Transcript שקופית 1 - B Communications

Introducing the Bezeq Era
Investors presentation, May 2012
Forward-Looking Statement
This presentation contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements are statements that are not historical facts and may include
financial projections and estimates and their underlying assumptions, statements regarding plans,
objectives and expectations with respect to future operations, products and services, and statements
regarding future performance. These statements are only predictions based on our current expectations
and projections about future events. There are important factors that could cause our actual results,
level of activity, performance or achievements to differ materially from the results, level of activity,
performance or achievements expressed or implied by the forward-looking statements. Those factors
include the factors indicated in our filings with the Securities and Exchange Commission (SEC). For more
details, refer to our SEC filings and the amendments thereto, including our Annual Report on Form 20-F
and Current Reports on Form 6-K. We undertake no obligation to update forward-looking statements to
reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may
be required by law.
1
BCOM’s Key Parameters
B Communications Ltd. (“BCOM”) is a telecommunications-oriented holding company
which is a subsidiary of Internet Gold.
Internet Gold’s primary holding is its approximately 79.94% interest in BCOM (TASE and
Nasdaq: BCOM), which in turn holds the controlling interest (approximately 31.05%) in
Bezeq, The Israel Telecommunication Corp. (“Bezeq”), Israel’s largest telecommunications
provider (TASE: BZEQ).
From April 2010 through March 2012, BCOM repaid approximately NIS 2 billion of the
bank debt that was incurred to fund its April 2010 acquisition of the controlling interest in
Bezeq, including ~ NIS 1.7 billion of nominal principal installments and ~ NIS 0.3 billion
of interest and CPI-linkage expenses.
2
Eurocom Group Overview
• Founded in 1979
Eurocom Group overview
• One of Israel’s largest holding companies with a strong presence in Israel and a growing international presence
• Owned by Shaul Elovitch, Chairman of the Board of Directors (80% ownership) and Yossef Elovitch, Director (20% ownership)
• Solid financial base and strategic partnerships ensure the strong backing necessary to accelerate growth
• Diversified portfolio with investments in telecommunications, media, real estate, consumer electronics and financial services
Eurocom Communications
Telecom Services
Media
Internet Gold 

Golden Lines Ltd.
Satellite Services
YES – D.B.S. Satellite
Services (1998) Ltd.

B Communications
Bezeq
Walla

Walla Shops
Telecom Consumer
Electronic Products

Space
Communications Ltd.
Satcom Sys Ltd.

Satlink
Communications Ltd.
Eurocom Cellular
Communications
(Nokia)
Eurocom Real
Estate Ltd.
Eurocom Digital
Communications
(Panasonic)
E.G.R.E. Ltd.
Pelephone
Bezeq International
Investments &
Finance
Real Estate
D.M. Engineering
Ltd.

Enlight energy Ltd.

Eurocom Capital
Finance Ltd.
Pilat Media
Global Plc.

Pointer
Telocation

EITAG . Ltd.
Bezeq On-Line
 Traded on TASE
 Traded on NASDAQ
3
3
Eurocom: Israel’s Largest
Communications Footprint
Relative strength
Internet access
Company within the group
5
Internet Services
Internet VAS residential
Internet business
e-Advertising
e-Commerce
Date Services
ILD
Fixed telephony
Mobile
Multi channel TV
Telecom & consumer electronics.
Satellite services
5
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5
5
5
5
5
5
5
5
4
BCOM - Experienced, Disciplined Leadership
Shaul Elovitch

Founder & Chairman
over 30 years experience
building leading communications
businesses and other major
investments businesses
Doron Turgeman
CEO since 2011 & CFO since 2001
Proven capabilities in:
•
•
•
•
•
•
Strategy creation & strategic planning
Marketing & brand development
Operational & financial management
Management of mergers & acquisitions
Creation of partnerships
Capital raising: 9 major transactions
• 2 IPOs – IGLD and SMLC
(renamed-BCOM)
• 9 bond issues
17 years experience in management,
15 years in communications
 Chairman
of the board of directors of Bezeq and it’s subsidiaries
5
Key Milestones for BCOM
From small entrepreneurial business
to large holding company
1992
to
1995
1995
To
2000
2000
to
2007
2007
to
2009
2009
to
 Israeli telecom market commences privatization process
 Eurocom participates in the privatization process and forms a corporate vehicle for that purpose
 Goal: to become one of Israel’s leading telecom service providers




Internet emerges as a major commercial service
IGLD decides to focus on ISP activities
Expansion into Content and Value-Added Services
Successful listing on NASDAQ (IGLD) (TASE dual listing 2005)




