     
625
             
1,585
 
Inter-segment cost of  revenues - Services
   
90
     
10
     
(100
)
           
100
     
12
     
(112
)
       
Segment cost of revenues - Equipment
   
374
     
58
             
432
     
339
     
61
             
400
 
Cost of revenues
   
1,370
     
784
     
(100
)
   
2,054
     
1,399
     
698
     
(112
)
   
1,985
 
Gross profit
   
351
     
105
             
456
     
258
     
138
             
396
 
Operating expenses (3)
   
223
     
147
             
370
     
227
     
114
             
341
 
Other income, net
   
12
     
9
             
21
     
15
     
6
             
21
 
Operating profit (loss)
   
140
     
(33
)
           
107
     
46
     
30
             
76
 
Adjustments to presentation of  segment
   Adjusted  EBITDA
                                                               
    – Depreciation and amortization
   
310
     
248
                     
342
     
192
                 
    – Other (1)
   
4
     
3
                     
7
     
2
                 
Segment Adjusted EBITDA (2)
   
454
     
218
                     
395
     
224
                 
Reconciliation of  segment subtotal Adjusted EBITDA to profit for the period
                                                               
Segments subtotal Adjusted EBITDA (2)
                           
672
                             
619
 
    -  Depreciation and amortization
                           
(558
)
                           
(534
)
    -  Finance costs, net
                           
(50
)
                           
(56
)
    -  Income tax expenses
                           
(19
)
                           
(8
)
    -  Other (1)
                           
(7
)
                           
(9
)
Profit for the period
                           
38
                             
12
 
 
21

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

   
New Israeli Shekels
   
New Israeli Shekels
 
   
3 months period ended September 30, 2021
   
3 months period ended September 30, 2020
 
   
In millions (Unaudited)
   
In millions (Unaudited)
 
 
 
Cellular
segment
   
Fixed line
segment
   
Elimination
   
Consolidated
   
Cellular
segment
   
Fixed line
segment
   
Elimination
   
Consolidated
 
Segment revenue - Services
   
432
     
240
           
672
     
411
     
220
           
631
 
Inter-segment revenue - Services
   
3
     
30
     
(33
)
           
4
     
32
     
(36
)
       
Segment revenue - Equipment
   
136
     
29
             
165
     
134
     
35
             
169
 
Total revenues
   
571
     
299
     
(33
)
   
837
     
549
     
287
     
(36
)
   
800
 
Segment cost of revenues - Services
   
291
     
248
             
539
     
320
     
226
             
546
 
Inter-segment cost of  revenues - Services
   
30
     
3
     
(33
)
           
32
     
4
     
(36
)
       
Segment cost of revenues - Equipment
   
110
     
18
             
128
     
110
     
21
             
131
 
Cost of revenues
   
431
     
269
     
(33
)
   
667
     
462
     
251
     
(36
)
   
677
 
Gross profit
   
140
     
30
             
170
     
87
     
36
             
123
 
Operating expenses (3)
   
78
     
49
             
127
     
72
     
39
             
111
 
Other income, net
   
4
     
2
             
6
     
5
     
3
             
8
 
Operating profit (loss)
   
66
     
(17
)
           
49
     
20
     
*
             
20
 
Adjustments to presentation of  segment
   Adjusted  EBITDA
                                                               
    – Depreciation and amortization
   
105
     
93
                     
113
     
68
                 
    – Other (1)
   
1
     
2
                     
1
     
2
                 
Segment Adjusted EBITDA (2)
   
172
     
78
                     
134
     
70
                 
Reconciliation of  segment subtotal Adjusted EBITDA to profit for the period
                                                               
Segments subtotal Adjusted EBITDA (2)
                           
250
                             
204
 
    -  Depreciation and amortization
                           
(198
)
                           
(181
)
    -  Finance costs, net
                           
(15
)
                           
(24
)
    -  Income tax expenses
                           
(10
)
                           
(1
)
    -  Other (1)
                           
(3
)
                           
(3
)
Profit for the period
                           
24
                             
(5
)

*     Representing an amount of less than 1 million.
(1) Mainly amortization of employee share based compensation. (2) Adjusted EBITDA as reviewed by the CODM represents Earnings Before Interest (finance costs, net), Taxes, Depreciation and Amortization (including amortization of intangible assets, deferred expenses-right of use and impairment charges) and Other expenses (mainly amortization of share based compensation). Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures for other companies. Adjusted EBITDA may not be indicative of the Group's historic operating results nor is it meant to be predictive of potential future results. The usage of the term "Adjusted EBITDA" is to highlight the fact that the Amortization includes amortization of deferred expenses – right of use and amortization of employee share based compensation and impairment charges.  (3) Operating expenses include selling and marketing expenses and general and administrative expenses.

