Partner Reports Resilient Financial Performance Amidst Strategic Shift: Revenues - INS 850 million

Partner, a prominent player in the telecommunications sector, showcased its ability to adapt and excel amidst challenging market dynamics, as it reported its financial results for the second quarter of 2023. The company's strategic shift towards premium products and a reduction in debt emerged as key drivers behind its successful performance.

Partner's strategic moves yielded impressive results, with the company achieving its lowest debt levels in history. This reduction in debt, coupled with a decrease in interest payments on bonds, led to a notable 15% increase in net profit. The visionary strategy spearheaded by CEO Avi Gabai, which emphasized premium offerings over discounted and unprofitable services, has shown promise by attracting higher-margin customers.

Despite encountering a global trend of weakening sales for end equipment and new cellular devices, Partner demonstrated resilience in its revenue streams. The total revenues for the second quarter of 2023 stood at 850 million shekels, reflecting a modest decrease of 1% compared to the same period last year. While revenues from equipment sales dropped by 16%, revenues from subscriptions, including cellular and internet subscriptions, managed to offset this decline by growing 2% compared to the corresponding quarter in 2022.

Operating Profit and Financial Efficiency

The operating profit for the second quarter of 2023 reached 81 million shekels, registering a minor decrease of 5% year-on-year. However, this reduction was mitigated by a remarkable 43% decrease in financing expenses, amounting to 12 million shekels for the quarter. The company's net profit surged by 15% to 54 million shekels, primarily attributed to the significant decrease in financing expenses.

Partner's median performance throughout the first half of 2023 remained robust, albeit with slight adjustments. Total revenues stabilized at 1.712 billion shekels, with the decrease in equipment sales being the primary factor. Equipment sales for the first half of the year dipped by 11% to 281 million shekels, while revenues from services demonstrated a 3% increase, totaling 1.431 billion shekels. Operating profit and net profit, however, faced minor setbacks, decreasing by 12% and 5%, respectively, compared to the first half of 2022.

The cellular sector saw a decline in revenues for the third quarter of 2023, amounting to 592 million shekels—a decrease of 25 million shekels compared to the second quarter of 2022. This dip was attributed to reduced revenues from cellular device purchases, as well as a decrease in prepaid sales and a contraction in the customer base. The revised method of subscriber counting contributed to the decline, with a net reduction of 84 thousand cellular subscriptions in the second quarter of 2023, excluding the counting method adjustment.

Despite the decline in customer numbers, the average revenue per partner customer (ARPU) witnessed a positive trajectory, increasing by 5 shekels to reach 43 shekels per subscriber. This growth was primarily due to changes in subscriber counting methodologies and the discontinuation of prepaid subscribers. Factoring out these adjustments, the ARPU still managed to rise by 1 shekel in the second quarter of 2023 compared to the same period in 2022. Moreover, the rate of subscription abandonment displayed improvement, dropping from 6.7% in the second quarter of 2022 to 6.1% in the corresponding period of 2023.Partner's strategic endeavors in expanding its fiber optic network yielded significant progress, with the network reaching over a million households in Israel. The IRU agreement with Bezeq further bolstered this expansion, granting access to fiber infrastructure for an additional 120,000 households. Partner reported a substantial increase in fiber subscribers, totaling 334,000 by the end of the second quarter of 2023, indicating a rise of 21,000 subscribers compared to the same period in 2022.

In the non-mobile segment, Partner demonstrated its ability to capitalize on market opportunities. The company's revenues from the stationary segment displayed growth, amounting to 308 million shekels, marking a 4% increase compared to the second quarter of 2022. Notably, the adjusted EBITDA from this segment remained steady at 89 million shekels for both the second quarter of 2023 and 2022.

Partner's dynamic strategies and prudent financial management have positioned the company to navigate uncertainties and leverage opportunities in the evolving telecommunications landscape. As the industry continues to transform, Partner's commitment to premium offerings and financial discipline will likely contribute to its enduring success.