Continuous organic growth
Restructure of IGLD into a group holding Smile Communications and Smile Media
Acquisition and merger with 012 Golden Lines to form 012 Smile Communications
Successful IPO and listing of 012 Smile Communications on NASDAQ and TASE (SMLC)





Continuous organic growth
Crystallization of the strategy to become a leader in the Israeli telecom market
Preparation for the next major M&A transaction while examining several opportunities
Sale of legacy 012 Smile.Communications assets
Acquisition of the controlling interest in Bezeq – Israel’s telecom market leader
 Acquisition of the controlling interest in Bezeq – Israel’s telecom market leader
 From April 2010 through March 2012, BCOM repaid more than NIS 2 billion of its bank debt which was
incurred to fund its April 2010 acquisition of the controlling interest in Bezeq.
2012
6
Group Structure
Eurocom Group
~79%
Free float
~21%
• April 2010 - BCOM acquired the
controlling interest in Bezeq from the
Apax-Saban-Arkin consortium.
Internet Gold
Golden Lines
~80%
Free float
~20%
• Bezeq trades on the Tel-Aviv Stock
Exchange, BCOM and IGLD - listed on
the NASDAQ Global Select Market &
TASE.
BCOM¹
~31%
Free float³
~69%
Fixed-line, broadband
infrastructure, data
com
Call centre
services
Pay-TV
(DTH)
100%
100%
100%
100%
~50%
~100%
Mobile telephony
and data
ILD, ISP,
enterprise
solutions
Walla!
Internet
portal
Source: Company’s information, Bezeq’s investors’ presentation.
¹ Prior to April 2010, BCOM operated under the name 012 Smile Communications.
7
Bezeq
Overview
8
Bezeq: Israel’s Most Comprehensive Communications
Infrastructure and Service Provider
Bezeq Group
Level B
2011 Rev.
2011 EBITDA
100%
100%
100%
49.8%¹ 
NIS 11.37bn
NIS 4.64bn
100%
100%
Level B
Fixed-Line
Bezeq Int’l
Pelephone
yes
Bezeq on line
Walla!
Fixed-line, broadband
infrastructure, data com
ILD, ISP,
enterprise solutions
Mobile telephony
and data
Pay-TV
(DTH)
Call centre
services
Internet portal
2011 Rev.
2011 EBITDA
NIS 4.65bn
NIS 2.34bn
2011 Rev.
NIS 1.35bn
2011 EBITDA NIS 350mm
2011 Rev.
2011 EBITDA
NIS 5.55bn
NIS 1.92bn
2011 Rev.
NIS 1.62bn
2011 EBITDA NIS 571mm
¹ 50.2% held by Eurocom. Following a Supreme Court decision which prevents Bezeq from acquiring control of yes, as of
August 21, 2009, Bezeq ceased consolidating yes’ s financial results and began accounting for its investment in yes
according to the equity method
e – Commerce
e - Advertising
Listed on TASE
9
Bezeq’s Results
Revenues
EBITDA
38.7%
11,519
(NIS Million)
11,987
11,373
Net income attributable to shareholders
4,457
2,157
5,153
40.8%
4,637
Free cash flow *
2,210
2,443
43.0%
2,207
2,066
1,549
Source : Bezeq’s press release
2008 and 2009 figures do not consolidate YES results
* Free cash flow is defined as free cash flows from operating activities less net capex paymants
10
Bezeq Overview
Level B
Bezeq Fixed-Line
Pelephone
Bezeq International
Fixed-line, broadband infrastructure, data com
Mobile telephony and data
ILD, ISP, enterprise solutions
Fiscal year ending December 31
CAGR
NISmm
2009A
2010A
2011A
09–11
Revenue
5,303
5,263
4,648
-3.5%
-0.8%
-11.7%
2,317
2,733
2,346
43.7%
51.9%
50.5%
% growth
EBITDA
% margin
Capex
% of rev.
FCF1
% of rev.
767
900
937
14.5%
17.1%
20.2%
1,550
1,833
1,409
29.2%
34.8%
30.3%
2011A
09–11
NISmm
2009A
2010A
2011A
09–11
-6.38%
Revenue
5,376
5,732
5,548
1.59%
Revenue
1,318
1,380
1,354
1.36%
14.1%
6.6%
-3.2%
14.1%
4.7%
-1.9%
0.62%
EBITDA
1,794
1,984
1,921
3.48%
EBITDA
345
414
350
33.4%
34.6%
34.6%
26.2%
30.0%
25.8%
% growth
% margin
10.53%
Capex
% of rev.
-4.66%
FCF1
% of rev.
555
397
382
10.3%
6.9%
6.9%
1,239
1,587
1,539
23.0%
27.7%
27.7%
% growth
% margin
-17.04%
Capex
% of rev.
11.45%
• 2.85 million cellular customers
• HSPA (High Access Packet Speed)
cellular technology offering 3.75 G
speed.
• Essential to accessing higher value
segments of the market.
• Strong platform for rising smartphone
demand and advanced data services.
EBITDA- Net Capex
CAGR
2010A
• FTTC, all IP, infrastructure for consumer
and business customers.
1
Fiscal year ending December 31
CAGR
2009A