22

PARTNER COMMUNICATIONS COMPANY LTD.
   (An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

   


New Israeli Shekels
   
Convenience
translation into
U.S. Dollars
 
   
9 months period ended September 30,
 
   
2020
   
2021
   
2021
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
   
In millions
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Cash generated from operations (Appendix)
   
605
     
612
     
189
 
Income tax paid
   
(1
)
   
(1
)
   
*
 
Net cash provided by operating activities
   
604
     
611
     
189
 
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Acquisition of property and equipment
   
(293
)
   
(344
)
   
(107
)
Acquisition of intangible and other assets
   
(124
)
   
(116
)
   
(36
)
Proceeds from (investment in) deposits, net
   
(106
)
   
45
     
14
 
Interest received
   
3
     
1
     
*
 
Net cash used in investing activities
   
(520
)
   
(414
)
   
(129
)
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Lease principal payments
   
(102
)
   
(102
)
   
(31
)
Lease interest payments
   
(13
)
   
(14
)
   
(4
)
Interest paid
   
(42
)
   
(43
)
   
(13
)
Share issuance
   
276
     
*
     
*
 
Proceeds from issuance of notes payable, net of issuance costs
   
412
     
23
     
7
 
Repayment of notes payable
   
(510
)
   
(128
)
   
(39
)
Repayment of non-current borrowings
   
(39
)
   
(39
)
   
(12
)
     Settlement of contingent consideration
   
(1
)
   
*
     
*
 
Net cash used in financing activities
   
(19
)
   
(303
)
   
(92
)
                         
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
   
65
     
(106
)
   
(32
)
                         
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
   
299
     
376
     
116
 
                         
CASH AND CASH EQUIVALENTS AT END OF PERIOD
   
364
     
270
     
84
 
 
*   Representing an amount of less than 1 million.

23

 
PARTNER COMMUNICATIONS COMPANY LTD.
   (An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Appendix - Cash generated from operations and supplemental information

   



New Israeli Shekels
   
Convenience
translation
into
U.S. Dollars
 
   
9 months period ended September 30,
 
   
2020
   
2021
   
2021
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
   
In millions
 
                   
Cash generated from operations:
                 
     Profit for the period
   
12
     
38
     
12
 
    Adjustments for:
                       
Depreciation and amortization
   
511
     
535
     
166
 
Amortization of deferred expenses - Right of use
   
23
     
23
     
7
 
Employee share based compensation expenses
   
8
     
8
     
2
 
Liability for employee rights upon retirement, net
   
(1
)
   
4
     
1
 
Finance costs, net
   
(1
)
   
(3
)
   
(1
)
Lease interest payments
   
13
     
14
     
4
 
Interest paid
   
42
     
43
     
13
 
Interest received
   
(3
)
   
(1
)
   
*
 
Deferred income taxes
   
6
     
12
     
4
 
Income tax paid
   
1
     
1
     
*
 
Changes in operating assets and liabilities:
                       
Decrease (increase) in accounts receivable:
                       
Trade
   
57
     
(18
)
   
(6
)
Other
   
3
     
7
     
2
 
Increase (decrease) in accounts payable and accruals:
                       
Trade
   
(14
)
   
(18
)
   
(6
)
Other payables
   
(22
)
   
21
     
7
 
Provisions
   
(10
)
   
5
     
2
 
Deferred revenues from HOT mobile
   
(23
)
   
(23
)
   
(7
)
Other deferred revenues
   
20
     
14
     
4
 
  Increase (decrease) in deferred expenses - Right of use
   
(34
)
   
(42
)
   
(13
)
  Current income tax
   
2
     
6
     
2
 
  Decrease (increase) in inventories
   
15
     
(14
)
   
(4
)
Cash generated from operations
   
605
     
612
     
189
 
 
*   Representing an amount of less than 1 million.

At September 30, 2021 and 2020, trade and other payables include NIS 124 million ($38 million) and NIS 114 million, respectively, in respect of acquisition of intangible assets and property and equipment; payments in respect thereof are presented in cash flows from investing activities.
 
These balances are recognized in the cash flow statements upon payment

24

Reconciliation of Non-GAAP Measures:

Adjusted Free Cash Flow
 
New Israeli Shekels
   
Convenience translation into
U.S. Dollars
 
   
9 months period ended
September 30,
   
3 months period ended
September 30,
   
9 months period ended
September 30,
   
3 months period ended
September 30,
 
   
2020
   
2021
   
2020
   
2021
   
2021
   
2021
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
   
In millions
 
Net cash provided by operating activities
   
604
     
611
     
207
     
224
     
189
     
69
 
Net cash used in investing activities
   
(520
)
   
(414
)
   
(198
)
   
(177
)
   
(129
)
   
