Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | B COMMUNICATIONS LTD |
Entity Central Index Key | 1,402,606 |
Trading Symbol | BCOM |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | FY |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Document Fiscal Year Focus | 2,017 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Accelerated Filer |
Entity Common Stock, Shares Outstanding | 29,889,045 |
Consolidated Statements of Fina
Consolidated Statements of Financial Position ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Current assets | ||||
Cash and cash equivalents | ₪ 2,386 | [1] | $ 688 | ₪ 762 |
Investments | 596 | [1] | 172 | 907 |
Trade receivables, net | 1,915 | [1] | 552 | 2,000 |
Other receivables | 270 | [1] | 78 | 216 |
Related party | 43 | [1] | 12 | |
Inventory | 125 | [1] | 36 | 106 |
Total current assets | 5,335 | [1] | 1,538 | 3,991 |
Non-current assets | ||||
Long-term trade and other receivables | 493 | [1] | 142 | 644 |
Property, plant and equipment | 6,940 | 2,003 | 7,072 | |
Intangible assets | 5,840 | 1,684 | 6,534 | |
Deferred expenses and non-current investments | 558 | [1] | 161 | 465 |
Broadcast rights | 454 | [1] | 131 | 432 |
Deferred tax assets | 1,019 | [1] | 294 | 1,007 |
Total non-current assets | 15,304 | [1] | 4,415 | 16,154 |
Total assets | 20,639 | [1] | 5,953 | 20,145 |
Current liabilities | ||||
Bank loans and credit and debentures | 1,858 | [1] | 536 | 2,051 |
Trade and other payables | 1,719 | [1] | 496 | 1,640 |
Related party | [1] | 32 | ||
Current tax liabilities | 160 | [1] | 46 | 138 |
Provisions | 94 | [1] | 27 | 80 |
Employee benefits | 280 | [1] | 81 | 315 |
Total current liabilities | 4,111 | [1] | 1,186 | 4,256 |
Non-current liabilities | ||||
Bank loans and debentures | 12,437 | [1] | 3,588 | 11,446 |
Employee benefits | 272 | [1] | 78 | 258 |
Other liabilities | 234 | [1] | 67 | 244 |
Provisions | 40 | [1] | 12 | 47 |
Deferred tax liabilities | 459 | [1] | 132 | 593 |
Total non-current liabilities | 13,442 | [1] | 3,877 | 12,588 |
Total liabilities | 17,553 | [1] | 5,063 | 16,844 |
Equity | ||||
Attributable to shareholders of the company | 1,246 | [1] | 359 | 1,170 |
Non-controlling interests | 1,840 | [1] | 531 | 2,131 |
Total equity | 3,086 | 890 | 3,301 | |
Total liabilities and equity | ₪ 20,639 | [1] | $ 5,953 | ₪ 20,145 |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Consolidated Statements of Inco
Consolidated Statements of Income ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪)₪ / shares | [1] | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2016ILS (₪)₪ / shares | Dec. 31, 2015ILS (₪)₪ / shares | |
Income Statement [Abstract] | |||||
Revenues | ₪ 9,789 | $ 2,823 | ₪ 10,084 | ₪ 9,985 | |
Costs and expenses | |||||
Depreciation and amortization | 2,117 | 611 | 2,161 | 2,131 | |
Salaries | 2,007 | 579 | 2,015 | 1,958 | |
General and operating expenses | 3,906 | 1,127 | 4,021 | 3,876 | |
Other operating expenses (income), net | 149 | 43 | 21 | 3 | |
Costs and expenses | 8,179 | 2,360 | 8,218 | 7,968 | |
Operating profit | 1,610 | 463 | 1,866 | 2,017 | |
Financing expenses (income) | |||||
Finance expenses | 586 | 169 | 1,054 | 689 | |
Finance income | (69) | (20) | (123) | (154) | |
Financing expenses, net | 517 | 149 | 931 | 535 | |
Profit after financing expenses, net | 1,093 | 314 | 935 | 1,482 | |
Share of loss (income) in equity-accounted investee | 5 | 1 | 5 | (12) | |
Profit before income tax | 1,088 | 313 | 930 | 1,494 | |
Income tax expenses | 347 | 100 | 442 | 358 | |
Net profit for the year | 741 | 213 | 488 | 1,136 | |
Profit (loss) attributable to: | |||||
Shareholders of the company | 78 | 22 | (236) | 210 | |
Non-controlling interests | 663 | 191 | 724 | 926 | |
Net profit for the year | ₪ 741 | $ 213 | ₪ 488 | ₪ 1,136 | |
Earnings (loss) per share | |||||
Basic | (per share) | ₪ 2.62 | $ 0.76 | ₪ (7.92) | ₪ 7.04 | |
Diluted | (per share) | ₪ 2.62 | $ 0.76 | ₪ (7.92) | ₪ 6.97 | |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | [1] | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | |
Statement of Comprehensive Income [Abstract] | |||||
Net profit for the year | ₪ 741 | $ 213 | ₪ 488 | ₪ 1,136 | |
Items of comprehensive profit (loss), net of tax | (8) | (2) | (15) | 7 | |
Total comprehensive profit for the year | 733 | 211 | 473 | 1,143 | |
Attributable to: | |||||
Shareholders of the Company | 76 | 21 | (240) | 212 | |
Non-controlling interests | 657 | 190 | 713 | 931 | |
Total comprehensive profit for the year | ₪ 733 | $ 211 | ₪ 473 | ₪ 1,143 | |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity ₪ in Millions, $ in Millions | ILS (₪) | USD ($) | Share capitalILS (₪)shares | Share premiumILS (₪) | Treasury SharesILS (₪) | Other reservesILS (₪) | Retained earningsILS (₪) | TotalILS (₪) | Non-Controlling interestsILS (₪) | |||
Beginning balance at Dec. 31, 2014 | ₪ 3,588 | ₪ 3 | ₪ 1,057 | [1] | ₪ (48) | ₪ (51) | ₪ 961 | ₪ 2,627 | ||||
Beginning balance, shares at Dec. 31, 2014 | shares | [2] | 29,889,045 | ||||||||||
Exercise of options in a subsidiary | 19 | (1) | (1) | 20 | ||||||||
Dividends to non-controlling interests | (1,232) | (1,232) | ||||||||||
Dividends to shareholders | (127) | (127) | (127) | |||||||||
Other comprehensive profit (loss), net of tax | 7 | 2 | 2 | 5 | ||||||||
Net profit for the year | 1,136 | 210 | 210 | 926 | ||||||||
Comprehensive profit for the year | 1,143 | 2 | 210 | 212 | 931 | |||||||
Ending balance at Dec. 31, 2015 | 3,391 | $ 882 | ₪ 3 | 1,057 | [1] | (47) | 32 | 1,045 | 2,346 | |||
Ending balance, shares at Dec. 31, 2015 | shares | [2] | 29,889,045 | ||||||||||
Exercise of options in a subsidiary | 4 | (2) | (2) | 6 | ||||||||
Transactions with non-controlling interest, net of tax | 850 | 722 | 722 | 128 | ||||||||
Dividends to non-controlling interests | (1,062) | (1,062) | ||||||||||
Dividends to shareholders | (355) | (355) | (355) | |||||||||
Other comprehensive profit (loss), net of tax | (15) | 3 | (7) | (4) | (11) | |||||||
Net profit for the year | 488 | (236) | (236) | 724 | ||||||||
Comprehensive profit for the year | 473 | 3 | (243) | (240) | 713 | |||||||
Ending balance at Dec. 31, 2016 | 3,301 | 952 | ₪ 3 | 1,057 | [1] | (46) | 156 | 1,170 | 2,131 | |||
Ending balance, shares at Dec. 31, 2016 | shares | [2] | 29,889,045 | ||||||||||
Dividends to non-controlling interests | (948) | (273) | (948) | |||||||||
Other comprehensive profit (loss), net of tax | (8) | (2) | 1 | (3) | (2) | (6) | ||||||
Net profit for the year | 741 | [3] | 213 | 78 | 78 | 663 | ||||||
Comprehensive profit for the year | 733 | [3] | 211 | 1 | 75 | 76 | 657 | |||||
Ending balance at Dec. 31, 2017 | ₪ 3,086 | $ 890 | ₪ 3 | ₪ 1,057 | [1] | ₪ (45) | ₪ 231 | ₪ 1,246 | ₪ 1,840 | |||
Ending balance, shares at Dec. 31, 2017 | shares | [2] | 29,889,045 | ||||||||||
[1] | Represents an amount less than NIS 1. | |||||||||||
[2] | Net of treasury shares. | |||||||||||
[3] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Cash flows from operating activities | |||||
Net profit for the year | ₪ 741 | [1] | $ 213 | ₪ 488 | ₪ 1,136 |
Adjustments: | |||||
Depreciation and amortization | 2,117 | [1] | 611 | 2,161 | 2,131 |
Impairment of goodwill | 129 | [1] | 37 | ||
Profit from gaining control over DBS | [1] | (12) | |||
Share of loss (profit) of equity accounted investees | 5 | [1] | 1 | 5 | (12) |
Finance expenses, net | 525 | [1] | 151 | 981 | 570 |
Capital gain, net | (27) | [1] | (8) | (86) | (136) |
Income tax expenses | 347 | [1] | 100 | 442 | 358 |
Change in inventory | (35) | [1] | (10) | (20) | (20) |
Change in trade and other receivables | 194 | [1] | 57 | 110 | 323 |
Change in trade and other payables | 16 | [1] | 5 | (24) | (271) |
Changes in provisions | 15 | [1] | 4 | (19) | 18 |
Changes in employee benefits | (33) | [1] | (10) | (65) | 110 |
Change in other liabilities | (34) | [1] | (10) | 23 | (9) |
Net income tax paid | (473) | [1] | (136) | (534) | (534) |
Net cash provided by operating activities | 3,487 | [1] | 1,005 | 3,462 | 3,652 |
Cash flows from investing activities | |||||
Purchase of property, plant and equipment | (1,131) | [1] | (326) | (1,193) | (1,324) |
Investment in intangible assets and deferred expenses | (399) | [1] | (115) | (223) | (311) |
Proceeds from the sale of property, plant and equipment | 98 | [1] | 28 | 138 | 151 |
Tax payments due to owners loans | [1] | (461) | |||
Change in investments, net | 301 | [1] | 87 | 621 | 1,574 |
Net deposits from (to) restricted cash | [1] | 155 | (90) | ||
Cash from gaining control over investee | [1] | 299 | |||
Other | 3 | [1] | 1 | 15 | 11 |
Net cash provided by (used in) investing activities | (1,128) | [1] | (325) | (948) | 310 |
Cash flows from financing activities | |||||
Proceeds from issuance of debentures and loans received | 2,635 | [1] | 760 | 4,184 | 1,010 |
Repayment of debentures and loans | (1,813) | [1] | (523) | (4,871) | (2,297) |
Interest paid | (537) | [1] | (155) | (915) | (769) |
Dividends paid by Bezeq to non- controlling interests | (948) | [1] | (273) | (1,062) | (1,232) |
Transactions with non-controlling interests | [1] | 978 | |||
Dividends to shareholders | [1] | (355) | (127) | ||
Payments to Eurocom DBS | (61) | [1] | (18) | (256) | (680) |
Others | (11) | [1] | (3) | (36) | 1 |
Net cash used in financing Activities | (735) | [1] | (212) | (2,333) | (4,094) |
Net increase (decrease) in cash and cash equivalents | 1,624 | [1] | 468 | 181 | (132) |
Cash and cash equivalents as at the beginning of the year | 762 | 220 | 581 | 713 | |
Cash and cash equivalents as at the end of the year | ₪ 2,386 | [1] | $ 688 | ₪ 762 | ₪ 581 |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Reporting Entity
Reporting Entity | 12 Months Ended |
Dec. 31, 2017 | |
Reporting Entity [Abstract] | |
Reporting Entity | Note 1 - Reporting Entity B Communications Ltd. (“the Company”) is an Israeli resident company incorporated in Israel. The address of the Company’s registered office is 2 Dov Friedman Street, Ramat-Gan, Israel. The consolidated financial statements of the Company as at and for the year ended December 31, 2017 include the accounts of the Company and its subsidiaries. The Company is a majority-owned subsidiary of Internet Gold - Golden Lines Ltd. (“IGLD” or “Internet Gold”) and its ultimate parent is Eurocom Holdings (1979) Ltd. (“Eurocom”). On April 14, 2010, the Company completed the acquisition of 30.44% of the outstanding shares of Bezeq - The Israel Telecommunications Corp. Limited (“Bezeq”) and became the controlling shareholder of Bezeq. Bezeq’s ordinary shares are registered for trade on the Tel Aviv Stock Exchange. On February 1, 2016, the Company sold 115,500,000 shares of Bezeq (4.18% of the outstanding shares of Bezeq) for NIS 8.5 per share or NIS 978, net of transaction costs. The Company retained a 26.34% ownership interest in Bezeq, following the closing of the transaction. For more information relating to the Company’s control over Bezeq, see Note 12F. The ordinary shares of the Company are registered for trade on the NASDAQ Global Select Market and on the Tel Aviv Stock Exchange. On June 20, 2017, the Israel Securities Authority began an open investigation (“the Investigation”), which included searches at the offices of Bezeq and of DBS and seizure of documents. As part of the investigation, the Chairman of Bezeq’s Board of Directors (when the investigation was initiated) was questioned, as well as Bezeq’s CEO, the CEO and CFO of DBS, and to the best of Bezeq’s knowledge, other senior officers and officers in the Group. On November 6, 2017, the Israel Securities Authority (“the ISA”) issued a press release regarding the conclusion of the Investigation and the transfer of the Investigation file to the Tel Aviv District Attorney (Taxation and Economics). In accordance with the notice, the ISA concluded that there is prima facie evidence establishing the involvement of the main suspects in the case, in offenses of: (1) fraudulently receiving funds in connection with the entitlement of Bezeq’s controlling shareholder to a receive contingent consideration of NIS 170 as part of the transaction for Bezeq’s purchase of DBS shares from Bezeq’s controlling shareholder, which consideration was based on certain targets to be met by DBS; (2) leaking the material of the independent committee of Bezeq’s Board of Directors that examined interested party transactions (the transaction for the acquisition of DBS shares by Bezeq and the transaction between DBS and Space Communications Ltd. for the purchase by DBS of satellite segments from Space Communications Ltd.) to Bezeq’s controlling shareholder and associates; and (3) promoting Bezeq’s interests in the Ministry of Communications in violation of the Penal Law and the Israel Securities Law. The notice further stated that the Investigation file was transferred to the District Attorney’s Office and that the District Attorney’s Office is authorized to decide on how to continue to proceed with this matter. It should be noted that in this context, on November 20, 2017, Bezeq and DBS received a “letter of notice to the suspect” indicating that the investigation file relating to Bezeq and DBS as suspects was transferred to the Attorney General for review. On February 18, 2018, the ISA and the Israel Police issued a joint press release stating that in view of the evidence the ISA found in its investigation, which raised suspicions of additional offenses, a new joint investigation was opened on that date by investigators of the ISA and the Unit for Combating Economic Crime at Lahav 433. Pursuant to such investigation, a number of suspects were arrested, including senior officers of the Bezeq Group (including a former director and controlling shareholder in Bezeq and Bezeq’s CEO), and were subsequently released under restrictive conditions. To the best of Bezeq’s knowledge, and based on the Court’s rulings, the officers are suspected, together with others, of offenses of fraud, administrative offenses, obstruction of justice, bribery, offenses under the Israel Securities Law, deception and breach of trust in a company, and also some offenses under the Prohibition on Money Laundering Law, 2000. Subsequent to the opening of the investigation, a number of legal proceedings were commenced against Bezeq, officers of Bezeq, and companies of the group of controlling shareholders in Bezeq, including motions for certification of class actions and motions for discovery of documents before submitting a motion for certification of a derivative claim. For further information, see Note 20. Bezeq does not have full information about the investigations described in this section, or the content, the materials or the evidence in the possession of the legal authorities. In addition, in view of the provisions of Israeli law and the concern of obstructing investigation proceedings, Bezeq at present is prevented from, and is avoiding, the examination of all matters that were raised in the investigations. This restricts Bezeq’s activity, including in all matters relating to audits and assessments required for publishing Bezeq’s reports. Accordingly, Bezeq is unable to assess the effects of the investigations, their findings and their results on Bezeq and its officers, on the internal control of Bezeq, on the financial statements and on the estimates, if any, used in the preparation of these financial statements. |
