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Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Partner Communications Third Quarter 2022 Results Conference Call. All participants are at present in a listen-only mode. . As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Amir Adar, Head of Investor Relations and Corporate Projects. Mr. Adar, please begin.
Amir Adar: Thank you. And thank you to all our listeners for joining us on this conference call to discuss Partner Communications third quarter results for the year 2022. With me on the call today is Avi Gabbay, Partner's CEO; and Sigal Tzadok, our Acting CFO. Avi will provide an update on Partner's business development. He will then hand over to Sigal, who will provide a detailed discussion of our quarterly financial and operational results. And finally, we'll 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. Securities 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 Securities Litigation Reform Act of 1995. Regarding such forward-looking statements, you should be aware that Partner's actual results might vary materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements are contained in Partner's press release dated November 23, 2022, as well as Partner's filings with the U.S. Securities and Exchange Commission on Forms 20-F, F-1 and 6-K as well as the F-3 self-registration statement, all of which are readily available. Please note that the information in this conference call related to the projection or other forward-looking statements is subject to the previous Safe Harbor Statement as of 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 the call, please feel free to contact me at 972-54-781-5051. I will now turn the call over to Partner's CEO, Avi Gabbay. Avi?
Avi Gabbay: Thank you Amir. Good morning everyone and welcome to our earnings conference call. Q3 ended with solid results of KPI improvements translated into robust financial execution. In the last call I spoke about the importance of bringing value to our customers. In my experience, simplicity plays an important role to achieve this goal. Focusing on simplicity in our day to day activities is a key ingredient in making Partner more productive, more agile, and more accessible to its existing and potential customers. For example, in the past few months we have optimized our follow-up packages by bringing more value to our customers, adjusting tariffs in older discovery plants, and reducing the overall number of packages. By doing that we helped our customers to find quickly and clearly the best offer while at the same time improving productivity and satisfaction of our own sales and customer service teams. Another example is the termination of sales which tied cellular packages benefits to equipment purchases. These sorts of deals didn't match the value to the requirements of the customers and didn't follow the rule that one plus one needs to be at least two. I hope this gives you some color on the changes that we are implementing to better maximize long-term revenue from customers while increasing customer satisfaction. As for 5G rollouts, deployment is continuing its best at space. We continue with the expedited 5G infrastructure deployment and expect to achieve over 40% population coverage by the end of the year. Still, it is important to note that 4G continues to play an important role and our premium 4G value packages are getting attraction. In fiber optics we're expanding our value chain as we become a dominant fiber optic infrastructure player as our fiber optic network has reached 929,000 households, homes connected as of today. Regarding challenges, as I said in the previous call, equipment sales is one of the areas in which more focus is needed in order to build new capabilities that will match our brand strength, the geographical reach, and vast customer base. On a company level, a new diversified and experienced management team has been formalized which will take the company to new records. I would like to thank Partnerâs employees for their contribution to the results and will now turn the call over to Sigal Tzadok for a detailed review of our financial results for the quarter.
Sigal Tzadok: Thank you, Avi. The growth in revenues this quarter was the result of a stronger seasonality impact in the cellular segment and the continued growth in fiber optics subscribers. Along with the increase in revenues, we continue to control the level of OPEX despite onetime expenses of 17 million Shekels related to the collective employment agreement. From July 2022, adjusted EBITDA increased by 10% from 250 million Shekels in the third quarter of last year to 276 million Shekels this quarter. Regarding the cellular subscriber base, as we noted last quarter, the number of Ministry of Education package, subscribers decreased by 66,000 during the third quarter. Excluding the impact of this subscribers, the cellular subscriber base increased by 13,000 in the third quarter and the sale of churn rate totaled 6.8% compared to 6.6% in the previous quarter in the third quarter last year. Cellular output increased for the second consecutive quarter to total 51 Shekels compared to 48 Shekels in the third quarter of last year. Turning to the fixed line segment, the number of homes connected to our fiber optic infrastructure increased by 63,000 in the third quarter and the number of fiber optic subscribers increased by 18,000 compared to an increase of 17,000 in the previous quarter. The penetration rate of fiber optic subscribers from potential customers in connecting buildings remains unchanged at 13%. I will now briefly review funding and investing. Adjusted free cash flow for the quarter totaled 38 million Shekels, CAPEX payments in the third quarter totaled 205 million Shekels including a payment of 31 million Shekels for the 5G license fee for the tender that was held two years ago. Net debt was 667 million Shekels at the end of the quarter compared to 662 million Shekels at the end of the third quarter last. Finally, the company's net debt to adjusted EBITDA ratio stood at 0.6 at the end of the third quarter compared to ratio of 0.8 at the end of the third quarter last year. I will now be happy to open the call for questions. Moderator, please start the Q&A.