(55
)
Investment in (proceeds from) deposits, net
   
106
     
(45
)
   
51
     
5
     
(14
)
   
2
 
Lease principal payments
   
(102
)
   
(102
)
   
(35
)
   
(38
)
   
(31
)
   
(11
)
Lease interest payments
   
(13
)
   
(14
)
   
(4
)
   
(5
)
   
(4
)
   
(2
)
Adjusted Free Cash Flow
   
75
     
36
     
21
     
9
     
11
     
3
 
Interest paid
   
(42
)
   
(43
)
   
(9
)
   
(1
)
   
(13
)
   
(1
)
Adjusted Free Cash Flow After Interest
   
33
     
(7
)
   
12
     
8
     
(2
)
   
2
 

Total Operating Expenses (OPEX)
 
New Israeli Shekels
   
Convenience translation into
U.S. Dollars
 
   
9 months period ended
September 30,
   
3 months period ended
September 30,
   
9 months period ended
September 30,
   
3 months period ended
September 30,
 
   
2020
   
2021
   
2020
   
2021
   
2021
   
2021
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
   
In millions
 
Cost of revenues - Services
   
1,585
     
1,622
     
546
     
539
     
502
     
166
 
Selling and marketing expenses
   
212
     
238
     
72
     
81
     
74
     
25
 
General and administrative expenses
   
129
     
132
     
39
     
46
     
41
     
15
 
Depreciation and amortization
   
(534
)
   
(558
)
   
(181
)
   
(198
)
   
(173
)
   
(61
)
Other (1)
   
(1
)
   
(1
)
   
(1
)
   
(1
)
   
*
     
*
 
OPEX
   
1,391
     
1,433
     
475
     
467
     
444
     
145
 
 
*   Representing an amount of less than 1 million.

(1)
Mainly amortization of employee share based compensation and other adjustments.


25


Key Financial and Operating Indicators (unaudited)*

NIS M unless otherwise stated
 
Q3' 19
   
Q4' 19
   
Q1' 20
   
Q2' 20
   
Q3' 20
   
Q4' 20
   
Q1' 21
   
Q2' 21
   
Q3' 21
   
2019
   
2020
 
Cellular Segment Service Revenues
   
466
     
438
     
423
     
409
     
415
     
416
     
413
     
420
     
435
     
1,798
     
1,663
 
Cellular Segment Equipment Revenues
   
142
     
172
     
146
     
130
     
134
     
135
     
160
     
157
     
136
     
571
     
545
 
Fixed-Line Segment Service Revenues
   
233
     
238
     
245
     
244
     
252
     
252
     
260
     
262
     
270
     
925
     
993
 
Fixed-Line Segment Equipment Revenues
   
25
     
26
     
32
     
28
     
35
     
41
     
34
     
34
     
29
     
103
     
136
 
Reconciliation for consolidation
   
(41
)
   
(40
)
   
(39
)
   
(37
)
   
(36
)
   
(36
)
   
(34
)
   
(33
)
   
(33
)
   
(163
)
   
(148
)
Total Revenues
   
825
     
834
     
807
     
774
     
800
     
808
     
833
     
840
     
837
     
3,234
     
3,189
 
Gross Profit from Equipment Sales
   
33
     
37
     
37
     
30
     
38
     
40
     
42
     
39
     
37
     
144
     
145
 
Operating Profit
   
26
     
30
     
36
     
20
     
20
     
20
     
28
     
30
     
49
     
87
     
96
 
Cellular Segment Adjusted EBITDA
   
170
     
156
     
132
     
129
     
134
     
138
     
143
     
139
     
172
     
635
     
533
 
Fixed-Line Segment Adjusted EBITDA
   
55
     
61
     
83
     
71
     
70
     
65
     
66
     
74
     
78
     
218
     
289
 
Total Adjusted EBITDA
   
225
     
217
     
215
     
200
     
204
     
203
     
209
     
213
     
250
     
853
     
822
 
Adjusted EBITDA Margin (%)
   
27
%
   
26
%
   
27
%
   
26
%
   
26
%
   
25
%
   
25
%
   
25
%
   
30
%
   
26
%
   
26
%
OPEX
   
474
     
467
     
460
     
456
     
475
     
480
     
481
     
485
     
467
     
1,885
     
1,871
 
Finance costs, net
   
18
     
20
     
19
     
13
     
24
     
13
     
19
     
16
     
15
     
68
     
69
 
Profit (Loss)
   
7
     
7
     
10
     
7
     
(5
)
   
5
     
5
     
9
     
24
     
19
     
17
 
Capital Expenditures (cash)
   
174
     
127
     
151
     
119
     
147
     
156
     
149
     
139
     
172
     
629
     
573
 
Capital Expenditures (additions)
   
150
     
129
     
129
     
121
     
179