Basis of Preparation
Basis of Preparation | 12 Months Ended |
Dec. 31, 2017 | |
Basis of Preparation [Abstract] | |
Basis of Preparation | Note 2 - Basis of Preparation A. Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. The consolidated financial statements were authorized to be issued by the Company’s Board of Directors on May 15, 2018. B. Definitions In these financial statements- (1) The Company: B Communications Ltd. (2) The Group: B Communications Ltd. and its subsidiaries, as listed in Note 12.B. (3) Parent company: Internet Gold - Golden Lines Ltd. (4) Bezeq: Bezeq - The Israel Telecommunication Corp. Limited. (5) Bezeq Group: Bezeq The Israel Telecommunication Corp. Limited and its subsidiaries, as listed in Note 12 Investees. (6) DBS: DBS Satellite Services (1998) Ltd. (7) Eurocom Communications: Eurocom Communications Ltd. (8) Subsidiaries: Companies whose financial statements are fully consolidated, directly or indirectly, with the financial statements of the Company. (9) Associates: Companies, in which the Group’s investment is included, directly or indirectly, in the consolidated financial statements on an equity basis. (10) Investees: Subsidiaries or associates. (11) Related party: As defined in IAS 24 (2009), Related Party Disclosures. (12) Israeli CPI: The consumer price index as published by the Israeli Central Bureau of Statistics. C. Functional currency and presentation currency The consolidated financial statements are presented in NIS, which is the Group’s functional currency, and have been rounded to the nearest million. The NIS is the currency that represents the principal economic environment in which the Group operates. D. Convenience translation into U.S. dollars (“dollars” or “$”) For the convenience of the reader, the reported NIS figures as at December 31, 2017, have been presented in dollars, translated at the representative rate of exchange as at December 31, 2017 (NIS 3.467 = US$ 1.00). The dollar amounts presented in these financial statements are merely supplementary information and should not be construed as complying with IFRS translation method or as representing amounts that are receivable or payable in dollars or convertible into dollars, unless otherwise indicated. E. Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for the following items: * Financial instruments, including financial derivative instruments, measured at fair value recognized through profit or loss. * Inventories measured at the lower of cost and net realizable value. * Equity-accounted investments. * Deferred tax assets and liabilities. * Provisions. * Assets and liabilities for employee benefits. * Liabilities for payment of contingent consideration in a business combination. For further information regarding the measurement of these assets and liabilities see Note 3 regarding significant accounting policies. The methods used to measure fair value are specified in Note 17E. F. Operating cycle The Group’s operating cycle is up to one year. As a result, current assets and current liabilities include items the realization of which is intended and anticipated to take place within one year from the date of the financial statements. G. Use of estimates and judgments The preparation of financial statements in conformity with IFRS requires the Group’s managements to make judgments and use estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant estimates and judgments made when applying accounting policies and changes in these estimates and assumptions that could potentially have a material effect on the financial statements are as follows: Subject Main assumptions Possible implications Reference Useful life and expected operation of fixed assets, intangible assets, broadcasting rights, and subscriber acquisition asset Assumptions of the useful life of groups of fixed assets, intangible assets, and additional assets Change in the value of fixed assets, intangible assets, additional assets, and in depreciation and amortization expenses Note 8, Note 9, Note 10 and Note 11 Measurement of recoverable amounts of cash-generating units that include goodwill Assumption of expected cash flows from cash-generating units Recognition of impairment loss Note 9 Deferred taxes Assumption of anticipated future realization of the tax benefit in the future, including assumptions for the utilization of carryforward losses in DBS, and the assumption that it is more likely than not that the cancellation of the structural separation between Bezeq and DBS will be approved. Recognition or reversal of deferred tax asset in profit or loss Note 19 Uncertain tax positions The extent of the certainty that the Group’s tax positions will be accepted and the risk of it incurring any additional tax and interest expenses. This is based on an analysis of a number of matters including interpretations of tax laws and the Group’s past experience Recognition or reversal of income tax expenses Note 19 Measurement of liabilities and the fair value of the excess of advance payments for contingent consideration in a business combination The assumptions regarding the amount expected to be recovered for Bezeq from the excess of the advance payments, and taking into consideration the solvency of Eurocom DBS Change in the value of the liability for contingent consideration for a business combination and change in the fair value of the excess of the advance payments for contingent consideration and recognition in the statement of income for this change, respectively. Note 12 Provisions and contingent liabilities Assessment of the likelihood of claims against Group companies and measuring potential liabilities attributable to claims Reversal or creation of a provision for a claim and recognition of income/expenses respectively Note 15 and Note 20 Post-employment employee benefits Actuarial assumptions such as discount rate, future salary increases and churn rate Increase or decrease in the post-employment defined benefit obligation Note 18 The existence of effective control over Bezeq The practical ability to appoint most of the members of the board of directors of Bezeq, as a result of the control permit in Bezeq, the composition and distribution of the holdings of the other shareholders of Bezeq and the restrictions on these shareholders under the Telecommunications Law Consolidation of Bezeq’s reports or treatment of Bezeq using the equity method. Note 3 H. Determination of fair value When preparing the financial statements, the Group is required to determine the fair value of certain assets and liabilities. Further information about the assumptions made in determining fair values is disclosed in Note 17E regarding fair value. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 3 - Significant Accounting Policies The accounting policies set out below have been applied consistently by Group entities for all periods presented in these consolidated financial statements. In this Note, where the Group has chosen accounting alternatives permitted in accounting standards and/or in accounting policy where there is no explicit provision in accounting standards, such disclosure is presented in bold. This does not attribute greater importance compared to other accounting policies that are not presented in bold. A. Initial application of new standards As from January 1, 2017, the Group has early adopted IFRS 15, Revenue from Contracts with Customers (“IFRS 15”), which sets out guidelines for recognition of revenue. IFRS 15 presents a new model for recognizing revenue from contracts with customers, which includes five steps for analyzing transactions so as to determine when to recognize revenue and in what amount: 1. Identifying the contract with the customer. 2. Identifying separate performance obligations in the contract. 3. Determining the transaction price. 4. Allocating the transaction price to separate performance obligations. 5. Recognizing revenue when the performance obligations are satisfied. In accordance with the model, the Group recognizes revenue when the customer gains control over the goods or services. Revenue is based on the consideration that the Group expects to receive for the transfer of the goods or services promised to the customer. Revenue is recognized when it is expected that the economic benefits will flow to the Group. Application of the model did not have a material effect on the measurement of the Group’s revenue in 2017, compared to the provisions of the previous standard. The main effect of the Group’s application of IFRS 15 is the accounting treatment for the incremental costs of obtaining a contract with a customer (“Subscriber Acquisition”), which are costs incurred to obtain a contract with a customer and which costs would not have been incurred had the contract not be obtained (such as sales commissions). These are recognized as an asset when the costs are attributed directly to a contract that the Group can specifically identify, they produce or improve the Group’s resources that will be used for its future performance obligation and it is probable that the Group will recover these costs, and not only where there is an obligation of the customer to acquire services from the Group for a defined period. Accordingly, direct commissions paid to agents and sales employees of the Group for sales and upgrades under agreements that do not include an obligation period for the customer, are recognized as an asset for obtaining a contract instead of an expense in the statement of income, since the Group expects to recover the incremental costs for achieving the contract in the framework of the contracts. An asset for obtaining a contract is amortized in accordance with the expected useful life of the subscribers and in accordance with the average churn rate of subscribers based on the type of subscriber and service received (mainly over 1-4 years). Contract acquisition costs that would arise regardless of whether the contract was obtained are recognized as an expense when incurred. The Group applied IFRS 15 using the cumulative effect approach without a restatement of comparative figures. As part of the initial implementation of IFRS 15, the Group has chosen to apply the expedients in the transitional provisions, according to which the cumulative effect approach is applied only for contracts not yet complete at the transition date and the accounting treatment for the contracts completed at the transition date will not be amended. The contracts that are renewed every month and that may be cancelled by the customer at any time, without any penalty, are contracts that ended at the date of initial application of IFRS 15. Therefore, Subscriber Acquisition costs incurred prior to January 1, 2017 and recognized in the statement of income as an expense were not accounted for retroactively. Other than the accounting treatment of Subscriber Acquisition costs, implementation of IFRS 15 had no other material effects on the financial statements. In addition, implementation of IFRS 15 had no effect on retained earnings as at the transition date. The tables below summarize the effects on the consolidated statement of financial position as at December 31, 2017 and on the consolidated statements of income and cash flows for 2017, assuming that the Group’s previous policy regarding subscriber acquisition costs continued during that period. Effect on the consolidated statement of financial position of the Group as at December 31, 2017: In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net subscriber acquisition asset (stated as deferred expenses and non-current investments) 4 111 115 Equity attributable to shareholders of the Company 1,224 22 1,246 Non-controlling interests 1,778 62 1,840 Total equity 3,002 84 3,086 Effect on the consolidated cash flows statement of the Group for 2017: Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net cash from operating activities 3,322 165 3,487 Net cash used in investing activities (963 ) (165 ) (1,128 ) Effect on the consolidated statement of income of the Group for 2017: Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS General and operating expenses 4,037 (131 ) 3,906 Salaries 2,041 (34 ) 2,007 Depreciation and amortization expenses 2,063 54 2,117 Operating profit 1,499 111 1,610 Profit after financing expenses 982 111 1,093 Profit before income tax 977 111 1,088 Income tax 320 27 347 Net profit for the period 657 84 741 Profit attributable to shareholders of the Company 56 22 78 Profit attributable to non-controlling interests 601 62 663 Earnings per share (Basic and Diluted) 1.88 0.74 2.62 As from January 1, 2017, the Group applies the amendment to IAS 12, Income Taxes: Recognition of Deferred Tax Assets for Unrealized Losses. The Amendment clarifies that for purposes of recognizing a deferred