Matav-Cable Systems Media Ltd. Announces Second Quarter and First Six Months 1999 Results

Business Wire, August 18, 1999

NETANYA, Israel--(BUSINESS WIRE)--Aug. 18, 1999--

Revenues Increase 11% "Partner's" Revenues Virtually Double over

Prior Quarter, while Loss Narrows Substantially

Matav-Cable Systems Media Ltd. (NASDAQ: MATVY) today announced unaudited results for the second quarter and six months ended June 30, 1999.

Revenues for the second quarter increased by 11.0% to New Israeli Shekels (NIS) 111.9 million (U.S. $27.5 million) (a) compared to NIS 100.8 million for the second quarter of 1998. Operating income was NIS 36.5 million (U.S. $9.0 million) compared to NIS 38.2 million for the same period a year ago. Net income before the Company's share in the losses of associated companies was NIS 19.9 million (U.S. $4.9 million) compared to NIS 23.1 million for the second quarter of 1998. Net income also includes a one-time charge of about NIS 4,524 recorded in "other expense," associated with the Company's planned purchase of an addressable analog system.

The reported loss, including the Company's share in the losses of associated companies, was NIS 12 million (U.S. $3.0 million) compared to a net profit of NIS 23.6 million for the same period last year. The Company's share of Partner's second quarter losses was approximately NIS 33.7 million. Net loss per ADS for the second quarter was NIS 0.70 (U.S. $0.16) versus income of NIS 1.74 last year (NIS 1.54 diluted).

Earnings before interest, taxes, depreciation and amortization (EBITDA), excluding "other expense," was NIS 57.1 million (U.S. $14.0 million) compared to NIS 58.8 million for the second quarter last year.

Revenues for the six months ended June 30, 1999 reached NIS 223.2 million (U.S. $54.8 million), an increase of 10.4% over the same period a year ago. Operating income was NIS 76.2 million (U.S. $18.7 million) compared to NIS 77.0 million for the same period last year. Net income before the Company's share in the losses of associated companies was NIS 46.2 million (U.S. $11.3 million) compared to NIS 46.8 million for the same period last year. Net income also reflects the one-time charge described above.

The reported loss, including the Company's share in the losses of associated companies for the six months ended June 30, 1999 was NIS 37.5 million ($9.2 million) compared to a net profit of NIS 47.3 million for the same period last year. Net loss per ADS for the first six months was NIS 2.54 (U.S. $0.62) versus income of NIS 3.48 last year (NIS 3.00 diluted).

Earnings before interest, taxes, depreciation and amortization (EBITDA), excluding "other expense" was NIS 117.1 million (U.S. $28.7 million) compared to NIS 117.7 million for the first six months of 1998.

As of June 30, 1999 the Company had increased the number of homes passed to 394,125 and subscribers to 277,914. This represents a penetration rate of 70.5%.

Partner Communications Company Ltd. ("Partner"), the third Israeli mobile cellular telecommunication services licensee (in which Matav indirectly holds a 20.3% share), recorded revenues for the second quarter of 1999 of NIS 179 million, an increase of 94% compared to the NIS 92 million recorded in the first quarter of 1999. The loss from operations for the second quarter narrowed to NIS 166 million compared to NIS 252 for the first quarter. During July, 1999, Partner's subscriber base passed the 200,000 mark compared to 100,000 at the end of the first quarter.

Barak ITC (1995), one of three Israeli providers of international telephone service, in which MATAV holds a 10% share, reported second quarter 1999 revenues of NIS 187 million, an increase of 46% compared to NIS 128 for the second quarter of 1998. At the same time, the loss narrowed to NIS 75 million compared to NIS 107 million in the second quarter of 1998. Since Matav records Barak's results on a cost basis, the losses have no impact on Matav's reported results.

During the quarter, the Council of Cable and Satellite Broadcasting decided that the cable companies will not be allowed to provide tiering for a period of 18-27 months, or until direct broadcast satellite (DBS) reaches 250,000 subscribers, whichever is sooner.

Also during the quarter, the Public Broadcast Regulation Administration submitted recommendations to the Council of Cable and Satellite Broadcasting. The Administration recommended, among other things, that the Council determine that a channel jointly broadcast by the CATV operators be produced by an independent producer not related to the CATV operators producer, and that as long as the CATV operators are the dominant operators in the market, they not be allowed to make exclusive agreements with the producer of such a channel. The Company opposes the recommendations.

Commenting on the results, Amit Levin, Acting CEO of MATAV said, "During the second quarter, Matav made substantial progress both in preparing for an increasingly competitive environment, and in evolving from a supplier of CATV, to an ICE (Information, Communications and Entertainment) provider. Our core cable services business continues to operate according to plan, while our telecommunications investments made significant progress.