• Most advanced communications network
in Israel.
• 85% of Israeli households covered.
Fiscal year ending December 31
NISmm
FCF1
% of rev.
120
180
288
9.1%
13.0%
21.3%
225
234
62
17.1%
17.0%
4.6%
0.72%
54.92%
-47.51%
• Leading broadband Internet service in
Israel Approximately 37% Internet
market share.
• Israel’s largest data center.
• New high- speed submarine cable
system deployed between Israel and
Europe.
• Increasing bandwidth at affordable
rates.
11
Bezeq’s Dividend Policy:
distribution of 100% of its after-tax profit on a semi-annual basis
Dividend Distributions (in NIS millions)
Dividend yield (%)¹
Regular dividends
Special dividends
15.8%
10.4%
12.0%
2,860
3,733
16.7%
12.8%
3,155
1,538
8.1%
3
1,000
4
1,800
²
1,941
1,600
2,195
2,155
2010A
2011A
1,514
1,060
2006A
2007A
2008A
2009A
• Based on its ownership interest, BCOM will
receive ~30% of Bezeq’s annual dividends
• Since 2006, Bezeq has paid over NIS 10 billion
(US$ 2.6 billion) in dividends
• Bezeq has already paid the first and second of
six equal special dividend payments which were
declared by the Board of Directors and
approved by the Israeli Court. This special
dividend of 3 NIS billion in the aggregate will
be paid on a semi-annual basis during
2011-2013
Source: Bezeq
¹ Based on regular and special dividends paid during the fiscal year.
² Special dividend paid in February 2007.
³ Special dividend which included a one-time gain of NIS 1.5 billion as a result of the deconsolidation of YES.
4 Special dividend paid in May and in October 2011.
12
BCOM’s Cash Position
As of March 31, 2012, BCOM’s unconsolidated cash and cash equivalents totaled NIS 393
million, its unconsolidated total debt was NIS 4.5 billion, and its net debt totaled NIS 3.6 billion.
BCOM’s Unconsolidated Balance Sheet Data*
As of March 31, 2012
NIS millions
Short term liabilities
Long term liabilities
Total liabilities
Cash and cash equivalents
Dividend receivable
Total net debt
565
3,934
4,499
393
489
3,617
* Does not include the balance sheet of Bezeq
13
Projection of Future Debt Repayment
(2012-2016, NIS millions)
891
900
28
39
800
224
700
637
629
625
37
37
29
38
27
38
106
103
100
77
77
78
78
378
380
381
382
600
543
34
500
400
37
17
217
300
200
383
100
0
Consortium of banks led by Bank Hapoalim - Semi annual installments
Consortium of banks led by Bank Hapoalim - Bullet loans
Debentures
Migdal Insurance Group
Other
• The projected debt repayment take into consideration future changes in the CPI index rate of 2% per year
• All amounts include future estimated interest payments
14
B Communication Debentures
Receive an A2 Stable Rating
Midroog Ltd., an Israeli rating company affiliated with Moody’s, has awarded the Company’s debentures
an A2 stable rating.
In awarding the debentures an A2 stable rating, Midroog cited the following factors: (1) the Company’s
holding of the controlling interest in Bezeq, the leading player in the Israeli communications market,
which has an Aa1 stable rating; (2) the leverage inherent in BCOM’s ownership of the controlling interest
in Bezeq; and (3) the financing structure for the acquisition of the Bezeq interest, including the seniority
of BCOM’s debt and its ability to repay the financing secured to facilitate the Bezeq acquisition.
Midroog also based its assessment on the low level of business risk inherent in Israel’s communications
market, including (1) Bezeq’s position in Israel’s communications market as the leading provider of
diverse communications services to the Israeli market; and (2) the strength of the Bezeq brand, which is
supported by leading technology and high-quality services and management. The Aa1 stable rating
awarded to Bezeq’s debentures is based, in part, on its own leverage levels, which enable it to cover its
debt quickly.
In addition, Midroog gave consideration to forecasts regarding BCOM’s cash flow, collateral, debt
seniority, leverage levels and debt coverage capabilities. These considerations led Midroog to award
BCOM’s debentures a different rating than it awarded Bezeq, BCOM’s underlying asset.
15
Introducing the Bezeq Era
Thank you