tax asset, the effect of reversal of deductible temporary differences should be excluded when assessing future taxable profit. Moreover, the Amendment provides that probable future profits may include profits from the recovery of assets at more than their carrying value, if there is sufficient supporting evidence. Application of the amendment did not have an effect on the Group’s financial statements. B. Non-controlling interests On January 1, 2016 the Group changed its accounting policy with respect to transactions with non-controlling interests, while retaining control. According to the new accounting policy, the difference between the consideration paid or received for change in non-controlling interests is recognized in retained earnings. The Group believes that this presentation provides more relevant information about its distributable earnings. This change in accounting policy was applied retrospectively and did not have any impact on earnings per share. Allocation of impairment loss to non-controlling interests If an impairment loss allocated to non-controlling interests relates to goodwill that was not recognized in the consolidated financial statements, the impairment is not recognized as an impairment loss on goodwill. In such cases, only an impairment loss relating to goodwill that was allocated to the owners of the Company is recognized as an impairment loss on goodwill. For purposes of goodwill impairment testing, when the non-controlling interests are initially measured according to their relative share of the acquiree’s net identifiable assets, the carrying amount of the goodwill is adjusted according to the share which the Group holds in the cash-generating unit to which the goodwill is allocated. C. Consolidation of the financial statements and investments in associates (1) Business combinations A. The Group implemented the acquisition method for all business combinations. The acquisition date is the date on which the acquirer obtained control over the acquiree. B. The Group recognized goodwill at acquisition based on the fair value of the consideration transferred, and the fair value at the acquisition date of any pre-existing equity right of the Group in the acquiree, less the net amount of the identifiable assets acquired and the liabilities assumed. C. The consideration transferred includes the fair value of the assets transferred to the previous owners of the acquiree and the liabilities incurred by the acquirer to the previous owners of the acquiree, including the obligation to acquire the acquiree’s equity instruments. In addition, the consideration transferred includes the fair value of any contingent consideration. Subsequent to the acquisition date, the Group recognizes changes in fair value of contingent consideration classified as a financial liability in profit or loss under financing expenses. D. In step acquisitions, the difference between the fair value at the acquisition date of the Group’s pre-existing equity rights in the acquiree and the carrying amount at that date is recognized in the statement of income under other operating income or expenses. E. Costs associated with the acquisition that were incurred by the Group in the business combination such as advisory, legal, valuation and other professional or consulting fees were recognized as expenses in the period the services are received. (2) Subsidiaries Subsidiaries are entities controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date of loss of control. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the acquiree and it has the ability to affect those returns through its power over the acquiree. Substantive rights held by the Group and others are taking into account when assessing control. (3) Transactions eliminated on consolidation Intra-group balances and income and expense arising from intra-group transactions are eliminated in the preparation of the consolidated financial statements. D. Foreign currency transactions Transactions in foreign currency are translated into the functional currency of the Group at the exchange rate on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies on the reporting date are retranslated to the functional currency at the exchange rate at that date. E. Financial instruments (1) Non-derivative financial assets Non-derivative financial assets include mainly investments in exchange traded notes, financial funds, exchange traded funds (“ETFs”), deposit certificates, debt instruments, shares, trade and other receivables, and cash and cash equivalents. The Group initially recognizes financial assets at the date the Group becomes a party to contractual provisions of the instrument, meaning the date that the Group undertakes to buy or sell the asset. Financial assets are derecognized when the contractual rights of the Group to the cash flows from the asset expire, or the Group transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Regular way sales of financial assets are recognized on the trade date, meaning on the date the Group undertook to sell the asset. (2) Classification of financial assets and the accounting treatment in each group The Group classifies its financial assets as follows: Cash and cash equivalents Cash consists of cash balances available for immediate use and call deposits. Cash equivalents consist of short-term highly liquid investments (with original maturities of three months or less) that are readily convertible into known amounts of cash and are exposed to insignificant risks of change in value. Financial assets at fair value through profit or loss A financial asset is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Upon initial recognition. These financial assets are measured at fair value and changes therein are recognized in the statement of income. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, net of impairment losses. (3) Non-derivative financial liabilities Non-derivative financial liabilities include debentures issued by the Group, loans and borrowings from banks and other credit providers, and trade and other payables. The Group initially recognizes debt instruments as they are incurred. Financial liabilities are initially recognized at fair value plus any attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is discharged or canceled. (4) CPI-linked assets and liabilities that are not measured at fair value The value of CPI-linked financial assets and liabilities, which are not measured at fair value, is revaluated in each period according to the actual increase in the CPI. (5) Offsetting financial instruments Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. (6) Derivative financial instruments including hedge accounting a. Hedge accounting The Group holds derivative financial instruments to hedge cash flows against risks to future changes in the CPI. Forward contracts are measured at fair value. Changes in the fair value of a derivative hedging instrument designated as a cash flow hedge are recognized through other comprehensive income, in a hedging reserve under equity, to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in profit or loss. The amount recognized in the hedging reserve is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss under the same line item in the statement of income as the hedged item. b. Economic hedges The Group holds other derivative financial instruments to hedge cash flows against foreign currency risks. Hedge accounting is not applied for these instruments. The derivative instruments are recognized at fair value; changes in fair value are recognized in profit and loss as incurred. (7) Share capital a. Ordinary shares Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity. b. Treasury shares When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares F. Broadcast rights Broadcasting rights are stated at cost, net of rights exercised. The net adjustment of the broadcasting rights is presented as an adjustment of earnings as part of the ongoing operations in the statements of cash flows. G. Property, plant and equipment (1) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labor and financing costs as well as any other cost directly attributable to bringing the asset to the condition for its use intended by the management, and the estimated costs of dismantling and removing the items and restoring the site on which they are located when the Group has an obligation to vacate and restore the site. The cost of purchased software that is integral to the functionality of the related equipment is recognized as part of the cost of the equipment. Spare parts, servicing equipment and stand-by equipment are classified as property, plant and equipment when they meet the definition of property, plant and equipment under IAS 16, otherwise they are classified as inventory. When major parts of the property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of the property, plant and equipment. Gain or loss from the disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal of the asset with its carrying amount. Gain or loss from the sale of fixed assets is recognized under operating income in the statement of income. (2) Subsequent expenditure The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefit embodied in the replaced item will flow to the Group and its cost can be measured reliably. The costs of day-to-day servicing are recognized in the statement of income as incurred. (3) Depreciation Depreciation is recognized in the statement of income on a straight-line basis over the estimated useful life of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets under finance lease agreements are depreciated over the shorter of the lease term and their useful lives. An asset is depreciated when it is ready for use, meaning when it reaches the location and condition necessary for it to be capable of operating in the manner intended by management. Leasehold improvements are depreciated over the shorter of the lease term, including the extension option held by the Group and expected to be exercised and the expected life of the improvement. The estimated useful lives for the current period are as follows: Useful life Fixed line and international network equipment (switches, transmission, power) 4-12 Network 12-33 Subscriber equipment and installations 4-8 Equipment and infrastructure for multichannel television 3-15 Vehicles 6-7 Office and general equipment 5-10 Electronic equipment, computers and internal communication systems 3-7 Cellular network 4-10 Passive radio equipment at cellular network sites up to December 31, 2037 Buildings 25 Seabed cable 4-25 (mainly 25) Depreciation methods, useful lives and residual values are reviewed at least at each reporting year and adjusted as required. H. Intangible assets (1) Goodwill and brand names Goodwill and brand names that arise upon the acquisition of subsidiaries are included in intangible assets. Subsequent to initial recognition, brand name (Bezeq CGU, Bezeq International CGU and Pelephone CGU) and goodwill are measured at cost less accumulated impairment losses. Goodwill and brand names are measured at least once a year to assess impairment. (2) Software development costs Software development costs are recognized as an intangible asset only if the development costs can be measured reliably; the software is technically and commercially feasible; and the Group has sufficient resources to complete the development and intends to use the software. The costs recognized as an intangible asset include the cost of the materials, direct labor and overhead expenses directly attributable to preparation of the asset for its intended use. Other development costs are recognized in the statement of income as incurred. Capitalized development costs are measured at cost less amortization and accumulated impairment losses. (3) Software Software that is an integral part of the hardware, which cannot function without the programs installed on it, is classified as property, plant and equipment. However, licenses for stand-alone software, which adds functionality to the hardware, is classified (mainly) as intangible assets. (4) Frequency rights Rights to frequencies refer to frequencies assigned to Pelephone for cellular activities, after it won the dedicated tenders of the Ministry of Communications. Depreciation of the asset is recognized in the statement of income on the straight-line method over the term of the allocation of frequencies, which started from the use of the frequencies. The 4G frequencies (LTE) and 3.5G frequencies (UMTS/HSEA) are amortized until August 22, 2028. (5) Other intangible assets Other intangible assets acquired by the Group, which have a definite useful life, are measured at cost less amortization and accumulated impairment losses. (6) Subsequent expenditures Subsequent expenditures are recognized as intangible assets only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures relating to generated goodwill and brands, are recognized in the statement of income as incurred. (7) Amortization Amortization, except for goodwill, brand names (excluding brands acquired in the DBS business combination) and customer relationships, is recognized in the statement of income on a straight-line basis over the estimated useful life of the intangible assets, from the date on which the assets are available for use. Goodwill and brand names are not systematically amortized but are tested for impairment at least once a year. Customer relationships are amortized according to the economic benefit expected from those customers each period based on their expected churn rate, which results in accelerated amortization during the early years of the relationship. Estimated useful lives for the current and comparative periods are as follows: Type of asset Amortization period Frequency usage rights Over the term of the license until 2028 Computer programs and software licenses 3 - 10 years according to the term of the license or the estimated time of use of the program Customer relationships 5 - 7 years Brand acquired in a business combination 12 Amortization methods and useful lives are reviewed at least once a year and adjusted if appropriate. I. Leased assets Leases, including leases of land from the Israel Land Administration, where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are measured at cost less accumulated amortization and impairment losses. Other leases are classified as operating leases and the leased assets are not recognized in the Group’s statement of financial position. Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. At inception or upon reassessment of an arrangement, the Group determines whether such an arrangement is or contains a lease. An arrangement is a lease or contains a lease if the following two criteria are met: A. The fulfillment of the arrangement is dependent on the use of a specific asset or assets. B. The arrangement contains rights to use the asset. If, in accordance with these terms, the Group determines that the agreement does not contain a lease, the agreement is accounted for as a service agreement and payments for the service are recognized in profit or loss on a straight-line basis, over the service period. J. Right of use of capacities Transactions for acquiring an indefeasible right of use of submarine communication cable capacities are mostly accounted for as service transactions. The prepaid expense is amortized on a straight-line basis as stated in the agreement, but for no longer than the expected estimated useful life of those capacities. Identifiable capacities which serve Bezeq exclusively meet the definition of a finance lease and are recognized in property, plant and equipment. The asset is depreciated on a straight-line basis as stated in the agreement, but for no longer than the expected estimated useful life of those capacities. K. Inventory The cost of inventories includes the cost of purchase and cost incurred in bringing the inventories to their present location and condition. Inventories are measured at the lower of cost or net realizable value. The Group elected to base the cost of inventories on the moving average principle. The inventories include terminal equipment and accessories intended for sale and service, as well as spare parts used for repairs in the repair service provided to its customers. Slow-moving inventory of terminal equipment, accessories and spare parts are stated net of the provision for impairment. L. Impairment (1) Non-derivative financial assets The Group tests a financial asset for impairment when objective evidence indicates that one or more loss events have had a negative effect on the estimated future cash flows of that asset. Significant financial assets are tested for impairment on an individual basis. Other financial assets are assessed for impairment collectively in groups that share similar credit risk characteristics, taking into account past experience. The financial statements include specific provisions and Group provisions for doubtful debts, which properly reflect, in the estimation of the management, the loss inherent in debts for which collection is in doubt. (2) Non-financial assets Timing of impairment testing The carrying amounts of the Group’s non-financial assets, other than inventory and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the recoverable amount of the asset is estimated. The Group assesses the recoverable amount of goodwill and brand name once a year, or more frequently if there are indications of impairment. Measurement of recoverable amount The recoverable amount of an asset or cash-generating unit is the greater of its value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit, for which the estimated future cash flows from the asset or cash-generating unit (for which future cash flows were not adjusted). Determining cash-generating units For the purpose of impairment testing, the assets are grouped together into the smallest group of assets that generates cash from continuing use that are largely independent of other assets or groups of assets (“cash-generating unit”). Allocation of goodwill to cash-generating units For purposes of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes, but in any event is not larger than an operating segment. Goodwill acquired in a business combination is allocated to cash-generating units that are expected to generate benefits from the synergies of the combination. Recognition of impairment loss An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. As regards cash-generating units that include goodwill, an impairment loss is recognized when the carrying amount of the cash-generating unit, after including the balance of goodwill, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis. See Note 9. M. Employee benefits (1) Post-employment benefits The Group has a number of post-employment benefit plans. The plans are usually financed by deposits with insurance companies and they are classified as defined contribution plans and defined benefit plans. a. Defined contribution plans A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. The Group’s obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the statement of income in the periods during which services are rendered by employees. b. Defined benefit plans The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is presented at its present value, and the fair value of any plan assets is deducted. The calculation is performed annually by a qualified actuary. The discount rate is the yield at the reporting date on high-quality linked corporate debentures denominated in NIS, with maturity dates approximating the terms of the Group’s obligations. Net interest costs on a defined benefit plan are calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability. The Group elected to recognize the interest costs that were recognized in profit or loss under financing expenses. Remeasurement of the net defined benefit liability comprises actuarial gains and losses and the return on plan assets (excluding interest). Remeasurements are recognized immediately directly in retained earnings When the benefits of a plan are improved or curtailed, the portion of the increased benefit relating to past service by employees or the gain or loss on curtailment are recognized immediately in profit or loss when the plan improvement or curtailment occurs. (2) Other long-term employee benefits The Group’s net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The amount of these benefits is stated at its present value. The discount rate is the yield at the reporting date on high-quality linked corporate debentures denominated in NIS, with maturity dates approximating the terms of the Group’s obligations. Any actuarial gains or losses are recognized in the statement of income in the period in which they arise. Any actuarial changes arising from a change in the discount rate are recognized in the financing expenses item, while the other differences are recognized in salary expenses. (3) Benefits for early retirement and dismissal Termination benefits are recognized as an expense when the Group is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognized as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. (4) Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits depending on the date when the benefits are expected to be to be wholly settled. In the statement of financial position, the employee benefits are |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 4 - Segment Reporting A. Operating Segments The Group operates in four segments in the communications sector and every company in the Group operates in one separate business segment. The primary reporting format, by business segments, is based on the Group’s management and internal reporting structure. Each company provides services in the segment in which it operates, using the property, plant and equipment and the infrastructure it owns (see also Note 24). The infrastructure of each company is used only for providing its services. Each of the companies in the Group is exposed to different risks and yield expectations, mainly with respect to the technology and competition in the segment in which it operates. Accordingly, the separable components in the Group are each company in the Group. Based on the above, the business segments of the Group are as follows: - Bezeq - The Israel Telecommunication Corp. Ltd.: fixed line domestic communications - Pelephone Communications Ltd.: cellular communications - Bezeq International Ltd.: international communications, internet services and network end point - DBS Satellite Services (1998) Ltd.: multichannel television The other companies in the Group are presented under the “Other” item. Other operations include call center services (Bezeq Online) and online shopping and classified ads (through Walla). These operations are not reported as reporting segments as they do not fulfill the quantitative thresholds. Inter-segment pricing is set at the price determined in a transaction in the ordinary course of business. The results, assets and liabilities of a segment include items directly attributable to that segment, as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period for acquisition of property, plant and equipment and intangible assets. The Group’s investment in DBS was accounted for using the equity method up to March 23, 2015. As from that date, the financial statements of DBS are consolidated with the financial statements of the Group as described in Note 12B below. The Group reports on multichannel television as an operating segment without adjustment to ownership rates and excess cost in all reporting periods. Year ended December 31, 2015 Domestic Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 4,122 2,831 1,485 1,774 197 (440 ) 9,969 Inter-segment revenues 285 59 93 - 24 (445 ) 16 Total revenue 4,407 2,890 1,578 1,774 221 (885 ) 9,985 Depreciation and amortization 725 419 132 322 13 520 2,131 Segment results - operating income 2,148 157 240 250 (15 ) (763 ) 2,017 Finance income 30 53 7 32 17 15 154 Finance expenses (362 ) (4 ) (15 ) (635 ) (2 ) 329 (689 ) Total financing income (expense), net (332 ) 49 (8 ) (603 ) 15 344 (535 ) Segment profit (loss) after finance expenses, net 1,816 206 232 (353 ) - (419 ) 1,482 Share in profit (loss) of equity-accounted investee - - - - (2 ) 14 12 Segment profit (loss) before income tax 1,816 206 232 (353 ) (2 ) (405 ) 1,494 Income tax 492 55 60 1 - (250 ) 358 Segment results - net profit (loss) 1,324 151 172 (354 ) (2 ) (155 ) 1,136 Additional information: Segment assets 7,311 3,269 1,160 1,667 659 4,965 19,031 Goodwill - - 6 - 10 3,050 3,066 Investment in equity-accounted investee - - 4 - 7 14 25 Segment liabilities 12,117 513 343 6,685 104 (1,031 ) 18,731 Investments in property, plant and equipment and intangible assets 837 419 127 281 33 (80 ) 1,617 Year ended December 31, 2016 Domestic Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 4,063 2,587 1,478 1,745 198 - 10,071 Inter-segment revenues 320 43 70 - 20 (440 ) 13 Total revenue 4,383 2,630 1,548 1,745 218 (440 ) 10,084 Depreciation and amortization 717 380 137 296 16 615 2,161 Segment results - operating income 2,076 32 176 264 (34 ) (648 ) 1,866 Finance income 30 52 5 13 4 19 123 Finance expenses (475 ) (6 ) (15 ) (539 ) (2 ) (17 ) (1,054 ) Total financing income (expense), net (445 ) 46 (10 ) (526 ) 2 2 (931 ) Segment profit (loss) after finance expenses, net 1,631 78 166 (262 ) (32 ) (646 ) 935 Share in profit (loss) of equity-accounted investee - - 1 - (5 ) (1 ) (5 ) Segment profit (loss) before income tax 1,631 78 167 (262 ) (37 ) (647 ) 930 Income tax 399 17 42 (330 ) - 314 442 Segment results - net profit (loss) 1,232 61 125 68 (37 ) (961 ) 488 Additional information: Segment assets 7,111 3,294 1,177 2,026 193 3,260 17,061 Goodwill - - 6 - 10 3,050 3,066 Investment in equity-accounted investee - - 5 - 1 12 18 Segment liabilities 11,988 569 380 1,434 104 2,369 16,844 Investments in property, plant and equipment and intangible assets 828 277 126 227 13 - 1,471 Year ended December 31, 2017 Domestic Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 3,953 2,500 1,466 1,650 220 - 9,789 Inter-segment revenues 291 46 71 - 17 (425 ) - Total revenue 4,244 2,546 1,537 1,650 237 (425 ) 9,789 Depreciation and amortization 728 383 135 285 20 566 2,117 Segment results - operating income 1,971 72 174 163 (20 ) (750 ) 1,610 Finance income 36 54 4 10 5 (40 ) 69 Finance expenses (439 ) (3 ) (12 ) (81 ) - (51 ) (586 ) Total financing income (expense), net (403 ) 51 (8 ) (71 ) 5 (91 ) (517 ) Segment profit (loss) after finance expenses, net 1,568 123 166 92 (15 ) (841 ) 1,093 Share in profit (loss) of equity-accounted investee - - - - (4 ) (1 ) (5 ) Segment profit (loss) before income tax 1,568 123 166 92 (19 ) (842 ) 1,088 Income tax 396 28 39 336 - (452 ) 347 Segment results - net profit (loss) 1,172 95 127 (244 ) (19 ) (390 ) 741 Additional information: Segment assets 9,086 3,271 1,199 1,502 174 2,460 17,692 Goodwill - - 6 - 10 2,921 2,937 Investment in equity-accounted investee - - 5 - (6 ) 11 10 Segment liabilities 13,901 536 410 1,154 64 1,488 17,553 Investments in property, plant and equipment and intangible assets 851 331 169 237 19 - 1,607 B. Adjustments for segment reporting of revenue, profit or loss, assets and liabilities Year ended December 31, 2015 2016 2017 NIS NIS NIS Revenue Revenue from reporting segments 10,649 10,306 9,977 Revenue from other segments 221 218 237 Elimination of revenue from inter-segment sales except for revenue from sales to an associate reporting as a segment (445 ) (440 ) (425 ) Elimination of revenue for a segment classified as an associate (440 ) - - Consolidated revenue 9,985 10,084 9,789 Year ended December 31, 2015 2016 2017 NIS NIS NIS Profit or loss Operating income for reporting segments 2,795 2,548 2,380 Elimination of expenses from a segment classified as an associate (59 ) - - Financing expenses, net (535 ) (931 ) (517 ) Share in the losses (profit) of equity-accounted investees 12 (5 ) (5 ) Profit (loss) from operations classified in other categories 44 (34 ) (20 ) Depreciation and amortization of intangible assets resulting from the Bezeq PPA adjustments (545 ) (442 ) (483 ) Other adjustments (218 ) (206 ) (267 ) Consolidated profit before income tax 1,494 930 1,088 December 31, 2016 2017 NIS NIS Assets Assets from reporting segments 13,619 15,069 Assets attributable to operations in other categories 204 178 Goodwill not attributable to segment assets 3,050 2,921 Investment in an equity-accounted investee 12 11 Inter-segment assets 703 269 Assets resulting from the Bezeq PPA, net 2,119 1,678 Assets attributable to a non-reportable segment 438 513 Consolidated assets 20,145 20,639 December 31, 2016 2017 NIS NIS Liabilities Liabilities from reporting segments 14,371 16,001 Liabilities attributable to operations in other categories 104 64 Inter-segment liabilities (730 ) (1,360 ) Liabilities resulting from the Bezeq PPA, net 491 386 Liabilities attributable to a non-reportable segment 2,608 2,462 Consolidated liabilities 16,844 17,553 |
