Partner Communications Reports the Highest Quarterly Profit in 12 Years

The communications company Partner ended the third quarter of 2023 with a net profit of NIS 85 million, the highest quarterly profit for the company in the last 12 years. The results reflect an 8% increase in revenues and a strong performance across key sectors, including cellular, internet, and terminal equipment.

Partner Communications has reported strong financial results for the third quarter of 2023, with a net profit of NIS 85 million, marking its highest quarterly profit in over a decade. The company’s financial debt was reduced to NIS 255 million, a significant decline from NIS 468 million at the same time last year, reflecting a healthier balance sheet.

The company's total revenue (excluding connectivity fees) reached NIS 811 million, an 8% increase compared to the corresponding quarter last year. Revenues from services — which include cellular, television, and internet subscribers — amounted to NIS 683 million, also up 8% year-over-year. In addition, revenue from the sale of terminal equipment, primarily cellular devices, rose by 8% to NIS 128 million.

Operating Profit and Cash Flow Surge

Partner’s operating profit saw a remarkable 41% increase, reaching NIS 120 million, which contributed to a 52% jump in net profit. The company’s free cash flow surged by 66% to NIS 243 million, aided by a reduction in investments by NIS 64 million. These results reflect strong cost control and efficient operational management under the leadership of CEO Avi Gabbay.

Cellular Subscribers Show Positive Growth 

After a year-and-a-half-long decline in cellular subscribers, Partner reported a growth of 6,000 cellular subscribers in the third quarter, bringing the total number of cellular subscribers to 2.635 million. Although this marks a slight decrease of 20,000 subscribers compared to the same quarter last year, the company’s churn rate improved, decreasing to 5.1% from 5.5% in the second quarter of 2023.

However, the company’s average monthly revenue per user (ARPU) decreased slightly by NIS 1, standing at NIS 44. The drop in ARPU was primarily due to reduced sales of overseas roaming packages, which the company attributes to the decrease in international travel since the start of the ongoing conflict. The war's impact on roaming revenue was about NIS 3 million per month.

Internet and Fiber-Optic Services Continue to Grow

Partner’s internet business continues to perform well, with a total of 465,000 internet subscribers by the end of Q3, of which 421,000 (90%) are on the company’s fiber-optic network. While the overall number of internet subscribers decreased slightly compared to the same period last year, the proportion of fiber-optic subscribers continued to rise.

Revenue from Partner’s internet and television services reached NIS 359 million in Q3, up from NIS 297 million in the same period last year, signaling strong demand for broadband services. However, Partner's television sector, which is less profitable, is currently waiting for regulatory approval for a deal with yes, signed in July 2023. Under this agreement, yes will develop and operate Partner's TV broadcast app and supply content, based on the Sting TV service, which offers discounted TV programming.

Partner Eyes TV Market Deal with Yes

The company is also awaiting approval from the Israeli Competition Authority for its deal with the television provider yes, which will involve Partner paying a minimum of NIS 5 million per month for each subscription. The television market, while growing, remains less profitable compared to other business segments and is considered a complementary offering to Partner’s more lucrative fiber-optic and mobile services.

As of Q3 2023, Partner has 205,000 TV subscribers, maintaining the same number as in the second quarter.

Challenges and Future Outlook

Despite the positive financial performance, Partner continues to face challenges, particularly from the Ministry of Communications' decision to phase out the interconnection fee — a charge that cellular operators transfer between each other for voice calls. This fee, while not affecting the companies’ profits directly, will be gradually removed by June 2025, impacting industry-wide revenue models.

Looking forward, Partner’s strong financial performance in Q3 reflects its ability to navigate a competitive market while maintaining operational efficiency. The company’s growth in core areas such as mobile, internet, and fiber-optic services bodes well for its future, even as it adapts to regulatory changes and the ongoing effects of geopolitical instability on international travel and roaming services.