Cellcom Israel announces 10% increase in revenues and 40% increase in operating profit for 2006

March 12, 2007

3 Min Read

NETANYA, Israel -- Cellcom Israel Ltd. (NYSE: CEL) ("Cellcom," the "Company"), the leading Israeli cellular Company, announced today its financial results for the fourth quarter and full year ended December 31, 2006.

Fourth quarter and full year 2006 highlights:

  • Revenues for the full year 2006 were NIS 5.62 billion ($1.33 billion); EBITDA totaled NIS 1.864 billion ($441 million), representing 33.2% of revenues; net income totaled NIS 517 million ($122 million), or NIS 5.30 per share ($1.25 per share)

  • Annual content and value-added services (excluding SMS) revenues rose 55%

  • The Company added 201,000 new subscribers throughout 2006, 56,000 of which in the fourth quarter (additional 80,000 are attributed to the change in subscriber counting method(3))

  • Revenues for the fourth quarter of 2006 totaled NIS 1.43 billion ($339 million), a 13% increase from the fourth quarter 2005; EBITDA for the quarter totaled NIS 435 million ($103 million), a 35% increase from the fourth quarter 2005; Net income for the quarter totaled NIS 127 million ($30 million), or NIS 1.30 per share ($0.31 per share), a 95% increase from the fourth quarter 2005

1) EBITDA is a non-GAAP measure and is defined as income before financial income (expenses), net; other income (expenses), net; income tax; depreciation and amortization. See the reconciliation note at the end of the Press Release.

2) Free cash flow is a non-GAAP measure and is defined as the difference between the net cash provided by operating activities and the net cash used in investing activities. See the reconciliation note at the end of the Press Release.

3) Starting from the beginning of the third quarter the Company adopted a different method for counting subscribers, which, to the best of its knowledge, is the accepted method by other cellular operators in Israel. Under this method subscribers are deducted from the subscriber base after six months of no revenue generation or activity on Cellcom's network. Previously, subscribers were deducted from the subscriber base after three months. As a result of this change, subscribers that were not counted under the previous stricter method, are now included in the subscriber base.

Commenting on the results, Amos Shapira, Chief Executive Officer said, "Cellcom's strong performance in 2006 followed the combined effort of all our employees and managers. It also follows the improvements implemented in all areas of service, technology, marketing and sales as well as the ongoing efficiency measures."

"During the year we invested substantial management and financial resources to improve our service and customer satisfaction. This can be seen in our increased market share both in terms of number of subscribers and revenues. Looking ahead, we expect to continue to generate growth through our improved customer service, strong unique brand, expanding third generation (3G) subscriber base".

Mr. Shapira added, "During the second half of 2006, Cellcom introduced a wide variety of 3.5 Generation HSDPA based content and services. We expect these to serve as growth drivers in the quarters to come. Cellcom's HSDPA 3.5G network is the most advanced of its kind in Israel and will enable us to offer a wide variety of services, including a fast, unique web surfing experience, and the ability to support the functionality available in the latest generation of mobile handsets and end-user equipment. Only six months since the launch, our HSDPA network already covers most of Israel's populated territory. At the beginning of the third quarter we also launched our new landline services and believe that this too will serve as a growth driver in years to come".

Mr. Shapira concluded, "We are proud of our results and would like to thank our customers, employees and shareholders for making our success possible. We are committed to continue our efforts in 2007 and expect to deliver strong results".

Cellcom Israel Ltd.

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