Cash and Cash Equivalents
Cash and Cash Equivalents | 12 Months Ended |
Dec. 31, 2017 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Note 5 - Cash and Cash Equivalents As of December 31, 2016, and December 31, 2017, cash and cash equivalents include mainly bank deposits with a maturity of up to 90 days. |
Investments Including Derivativ
Investments Including Derivatives | 12 Months Ended |
Dec. 31, 2017 | |
Investments Including Derivatives [Abstract] | |
Investments Including Derivatives | Note 6 - Investments Including Derivatives December 31, *2016 2017 NIS NIS Current investments Financial assets held for trading 352 321 Bank deposits 546 275 Monetary funds and others 9 - 907 596 The deposits are repayable until July 2018 and the other investments can be disposed of immediately. *Reclassified |
Trade and Other Receivables
Trade and Other Receivables | 12 Months Ended |
Dec. 31, 2017 | |
Trade and Other Receivables [Abstract] | |
Trade and Other Receivables | Note 7 - Trade and Other Receivables A. Composition of trade and other receivables December 31, 2016 2017 NIS NIS Trade receivables, net* Outstanding debts 785 765 Credit cards and checks receivable 450 428 Unbilled receivables 241 235 Current maturities of long-term receivables 505 472 Related parties 19 15 Total trade receivables 2,000 1,915 Other receivables and current tax assets Prepaid expenses 145 66 Other receivables (mainly from real estate sales) and current tax assets 71 204 Total other receivables 216 270 Long-term trade and other receivables Trade receivables- open debts (1) 445 387 Long term receivables (from real estate sales) 199 106 644 493 2,860 2,678 * The amount of trade receivables is stated net of the provision for doubtful debts (1) Discounted interest rates for long-term trade payables are based the estimated credit risk of trade payables. The discounted interest rates used by the Bezeq Group in 2017 are 3.4% - 3.5% (in 2016: 3.3% - 3.5%). B. Excepted payment dates for long-term trade and other receivables: December 31, 2017 NIS 2019 345 2020 142 2021 and thereafter 6 493 C. Change in provision for doubtful debts during the year December 31, 2016 2017 NIS NIS Balance at January 1 173 111 Impaired loss recognized 25 20 Lost debts (87 ) (39 ) Balance at December 31 111 92 D. Aging of trade receivables The aging of trade receivables at the reporting date was as follow: December 31, 2016 December 31, 2017 Gross Impairment Gross Impairment NIS NIS NIS NIS Current 2,282 (8 ) 2,153 (6 ) Past due up to one year 183 (46 ) 165 (37 ) Past due one to two years 50 (31 ) 44 (27 ) Past due more than two years 41 (26 ) 32 (22 ) 2,556 (111 ) 2,394 (92 ) |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Note 8 - Property, Plant and Equipment Switching Transmission, Multi- Office power, channel equipment, Cellular, equipment computers Land and And satellite Network and Subscriber and buildings equipment equipment infrastructure equipment vehicles Total NIS NIS NIS NIS NIS NIS NIS Cost Balance as at January 1, 2016 1,061 5,000 5,505 867 1,203 941 14,577 Additions 27 457 247 180 265 73 1,249 Disposals (37 ) - (12 ) (11 ) (4 ) (11 ) (75 ) Balance as at December 31, 2016 1,051 5,457 5,740 1,036 1,464 1,003 15,751 Balance as at January 1, 2017 1,051 5,457 5,740 1,036 1,464 1,003 15,751 Additions 34 408 228 165 278 75 1,188 Disposals (81 ) - - (1 ) (4 ) (2 ) (88 ) Balance as at December 31, 2017 1,004 5,865 5,968 1,200 1,738 1,076 16,851 Depreciation and impairment losses Balance as at January 1, 2016 350 2,951 2,486 143 770 664 7,364 Depreciation for the year 64 521 250 236 183 83 1,337 Disposals (12 ) - - (10 ) - - (22 ) Balance as at December 31, 2016 402 3,472 2,736 369 953 747 8,679 Balance as at January 1, 2017 402 3,472 2,736 369 953 747 8,679 Depreciation for the year 53 481 204 222 187 85 1,232 Balance as at December 31, 2017 455 3,953 2,940 591 1,140 832 9,911 Carrying amounts As at January 1, 2016 711 2,049 3,019 724 433 277 7,213 As at December 31, 2016 649 1,985 3,004 667 511 256 7,072 As at December 31, 2017 549 1,912 3,028 609 598 244 6,940 A. The residual value of the Bezeq Group’s copper cables is assessed at the end of each quarter. The residual value is NIS 188 as at December 31, 2017 and NIS 154 as at December 31, 2016. B. Property, plant and equipment in the Bezeq Group is derecognized at the end of each year upon reaching full depreciation, except for land, buildings, vehicles, copper cables and specific components for Pelephone’s UMTS network, which are derecognized upon their sale. In 2017, the Bezeq Group derecognized fully depreciated property at a cost of NIS 496 (in 2016, NIS 894). C. Bezeq Group companies review the useful life of the property, plant and equipment through their depreciation committees, in order to determine the estimated useful life of their equipment. The change is not expected to have a material impact on the depreciation expenses of the Group. Following the findings of the committees, minor changes were made in the estimated useful life of certain assets. D. Most of the real estate assets used by the Bezeq Group are leased under a capitalized finance lease from the Israel Lands Administration for 49 years beginning as of 1993, with an option for an extension of another 49 years. The lease rights are amortized over the term of the lease period. E. In 2013, Bezeq started to install a fiber optic network that will reach the subscriber’s home. In 2017, deployment of fibers reached the state required for operation when a decision is made on the technology to be used, and Bezeq began to amortize the network. Commercial operation of the network is expected in the future. F. At the reporting date, there are commitments to purchase property, plant and equipment in the amount of NIS 136 (in 2016: NIS 139). G. In accordance with the Telecommunications Order (Telecommunications and Broadcasts) (Determination of Essential Service Provided by Bezeq The Israel Telecommunication Corp. Ltd.), 1997, approval from the Prime Minister and Minister of Communications is required to confer rights in some of Bezeq’s assets (including switches, cable network, transmission network, and information and databases). H. For information about pledges see Note 22. I. For information about pledges on loans and borrowings, see Note 13. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets [Abstract] | |
Intangible Assets | Note 9 - Intangible Assets Computer Right of use Customer software in cellular and Goodwill and licenses frequencies brand names Others Total NIS NIS NIS NIS NIS NIS Cost Balance as at January 1, 2016 3,066 1,592 480 7,479 269 12,886 Acquisitions or additions from independent development - 187 - - 11 198 Disposals - - - - (11 ) (11 ) Balance as at December 31, 2016 3,066 1,779 480 7,479 269 13,073 Balance as at January 1, 2017 3,066 1,779 480 7,479 269 13,073 Acquisitions or additions from independent development - 227 - - - 227 Disposals - - - - (48 ) (48 ) Balance as at December 31, 2017 3,066 2,006 480 7,479 221 13,252 Amortization and impairment losses Balance as at January 1, 2016 - 1,009 205 4,339 215 5,768 Amortization for the year - 229 37 487 24 777 Disposals - - - - (6 ) (6 ) Balance as at December 31, 2016 - 1,238 242 4,826 233 6,539 Balance as at January 1, 2017 - 1,238 242 4,826 233 6,539 Amortization for the year - 218 29 530 9 786 Disposals - - - - (42 ) (42 ) Impairment losses 129 - - - - 129 Balance as at December 31, 2017 129 1,456 271 5,356 200 7,412 Carrying amounts As at January 1, 2016 3,066 583 275 3,140 54 7,118 As at December 31, 2016 3,066 541 238 2,653 36 6,534 As at December 31, 2017 2,937 550 209 2,123 21 5,840 Total value of goodwill attributable to each cash-generating unit: December 31 2016 2017 NIS NIS Domestic fixed-line communications 1,548 1,548 Cellular telephone 1,205 1,163 Multi-channel television (DBS) 120 33 International communications and internet services 181 181 Others 12 12 Total 3,066 2,937 Goodwill impairment testing For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating units (“CGU”) which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. Several goodwill balances result from the requirement to recognize a deferred tax liability on business combination, calculated as the difference between the tax effect of the fair value of the acquired assets and liabilities, and their tax bases. For the purpose of testing this goodwill for impairment, any of the related deferred tax liabilities recognized on acquisition that remain at the balance sheet date are treated as part of the carrying amount of the relevant CGU. The annual impairment test date is December 31. The recoverable amount of each CGU was calculated as its value in use which was based on the Discounted Cash Flow method under the Income Approach. Domestic fixed-line communications (Bezeq Fixed Line) - The value in use for Bezeq Group of a domestic fixed line cash-generating unit was calculated using the future discounted cash flow (DCF) method, based on the expected cash flow for the next five years. The expected cash flow is based on results of the domestic fixed-line communications segment in recent years, taking into account the commercial effect of opening up the wholesale internet market and the expected reform in connection with wholesale telephony services. Main assumptions underlying the forecast: An erosion in the number of subscribers and monthly average revenue per user in the telephony segment, an increase in the number of subscribers and in monthly average revenue per user in the internet services segment, stability in the other services provided by the fixed-line segment, and the development of new revenue channels. The revenue forecast is based on assumptions about the number of users and average revenue per user of internet infrastructure, the number of users and average revenue per user of telephony services, and revenue from transmission, data communication and other revenue. The effect of the elimination of the structural separation on the domestic fixed-line communication segment was not taken into account. The operating, sales, marketing and investment expenses were adjusted for domestic-fixed line communication operations. The nominal capital price taken into account was 7.5% (after tax). In addition, a permanent growth rate of 1% was assumed. The valuation was prepared by an external appraiser. Based on this valuation, the Group was not required to record amortization for impairment of a fixed line domestic communications cash-generating unit. Cellular telephone (Pelephone) - The value in use for Bezeq Group of a cellular cash-generating unit was calculated using the future discounted cash flow (DCF) method, based on the expected cash flow for the next five years. The expected cash flow is based on Pelephone’s results in recent years, such that future growth and market shares are affected by directions in the cellular market, such as price competition, regulation and the operation scope of the new cellular operators. The revenue forecast is based on assumptions regarding the number of users, average revenue per user, and sales of terminal equipment. The main assumption underlying the forecast is the recovery in Pelephone’s business activity in 2019, due to the expected stabilization of the market and the start of competitive balance. The operating, sales, marketing and investment expenses were adjusted for Pelephone’s volume of operations. The nominal capital price taken into account was 10% (after tax). In addition, a permanent nominal growth rate of 2.5% was assumed. The valuation was prepared by an external appraiser. Based on the above valuation, the carrying amount of the cellular telephone CGU is NIS 137 million higher than its recoverable amount of NIS 5,561 million. Consequently, an impairment loss of NIS 42 million attributable to shareholders was recognized. Due to the impairment of the CGU, the recoverable amount is the same as the carrying amount. The impairment loss was attributed in full to goodwill and was included under other income and expenses in the statement of income. The circumstances that led to the recognition of an impairment loss are the lower revenues resulted from a lower ARPU forecast as a result of the price competition in the cellular market. The forecast also assumes a lower decrease in the expenses of the cellular telephone CGU, as a result of efficiency measures taken by management, however, it does not fully compensate for the expected decrease in the CGU’s revenues. Multi-channel television (DBS) - The value in use for Bezeq Group of a multichannel television cash-generating unit was calculated using the discounted cash flow (DCF) method, based on cash flow forecasts from the operation for the next five years. The cash flow forecast is based on assessments regarding the development of the multi-channel television market in general and the operations of DBS in this market in particular. The valuation includes assumptions regarding the intensity of competition in the market, price levels and the regulatory environment. A key assumption of the forecast is that