Operator: Thank you. . The first question is from David Kaplan of Psagot. Please go ahead.
David Kaplan: Hi, good evening everyone. A quick question from me on the fixed line side, can you tell us what the split of new ads in the of customers connected to fiber lines are on your network versus wholesale?
Avi Gabbay: Oh it is in 99% of our network. We almost don't do selling the fiber.
David Kaplan: Okay. And the 900,000 homes passed, I know you guys have set a goal that's a little bit higher than that this year. Has anything changed, are you ahead of schedule on that or are you on schedule or are you thinking about passing more homes now given the success you've seen so far?
Avi Gabbay: No, we are quite on schedule.
David Kaplan: Okay, so the end of this year we should or should say going into next year we should expect to see a significant decrease in CAPEX, is that correct?
Avi Gabbay: Again, sorry.
David Kaplan: We should expect to see much lower CAPEX in 2023 in that case than fewer investments in the fiber network?
Avi Gabbay: We didn't summarize yet the budget for 2023 because we are in the process of it and we have to decide on the how many home we are going to pass this year and some other investments. So I cannot elaborate on our budget till 2023.
David Kaplan: So does that mean you think there's a possibility that you would continue rolling out fiber and homes passed at the same rate that you're rolling them out now or would you expect for there to be a lower rate in 2023 of that?
Avi Gabbay: Definitely there's going to be a low rate in 2023. Still, there are other issues that we want to -- we are -- letâs say discussing the possibilities of investing in other issues that we need, it's not only fiber, it's not the only investment that we do.
David Kaplan: Okay, and then the last question is given the increase and continued higher levels of free cash flow, I know we talked last quarter about potential dividends, can you tell us where you are on that and as far as where Partner is or where the Board is as far as considering a dividend?
Avi Gabbay: Okay, first of all, we believe that at the end all the stakeholders should enjoy the company including the shareholders. And shareholders the way to -- let's say to enjoy the company by dividends and we intend to summarize the budget to 2023. And then to almost at the same time to make the plan for five years to see the business plan of the company five years ahead. And then we'll make the decision about the dividends whether yes or no and the amount. As you probably understand, I mean it's probably yes, the issue -- the only issue is what is the amount and what is the schedule.
David Kaplan: And would that be like it was in the past, do you believe you might have answered this question yet, a quarterly dividend, do you think it would be a semiannual or just an annual dividend?
Avi Gabbay: We didn't discuss it yet at the Board, so I don't want to.
David Kaplan: Okay, alright, thank you very much.
Avi Gabbay: You are welcome.
Operator: . There are no further questions at this time. Before I ask Mr. Gabbay to go ahead with his closing statement, I would 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 03-925-5921 and internationally, please call 9723-925-5921. The recording is also available on the company's website www.partner.co.il. Mr. Gabbay, would you like to make your concluding statement.
Avi Gabbay: Yeah, thank you. Well, Partner continues to report growth and stability in the financial results together with continued investment in fiber optics in 5G deployments. Correspondently in these days, we have concluded the formalization of the company's management team while staying focused on the further service improvements to our customers. I want to thank you again for joining us today and we look forward to speaking to you next quarter. Have a good day.
Operator: Thank you. This concludes the Partner Communications third quarter 2022 Results conference call. Thank you for your participation. You may go ahead and disconnect.