Last updated on April 24, 2014 at 21:24 EDT

Palestine Telecommunications Company (PalTel) Announces Financial Results for H1 2012

August 13, 2012

RAMALLAH, Palestine, August 13, 2012 /PRNewswire/ –

Net Income reached US$ 58m while economic activity in the market place is experiencing
retraction on the short term

Classified by Palestine exchange as the leader company in dividends payout ,
distributed over 90% of USD 74.2 Million to shareholders this year

The Palestine Telecommunications Company, PalTel announced its financial results for
the first half of 2012.

Consolidated net operating revenues grew by 0.3% to reach US$ 258m at the end of
H1-2012 compared with US$ 257m at the end of H1-2011. In regards to the operating revenues
of each segment, the company achieved a growth in its mobile and data revenues by 0.6% and
68.8% respectively while fixed Line and Media revenues dropped by 9.0% and 11.8%

The consolidated operating income reached US$ 83m by the end of H1-2012 compared with
US$ 91m by the end of H1-2011,. The growth rates in revenues and operating results for the
current period have been affected by several external developments, principal of which was
the devaluation of the Israeli Shekel (collection currency) versus the Jordanian Dinar
(reporting currency) where the average exchange rate during the first six months of 2012
was 5.36 ILS/JOD compared to 4.96 ILS/JOD the same period of last year.

The consolidated net income stands at US$ 58m at the end of H1-2012 compared with US$
67m at the end of H1-2011. The decline is mainly attributable to the devaluation of the
Israeli Shekel and as a direct result to the company’s decision to postpone the 50% tax
exemption for two years in response to a request by the government in order to alleviate
the public financial crisis; Paltel is entitled for this exemption as part of the law of
encouragement of investment in Palestine. Another exogenous factor is the new income tax
bracket of 20% imposed this year by the government compared to 7.5% the year before. As a
result of the fiscal crisis in the public sector, the tax authorities in Palestine have
declared a new tax scheme raising the corporate tax rate from 15% to 20% starting January

Sabih Masri, Chairman of PalTel stated that “Throughout the years we have experienced
strong growth in our net operating revenues and our operating revenues in core business
operations in terms of mobile and data services. Although there has been a decline in our
operating income this quarter, it is due to the impact of the revised Tax Law that was
enforced beginning of this year in addition to an economic slowdown in Palestine. Masri
further stated that “by the end of the fiscal year, we hope that our accumulated results
will reflect more positive results in all operational indicators as we continue to work on
the short term plans and continue to develop on the long term vision of the
Telecommunications sector in Palestine.”

Ammar Aker, CEO of Paltel Group stated, “we are confident that we will absorb the
sudden interruptions caused by the new tax bracket, the tax exemption waiver plus foreign
currency fluctuations in the short term as we continue to adapt implementing a prudent
strategy of both growing our customer base and preserving our customer loyalty. We believe
the current turbulence and uncertainty is tied to external factors and we are hopeful that
before end of year the economic conditions will stabilize and the impact on our results
shall be diluted by end of the year”

Current Operating Performance

Fixed Line

The number of fixed line subscribers witnessed 1.8% growth rate to stand at 392K
subscribers compared with 385K as of the end of year 2011. This growth resulted from new
acquisition campaigns.

The average monthly revenue per fixed line subscriber reached US$19.3 at the end of
H1-2012 compared with US$21.1 at the end of 2011 and US$20.4 at the end of H1-2011.


Mobile subscribers grew by 7.8% to stand at 2.61m at the end of H1-2012 compared with
2.42m at the end of 2011, and grew by 12.9% compared with the end of H1-2011 where the
total number of subscribers was 2.31m. The composition (split between) of the prepaid and
postpaid subscribers was 89.9% and 10.1% respectively.

This growth in the number of mobile subscribers was affected by several acquisition
campaigns and new products and services that targeted existing and prospective customers.

The blended ARPU reached US$13.2/subscriber/month during the first half of 2012
compared with US$14.7 in H1-2011 and US$14.3 for the full year 2011. This decrease in the
ARPU H1-2012 vs. H1-2011 is attributable to the larger customer base, low ARPU of new
customers, offering larger discounts to the customers and the exchange rate differential.


The data segment achieved a 7.4% growth rate in the number of ADSL lines to stand at
167K lines by the end of H1-2012 compared with 156K lines as of the end of 2011, and grew
by 21.6% compared to H1-2011 where the base was 138K lines. This increase in customer base
was accompanied by a decline in ARPU which reached US$14.1 in H1-2012 compared to US$18.8
by year end 2011. In addition, penetration rate of the ADSL lines (per landline) increased
from 40.5% at the end of 2011 to 42.7% at the end of H1-2012

Future Outlook

The company will continue to employ a long term strategy of growing new customer base
in its core services, Mobile, Fixed Line and Data services while servicing current
customers and offering competitive price offers to meet economic realities of these
customers. The company continues to invest in technological advancements to remain at edge
with new value added offers and to prepare the network for 3G services to be ready once
the frequencies are Obtained . The company will also investigate other investment
opportunities in new areas as it continues to diversify its sources of income. With more
than 82% market share and with 70% penetration rate, we are still confident of capturing
future growth in the telecom market in the Palestinian territories.

About Paltel

Palestine Telecommunication Company (“PalTel”) is an integrated telecom operator
offering fixed, mobile, Internet and data services throughout The Palestinian Territories.
Paltel is publicly listed on the Palestinian Stock Exchange (PSE). Paltel owns majority
equity ownership in Paltel (fixed line operator), Jawwal (Mobile Operator), Reach (Call
Centre services), Palmedia (Information and Media Services Provider), Hulul (Business
Solutions Provider) and Hadara (ISP Services). Paltel also owns equity in Vtel Holdings a
Dubai-based multinational telecommunications company with interests in Middle East, Asia
and Europe. As of August 1 2012, Jawwal has 2.61 million mobile customers, 392K fixed line
customers and 167K ADSL customers. For more information, please visit


        For further information please contact

        Ms. Fareeda Diab
        Director of Investor Relations


        Tel: +970-2-294-4004
        Mob: +970-59-900-00-22

SOURCE Paltel Group

Source: PR Newswire