in the medium term, the intensity of competition in the market will decrease in a manner that will affect the churn rate of subscribers and price levels. The operating, sales, marketing and investment expenses were adjusted to the volume of DBS’s operations. The nominal capital price used was 8.5% (after tax). In addition, a permanent growth rate of 1% was assumed. The valuation was prepared by an external appraiser. Based on the above valuation, the carrying amount of the multi-channel television sector is NIS 87 million higher than the recoverable amount of NIS 1,346 million. Consequently, an impairment loss of NIS 87 million was recognized. Due to the impairment of the cash-generating unit, the recoverable amount is the same as the carrying amount. The impairment loss was attributed in full to goodwill and was included under other income and expenses in the statement of income. The events and circumstances that led to recognition of the impairment loss are the expectation that DBS’s revenues will continue to decline significantly in the short term, despite the positive contribution of the Sting TV service and due to the loss of satellite subscribers and the decrease in ARPU. The forecast assumes a decrease in the expenses of DBS, as a result of efficiency measures in most of its activities, however, this is not expected to fully compensate for the expected decrease in revenue. These, combined with relatively high capital investment throughout the forecast period, generated negative cash flows in the short term and improved DBS’s cash production capacity in the mid-term as the intensity of competition in the market decreases. International communications and Internet services (Bezeq International) - The value in use for the Group’s international communications and Internet services CGU was calculated using the discounted cash flow method, based on the expected cash flow for the next five years. The expected cash flow is based on the results of Bezeq International in recent years, such that future growth and market shares are affected by directions both in the international communications and Internet services markets, such as competition, regulation, and the wholesale market. The revenue forecast is based on assumptions regarding the number of users and average revenue per user (“ARPU”). The main assumption underlying the forecast is a decrease in ARPU due to the expected increase in competition in the coming years as a result of the wholesale market in the Internet services business line along with a decrease in retail users which will partially be offset by an increase in wholesale users. In addition, revenues of the International communications business are also expected to decrease as a result of increased use of cellular phones and other communication solutions. In addition, the revenue forecast is based on assumptions of an increase in wholesale revenues along with an increase in revenues from value added services. The operating, sales, marketing and investment expenses were adjusted for the volume of operations of Bezeq International. The price of nominal capital used is 10% (after tax). In addition, it was assumed that the permanent growth will be 2%. The valuation was made by an independent appraiser. Based on this valuation, the Group was not required to record impairment of the international communications and Internet services CGU. |
Deferred Expenses and Non-Curre
Deferred Expenses and Non-Current Investments | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Expenses and Non-Current Investments [Abstract] | |
Deferred Expenses and Non-Current Investments | Note 10 - Deferred Expenses and Non-Current Investments December 31 2016 2017 NIS NIS Deferred expenses (A) 337 314 Customer acquisition asset, net - 115 Deposit used as collateral against hedging transactions (B) 58 67 Bank deposit for loans to Company employees (C) 47 51 Investments in equity-accounted investees 18 11 Other investments 5 - 465 558 A. Transactions for acquiring an indefeasible right of use (IRU) of seabed cable capacities are accounted for as service transactions. Under the contract, Bezeq International has the right of use for capacities until 2022 with an option for an extension until 2027. The amount of the prepaid expense is amortized on a straight line until 2027. B. A deposit used as collateral for hedging transactions is payable in two increments in December 2019 and December 2020. C. A bank deposit for loans to the Bezeq Group employees without a repayment date. |
Broadcast Rights, Net of Rights
Broadcast Rights, Net of Rights Exercised | 12 Months Ended |
Dec. 31, 2017 | |
Broadcast Rights, Net of Rights Exercised [Abstract] | |
Broadcast Rights, Net of Rights Exercised | Note 11 - Broadcast Rights, Net of Rights Exercised December 31 2016 2017 NIS NIS Cost 800 797 Less rights exercised (368 ) (343 ) Total 432 454 As at December 31, 2017, DBS has agreements for the acquisition of broadcast rights. In 2017, acquisition of these broadcast rights amounted to NIS 248. |
Investees
Investees | 12 Months Ended |
Dec. 31, 2017 | |
Investees [Abstract] | |
Investees | Note 12 - Investees A. Material subsidiaries held directly and indirectly by the Company 1. General Principal location of the company’s Ownership activity interest B Communications (SP1) Ltd. and B Communications (SP2) Ltd. (1) Israel 100 % Bezeq - The Israel Telecommunication Corp. Limited Israel 26.34 % Subsidiaries of Bezeq - The Israel Telecommunication Corp. Limited Pelephone Communications Ltd. Israel 100 % Bezeq International Ltd. Israel 100 % DBS Israel 100 % Walla! Communications Ltd. Israel 100 % (1) Held by B Communications (SP1) Ltd. 2. Details of Group entities a. B Communications (SP1) Ltd. and B Communications (SP2) Ltd. B Communications (SP1) Ltd. (“SP1”), founded in 2010, is a wholly-owned subsidiary of the Company. SP1 is the sole shareholder of B Communications (SP2) Ltd. (“SP2”) which directly holds the Bezeq controlling interest. b. Bezeq - The Israel Telecommunications Corporation Ltd. Bezeq is controlled by SP2 which holds 25.82% of Bezeq’s outstanding shares. An additional 0.52% of Bezeq outstanding shares are held by B Communications directly. Bezeq is the largest communications group in Israel. c. Pelephone Communications Ltd. Pelephone Communications Ltd. (“Pelephone”) is a wholly-owned subsidiary of Bezeq. Pelephone provides cellular communication services and value-added services and markets terminal equipment. d. Bezeq International Ltd. Bezeq International Ltd. (“Bezeq International”) is a wholly-owned subsidiary of Bezeq. Bezeq International provides internet access (ISP) services, international communications services and network end point (NEP) services. e. DBS Satellite Services (1998) Ltd. DBS Satellite Services (1998) Ltd. (“DBS”) is a wholly-owned subsidiary of Bezeq. DBS provides multi-channel television services. f. Walla! Communications Ltd. Walla! is wholly owned by Bezeq. Walla! provides internet, management and media services for a range of populations. 3. Dividend paid by Bezeq to non-controlling interests during 2017 was in the amount of NIS 948 (in 2016: NIS 1,062). 4 . Bezeq’s Dividend Distribution Policy On August 4, 2009, the Board of Directors of Bezeq approved a dividend distribution policy in which Bezeq will distribute a dividend to its shareholders amounting to 100% of the semi-annual profit (after tax) (profit for the period attributable to the shareholders of Bezeq), in accordance with the consolidated financial statements of Bezeq. On March 6, 2018, the Board of Directors of Bezeq resolved to revise the dividend distribution policy, such that Bezeq will distribute a dividend to its shareholders, on a semi-annual basis, of 70% of the semi-annual net profit in accordance with the consolidated financial statements of Bezeq, as from the next distribution scheduled for May 2018. Application of the policy to distribute a dividend is subject to the provisions of the law, including the distribution criteria prescribed in the Companies Law, and the estimation of the Board of Directors of Bezeq regarding Bezeq’s ability to meet its existing and anticipated liabilities, taking into consideration the projected cash flow, Bezeq ’s requirements and liabilities, the cash balance, its plans and position and subject to the approval of the general meeting of Bezeq ’s shareholders regarding any specific distribution, as set out in the articles of association of Bezeq. In accordance with the March 6, 2018 decision of Bezeq ’s Board of Directors, capital gains from the sale of the Sakia property (“the Profits of Sakia”) (See Note 21G), to the extent that they are recognized in 2018, will not be distributed in 2018 unless the entire consideration for the transaction is received in cash during 2018. Bezeq’s Board of Directors may decide to distribute a dividend for the Profits of Sakia at a later date in accordance with the circumstances and subject to the Law. In accordance with Bezeq’s revised dividend distribution policy, on March 28, 2018, the Board of Directors of Bezeq resolved to recommend to the general meeting of Bezeq’s shareholders the distribution of a cash dividend to its shareholders in the amount of NIS 368. The dividend was approved by Bezeq’s shareholders on April 26, 2018 and was paid on May 10, 2018. In 2016 and 2017, Bezeq declared and paid the following dividends in cash: 2016 2017 NIS NIS Distribution of a regular dividend (see section B4 above) 2017 (NIS 0.47 per share) - 1,286 2016 (NIS 0.52 per share) 1,441 - B. Business combination with DBS Satellite Services (1998) Ltd 1. As at March 25, 2015, Bezeq held 49.78% of the share capital of DBS and it held options to acquire 8.6% of DBS’s shares, which Bezeq was unable to exercise until that date. Eurocom DBS Ltd. held the balance of DBS shares. On March 25, 2015, Bezeq exercised the options for no consideration and on June 24, 2016, Bezeq completed a transaction (“the Acquisition Transaction”) for the acquisition of the entire holdings of Eurocom DBS in DBS, which at that date represented 50.22% of the issued share capital of DBS (41.62% fully diluted) and all the shareholder loans provided by Eurocom to DBS. On completion of the Acquisition Transaction, DBS became a wholly owned subsidiary (100%) of Bezeq. Bezeq consolidates the financial statements of DBS as from March 25, 2015. The statements of income for the first quarter of 2015 include the operating results of DBS based on the equity method. Under the terms of the Acquisition Transaction, Bezeq paid cash consideration of NIS 680 and agreed to pay two additional contingent payments, as follows: one additional payment of up to NIS 200, which was to be paid in accordance with the amount of the carry-forward losses of DBS used for tax purposes (“the First Contingent Consideration”); and another additional payment of up to NIS 170, which was to be paid in accordance with the business results of DBS in the 2015-2017 period (“the Second Contingent Consideration”). In September 2016, Bezeq paid Eurocom DBS NIS 188 (plus interest differences of NIS 10) for the First Contingent Consideration, under the Assessment Agreement and taxation decision of the Tax Authority as set out in Note 19. The consideration paid was for the agreement with the Tax Authority with respect to the losses of DBS as at December 31, 2013. Following the decision regarding the additional and final losses as at December 31, 2014, the additional amount due to Eurocom DBS was calculated and paid, and the unpaid amount will continue to bear interest in accordance with the acquisition agreement up to the payment date. As at December 31, 2017, the balance of the liability to Eurocom for the First Contingent Consideration is NIS 6. The liability for the Second Contingent Consideration was adjusted as at December 31, 2016, and amounted to NIS 84. Bezeq updated the estimated Second Contingent Consideration in 2017 and as at December 31, 2017, the liability amounts to NIS 14. On account of the Second Contingent Consideration, two payments of NIS 57 were paid in nominal terms, one in 2016 and the second in 2017. As a result of the aforesaid, the advance payments received by Eurocom DBS from Bezeq as at December 31, 2017 amounted to NIS 94 (after offsetting a liability of NIS 6 for the first contingent consideration). In accordance with the agreement between the parties, if the final amount is less than the amount of advance payments, Eurocom DBS will return the difference to Bezeq immediately after the final settlement, which is expected to be shortly after the signing of Bezeq’s financial statements for 2017 (or on the merger date as described in section B.2 below, whichever is earlier). The repayment bears annual interest at a rate of 4%. As at December 31, 2017, interest of NIS 10 was accrued for the excess of the advance payments. Bezeq estimated the fair value of the amount expected to be recovered from the excess of the advance payments, and taking into consideration the solvency of Eurocom DBS, the value of the debt was estimated at NIS 43 as at December 31, 2017. The revised fair value of the excess of the advance payments and the second contingent liability in the amount of NIS 14 in 2017 was recognized as a decrease in financing expenses in the statement of income. 2. Following the announcement of the Director of the Ministry of Communications on December 21, 2016, regarding “Cancellation of the structural separation obligation in Bezeq Group”, on December 25, 2016, Bezeq and DBS signed a merger agreement (“the Merger Agreement”), which, subject to the preconditions set out in the agreement, at the completion date of the merger, and effective retroactively from the effective date for the merger (December 31, 2016), all activities of DBS will be merged with and into Bezeq, for no consideration, in accordance with the provisions of section 323 of the Companies Law and the provisions of section 103B and section 103C of the Income Tax Ordinance (as described in Note 19), DBS will cease to exist as a separate legal entity, will be wound up without liquidation and the Registrar of Companies will delete it from the Register. Completion of the merger is subject to the fulfillment of the preconditions in the merger agreement. As of the approval date of the financial statements, the preconditions had not been fulfilled. Bezeq continues to advance the merger with DBS. Following the conversion of the shareholders loans and capital investment in 2016, the equity of DBS as at December 31, 2017 and December 31, 2016 amounted to NIS 348 and NIS 592, respectively. As at December 31, 2017, its working capital deficit amounted to NIS 535. The management of DBS believes that the financial resources at its disposal, which include the deficit in working capital, repayment of loans from Bezeq, and the conversion of DBS debentures to capital by Bezeq (as set out in Note 13) will be sufficient for the operations of DBS for the coming year. C. Non-controlling interests in subsidiaries The table hereunder presents summary information of the Group’s subsidiaries including fair value adjustments that were made on the date of acquisition, other than goodwill, in which there are non-controlling interests that are material to the Group. to non- December 31, Year ended December 31, Cash flow Total from Rate of comprehensive financing ownership Profit Income activities Total interests Carrying (loss) (loss) Cash Cash without Dividend increase held by amount of attributable attributable flow flow dividend to paid to (decrease) non- Non- Non- non- Other Total to non- from from non- non- in cash controlling Current current Current current Total net controlling comprehensive comprehensive controlling controlling operating investing controlling controlling and cash interests assets assets liabilities liabilities assets interests Revenues Profit income income interests interests activities activities interests interests equivalents % NIS 2017 Bezeq Group 73.66 4,823 12,367 3,857 10,848 2,485 1,840 9,789 858 (8 ) 850 663 657 3,525 (1,148 ) 104 (948 ) 1,533 2016 Bezeq Group 73.66 3,559 13,083 3,966 10,270 2,406 2,131 10,084 989 (15 ) 974 724 713 3,526 (1,567 ) (804 ) (1,062 ) 93 2015 Bezeq Group 69.44 3,771 14,426 4,905 10,041 3,251 9,985 1,336 7 1,343 926 931 3,740 283 (2,896 ) (1,232 ) (105 ) D. Increasing Competition and Reducing Concentration, 2013 law In December 2013, the Knesset passed the Israeli Law for Increasing Competition and Reducing Concentration, 2013 (“Concentration Law”), which: (i) imposes limitations on the control over companies with publicly held debt or equity securities through a pyramidal ownership structure by imposing a limitation on the number of public companies (tiers) in such pyramidal structure; (ii) authorizes financial regulators to set forth limitations on the amount of credit that financial institutions are permitted to provide to a corporation or a group of companies under the control of the same controlling shareholder; (iii) imposes limitations on the holdings by a significant non-finance company in a significant finance company or the holdings of both kinds of companies under common control; and (iv) requires governmental authorities responsible for the award of rights in public assets (including in the communications field) in certain cases to consider control concentration factors and industry-specific competitive factors. Internet Gold is deemed to be a “first tier” company, the Company is deemed to be a “second tier” company and Bezeq is deemed to be a “third-tier” company under the Concentration Law. Accordingly, if either Internet Gold or the Company are unable to redeem any of their publicly held debt and delist their ordinary shares from the TASE (which would require 90-days’ prior notice to the TASE) or go private prior to December 10, 2019, the Company will not be permitted to control Bezeq after such date and its holdings in Bezeq may be transferred to a trustee for the purpose of selling such holdings. The Concentration Law sets forth certain mechanisms intended to enable a tier company, which is subject to the prohibition of controlling another tier company, to make various arrangements for the repurchase of its publicly-held shares and the early redemption of publicly-held debt in order to comply with the provisions of the law. These mechanisms enable the repurchase of publicly-held shares and the early redemption of publicly-held debt securities under a Court-approved scheme of arrangement pursuant to the Israeli Companies Law, at fair value and in accordance with the conditions prescribed by the Concentration Law, while providing certain relief from shareholders or debenture holder majority requirements for the approval of the arrangement. Furthermore, if a trustee is appointed, he may seek a district court to order the cancellation of distributions made by Bezeq prior to his appointment if they are deemed not be in Bezeq’s interest. In addition, beginning six months after the publication of the Concentration Law and during a six years transition period, the board of directors of a company that is a “third-tier” company (such as Bezeq) must be comprised of a majority of “independent directors,” within the meaning of the Israeli Companies Law, and the number of “external directors” pursuant to the Israeli Companies Law shall be at least half the number of the company’s directors less one (rounded upwards) but not less than two. The election of such external directors will be by a majority vote of the shareholders and the controlling shareholder’s vote will not be counted for such purpose. The Israeli Minister of Justice is authorized to enact regulations setting forth a lower number of required external directors, provided that such number will not be lower than one-third of the board members. The Company estimates that the application of the Concentration Law will not affect its controlling shareholder’s voting position in Bezeq. Internet Gold is currently examining several alternatives for the implementation of the Concentration Law, including, but not limited to, the possibility of raising private debt that will be substituted for the debentures issued to the public, while delisting its shares from the TASE; merger between Internet Gold and our company; etc. There is no certainty that any of the alternatives will be implemented. There is also a possibility of changing the nature and location of the listing of our or Internet Gold’s securities from the United States to elsewhere. E. The Company’s control over Bezeq The Company has control over Bezeq based on the facts that it holds significantly more voting rights than any other shareholder. Bezeq’s other shareholders are widely dispersed and are not allowed to increase their holdings above 5% without regulatory approval, appoint a director or the chief executive officer of Bezeq nor have any influence on Bezeq’s day-to-day operational decision-making policies. In addition, the Israeli law and regulations were formulated in order to ensure that no individual or entity will interfere with the control of Bezeq by the holder of the Control Permit. These regulations enable the Company to nominate the majority of the board of directors of Bezeq. |
Debentures, Bank Loans and Cred
Debentures, Bank Loans and Credit | 12 Months Ended |
Dec. 31, 2017 | |
Debentures, Bank Loans and Credit [Abstract] | |
Debentures, Bank Loans and Credit | Note 13 - Debentures, Bank Loans and Credit A. Composition December 31 2016 2017 NIS NIS Current liabilities Current maturities of debentures 1,212 1,166 Current maturities of bank loans 839 692 2,051 1,858 Non-current liabilities Debentures 8,362 8,036 Bank loans 3,084 4,401 11,446 12,437 13,497 14,295 B. Debt terms and repayment schedule December 31, 2016 December 31, 2017 Nominal Carrying Carrying interest Par value amount Par value amount Currency rate NIS NIS NIS NIS % Loans from banks and others: Unlinked - Variable interest 978 978 675 675 NIS P-0.33 to P+0.2 Unlinked - Fixed interest 2,931 2,945 4,398 4,418 NIS 2.40 to 6.85 3,909 3,923 5,073 5,093 Debentures: Linked to the Israeli CPI - fixed interest 4,027 4,309 3,897 4, 091 NIS 2.20 to 8.40 Unlinked - variable interest 734 734 734 732 NIS Makam + 1.4 Unlinked - fixed interest 4,505 4,531 4,347 4,379 NIS 3.60 to 6.65 9,266 9,574 8,978 9,202 Total interest-bearing liabilities 13,175 13,497 14,051 14,295 Debentures issues by the Group (1) On September 21, 2010, the Company issued NIS 400 of its Series B Debentures at par value to the public in Israel. In January 2012 and August 2013, the Company completed private placements of additional Series B Debentures in the amount of NIS 126 and NIS 180 par value, respectively, to certain Israeli institutional investors. On April 1, 2016, the Company completed a private placement of NIS 148 par value of its Series B Debentures to Israeli institutional investors for an aggregate consideration of NIS 162. As at December 31, 2017 the outstanding par value of the Series B Debentures was NIS 452. The Series B Debentures are denominated in NIS, bear interest at a fixed annual rate of 6.5% which is payable semi-annually on March 31 and September 30 of each of the years 2011 through 2019 (the first interest payment was made on March 31, 2011 and the last interest payment is payable on March 31, 2019). The principal of the Series B Debentures is payable in four equal installments on March 31 of each year starting from 2016. According to the financial covenants of the Series B Debentures the Company is obligated to the following: 1. Not issue any additional Series B Debentures if such increase will decrease the A2 rating of the Series B Debentures. 2. To maintain control of Bezeq. 3. The investors will have the right to require the immediate repayment of the Series B debentures if Eurocom will no longer hold the controlling interest in the Company. As at December 31, 2017, and the approval date of the financial statements, the Company was in compliance with the financial covenants of the Series B Debentures. (2) On February 19, 2014, the Company issued $800 of Senior Secured Notes (the “Notes”) due 2021 that bear 7⅜% annual interest paid semi-annually. The Notes were offered and sold in the United States to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”) and to certain qualifying investors in offshore transactions, including in Israel, in reliance on Regulation S under the Securities Act. The Notes had senior obligations of the Company and were guaranteed by its two wholly-owned subsidiaries, SP1 and SP2, on a senior secured basis (“the Guarantees”). The Notes and the Guarantees were secured by first priority pledges over all of the capital stock of SP2, the capital stock of Bezeq held by SP2, and additional collateral. The Notes were admitted for trading on the system of the Tel Aviv Stock Exchange for trading by institutional investors, known as TACT Institutional. The Company used the net proceeds from the offering of the Notes to repay all amounts outstanding under the loans received by SP2 and SP1 from Bank Hapoalim Ltd. (“Bank Hapoalim”) and Migdal Insurance and Financial Holdings Ltd. Group (“Migdal”) that were used to purchase the controlling interest in Bezeq and to deposit funds into a debt service account. Under the terms of the indenture for the Notes funds maintained by SP2 had to be deposited in one or more accounts designated as a lockbox account and pledged as collateral to the security agent for the benefit of the holders of the Notes. On August 10, 2014, the Company’s Board of Directors approved the buyback of up to $50 of the Notes. On January 20, 2016, the Company completed its $50 repurchase program and its Board of Directors approved the extension and increase of the program by an additional $50. During 2015 and 2016, the Company purchased $65 par value of the Notes. On May 26, 2016, the Company announced that its wholly-owned subsidiary, B Communications (SP4) LP, had invited holders of the Notes to submit tenders to purchase their Notes for cash within a purchase price range of $1.00 to $1.07 per $1.00 nominal amount of Notes. The aggregate par value of the Notes tendered and purchased was approximately $18.6. The total loss incurred from the repurchase of the Notes during 2015 and 2016 amounted to NIS 33. In September 2016, the Notes were fully repaid following the Company’s issuance of Series C Debentures, as detailed below in Note 13B(3). (3) On September 18, 2016, the Company issued, at par value, NIS 1.9 billion of Series C Debentures to the public in Israel. The principal of the Series C Debentures will be payable in four equal installments payable on November 30 of each of the years 2020 through 2023 and one installment payable on November 30, 2024. Each of the first four installments will be equal to 7.5% of the principal amount of the aggregate amount of the Series C Debentures issued and the last installment will equal to 70% of such principal amount. The annual coupon of the Series C Debentures is 3.6% and is denominated in NIS. The interest on the outstanding principal of the Series C Debentures is payable in semi-annual payments on May 31 and November 30 of each year. The net proceeds from the offering together with cash and cash equivalents of the Company were used to fully redeem the outstanding Notes and to deposit the interest payment in May 2017 into a trustee account solely for the benefit of the holders of the Series C Debentures. On January 16, 2017, the Company completed a private placement of NIS 118 par value of its Series C Debentures to Israeli institutional investors for consideration of NIS 118. As at December 31, 2017 the outstanding par value of Series C Debentures was NIS 2.0 billion. On January 23, 2018, the Company completed a private placement of NIS 240 par value of its Series C Debentures to Israeli institutional investors for an aggregate consideration of NIS 249. Below are the main undertakings and Covenants with respect to the Series C Debentures: The Company undertook to refrain from creating in favor of any third party a lien of any ranking whatsoever over its direct and/or indirect holdings of 691,361,036 shares of Bezeq, including any of the rights accompanying such shares (hereinafter, the “Undertaken Shares”) without the prior consent of the holders of the Series C Debentures by a special resolution (hereinafter, “Negative Lien Undertaking”). The Company further undertook to refrain from making any disposition of the Undertaken Shares without the prior consent of the holders of the Series C Debentures by a special resolution. Notwithstanding the foregoing, and subject to the provisions of applicable law and/or permit, the Company may sell all or a portion of the Undertaken Shares to any third party, provided that in such instance, the Company uses the net proceeds it receives from such sale, less the taxes, expenses and deductions entailed in the sale of such shares, to make full or partial early redemption, of the Series C Debentures (exclusively) in accordance with the provisions the Indenture. Restriction on assumption of additional debt: The Company undertook to refrain from assuming additional debt, with the exception of: a. Financial debt in an amount (principal) which does not exceed NIS 400; b. The financial debt is not secured by any collateral and does not have priority over Series C Debentures in creditor ranking upon insolvency. c. The total par value of the Series C Debentures together with the total principal amount of the additional debt together with the (principal) amount of the new debt which the Company intends to assume does not exceed an aggregate of NIS 2.3 billion. Control of Bezeq The Company undertook to hold (directly and/or indirectly) at least 25% of Bezeq’s issued and paid-up capital, unless a regulatory permit/approval is received to reduce such shareholding percentage. Control in the Company Eurocom Communications, undertook to refrain from transferring control of the Company (directly or indirectly) to a party which has not been authorized in advance by the necessary regulatory entities, to the extent such approvals are required, at the relevant time. Minimum equity The Company undertook that its equity (capital attributed to the Company’s shareholders, without non-controlling interests) (hereinafter, the “Equity”) according to its last consolidated financial statements published, shall not be less than NIS 650 for the duration of two or more consecutive calendar quarters. The indenture for the Series C Debentures includes a mechanism of adjustment of interest rate in the event of a drop below the Minimum Equity or in the event of a downgrade in the rating of the Series C Debentures. Restriction on distribution The Company undertook not to distribute a dividend to its shareholders and/or perform a buyback of its shares and/or any other distribution as defined in the Companies Law unless all the conditions provided in subsections (a) through (f) below are satisfied: a. The distribution will not cause a downgrade in the rating of the Series C Debentures. b. The Company is not in violation of any of the covenants. c. No grounds for immediate repayment exist at the time a resolution to make a distribution is adopted, and no such grounds exist as a result of such distribution. d. The Company’s Equity post-distribution is not less than NIS 800. e. Until full repayment of the principal of the Series C Debentures, the Company shall not distribute a dividend exceeding 75% of the balance of the Company’s distributable surpluses (the surplus balance or surpluses accrued in the last two years, in accordance with the definitions provided in the Companies Law) in accordance with its consolidated financial statements. In addition, the Company shall not make a distribution if it recorded an aggregate net loss in the last four quarters preceding the distribution date, on the basis of its last financial statements and/or the quarterly financial report published prior to the distribution date. f. Notwithstanding the foregoing, the restrictions set forth in this subsection shall not apply with respect to the balance of the Company’s profits/surpluses which are distributable in accordance with the provisions of the Companies Law, the Company’s financial statements as of June 30, 2016 (i.e. a total of NIS 416 which shall be excluded from the distribution restrictions under this subsection (f); for the avoidance of doubt, the restrictions provided in subsections (a) through (e) shall apply with respect to such distribution). Ratio of unconsolidated equity to total unconsolidated balance sheet Ratio of unconsolidated equity to total unconsolidated balance sheet: The Company’s equity shall not be less than 15% of the total balance sheet in accordance with the Company’s audited or reviewed (unconsolidated) financial statements (or, alternatively, the quarterly financial report figures, as elected by the Company), as the case may be, for two or more consecutive calendar quarters. As at December 31, 2017, and the approval date of the financial statements, the Company was in compliance with the financial covenants of the Series C debentures. The Company and its Israeli legal advisors’ belief that the publication of the Company’s annual financial statements with the accompanying Auditors’ Report with a “qualified opinion” does not constitute an event of default under the Company’s outstanding debentures. Nevertheless, it is not possible to predict with certainty that a debenture holder may claim otherwise. The Company believes that it has qualitative legal and economic arguments against a claim of breach by any holder of debentures. There is also a possibility of changing the nature and location of the listing of the Company’s securities from the United States to elsewhere in a manner that may resolve such possible claim, if raised. A default under the Debentures could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. (4) Below are details of the terms that Bezeq undertook for the loans that it received and the debentures that were issued: a. For Bezeq’s overall debt, standard grounds were included for immediate repayment of the debentures and loans, including breach events, insolvency, dissolution procedures or receivership. In addition, a right was determined to call for immediate repayment if a third-party lender calls for immediate repayment of Bezeq ’s debts in an amount exceeding the amount determined. In addition, Bezeq has undertaken not to create additional liens on its assets unless liens are created at the same time in favor of the debenture holders and the lending banks (negative lien). The lien includes exceptions, including regarding a lien on assets that will be purchased or expanded by Bezeq, if the undertakings underlying the lien are created for the purchase or expansion of those assets and for the matter of a token lien. b. For Bezeq’s public debentures in the amount of NIS 6.4 billion and bank loans in the amount of NIS 3.3 billion as at December 31, 2017, and for loans from financial institutions in the amount of NIS 1.7 billion as at December 31, 2017, Bezeq has undertaken that if it makes an undertaking towards any entity in respect of compliance with financial covenants, it will also provide the same undertaking to these lenders (subject to certain exceptions). c. For Bezeq’s public debentures and for loans from financial institutions amounting to NIS 1.7 billion, grounds were included for immediate repayment, if telecommunication ceases to be the Group’s core activity. d. For Debentures (Series 9-10) and for loans from financial institutions in the amount of NIS 1 billion, grounds were included for the immediate repayment of the loans in the event of a change in control, following which the current controlling shareholders in Bezeq will cease to be controlling shareholders, with the exception of: (1) transfer of control to a transferee that received approval for control in Bezeq in accordance with the provisions of the Telecommunications Law and/or the Telecommunications Order; or (2) transfer of control in which the transferee holds control together with the current controlling shareholders in Bezeq, provided that the holding rate of the current controlling shareholders in Bezeq in the shares of Bezeq does not fall below 50.01% of the total shares of Bezeq held by the controlling shareholders together; or (3) a change in control to be approved by a meeting of the debenture holders/lenders. e. For Bezeq’s public debentures in the amount of NIS 6.4 billion and for loans from financial institutions amounting to NIS 1.7 billion, Bezeq has undertaken to the lenders to take steps so that, to the extent under its control, the debentures will be rated by at least one rating agency, so as long as there are debentures of the relevant series in circulation or a balance in loans, as the case may be. f. In addition, for Debentures (Series 9 and 10) and for loans from financial institutions in the amount of NIS 1 billion, grounds were included for immediate repayment of the debentures in the event of the recording of a going concern qualification in Bezeq’s financial statements for two consecutive quarters, in the event of a material deterioration in Bezeq’s business compared with the situation at the time of the issue, and there is real concern that Bezeq will not be able to repay the debentures/loans on time (as set out in section 35(I)1a1 of the Israel Securities Law). As at December 31, 2017 and the approval date of the financial statements, Bezeq was in compliance with all its liabilities, there were no grounds to call for immediate repayment, and financial covenants were not set out as described above. C. Non-marketable debentures issued by DBS In May 2017, Bezeq issued Debentures (Series 6 and 10), to the holders of Debentures (Series B) of DBS, which are listed on the TACT-Institutional system of the TASE in return for the DBS debentures that they hold. The offering was carried out in accordance with the Shelf Prospectus and the Shelf Offering Memorandum as follows: NIS 125 par value DBS Debentures were exchanged for NIS 125.75 par value Debentures (Series 6), of Bezeq and NIS 436.31 par value DBS Debentures were exchanged for NIS 481.68 par value Debentures (Series 10) of Bezeq. An exchange of debentures having substantially different terms was accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability at fair value. Accordingly, the Group recognized financing expenses of NIS 13, for the difference between the amortized cost of the debentures of DBS and the fair value of Debentures (Series 6 and 10) issued by Bezeq. In addition, in June 2017, Bezeq acquired NIS 17.40 par value DBS Debentures for NIS 20. Accordingly, DBS has Debentures (Series B), with a balance of NIS 435 as at December 31, 2017 (of which Bezeq held NIS 419). Subsequent to the reporting date, Bezeq converted the balance of the DBS debentures it holds into capital and the balance of the debentures amounted to an immaterial amount of NIS 15 held by the public. D. Movement in liabilities arising from financing activities Debentures (including accrued interest) Loans (including accrued interest) Total NIS NIS NIS Balance as at January 1, 2017 9,637 3,944 13,581 Changes due to cash flows from financing activities Consideration from the issue of debentures and receipt of loans, less transaction costs 635 2,000 2,635 Repayment of debentures and loans (978 ) (835 ) (1,813 ) Interest paid (379 ) (158 ) (537 ) Net cash generated from (used in) finance activities (722 ) 1,007 285 Financing expenses recognized in the statement of income 320 163 483 Balance as at December 31, 2017 9,235 5,114 14,349 |
Trade and Other Payables
Trade and Other Payables | 12 Months Ended |
Dec. 31, 2017 | |
Trade and Other Payables [Abstarct] | |
Trade and Other Payables | Note 14 - Trade and Other Payables December 31, *2016 2017 NIS NIS Open accounts** 910 1,041 Checks payable 92 21 Trade payables 1,002 1,062 Other payables including derivatives: Liabilities to employees and other liabilities for salaries 353 355 Institutions 98 87 Accrued interest 84 53 Deferred income 82 90 Derivatives 10 54 Other payables 11 18 Total other payables including derivatives 638 657 Total Trade and Other Payables 1,640 1,719 * Reclassified ** Of which, the carrying amount of trade payables that are related parties and interested parties as at December 31, 2017 amounts to NIS 31 (as at December 31, 2016 – NIS 21). |
Provisions
Provisions | 12 Months Ended |
Dec. 31, 2017 | |
Provisions [Abstract] | |
Provisions | Note 15 Provisions Dismantling and clearing of cellular Customer Additional and other claims legal claims sites Total NIS NIS NIS NIS Balance as at January 1, 2017 44 30 53 127 Provisions created in the period 20 15 4 39 Provisions used in the period (4 ) (7 ) (1 ) (12 ) Provisions cancelled in the period (1 ) (10 ) (9 ) (20 ) Balance as at December 31, 2017 59 28 47 134 Current 59 28 7 94 Non-current - - 40 40 Claims For details of legal claims, see Note 20. |
Financial Risk Management
Financial Risk Management | 12 Months Ended |
Dec. 31, 2017 | |
Financial Risk Management [Abstract] | |
Financial Risk Management | Note 16 - Financial Risk Management A. General The Group is exposed to the following risks, arising from the use of financial instruments: - Credit risk - Liquidity risk - Market risk (which includes currency, interest, inflation and other price risks) This note provides information about the Group’s exposure to each of the above risks, an explanation as to how the risks are managed, and the measurement processes. B. Framework for risk management The Company’s Board of Directors has overall responsibility for the Company’s risk management. Bezeq’s Board of Directors has responsibility for the Bezeq Group’s risk management. The purpose of risk management in the Group is to define and monitor those risks constantly, and to minimize their possible effects arising from the exposure on the basis of assessments and expectations for parameters that affect the risks. The Company’s policy is to hedge, in part and where required according to policies determined by the board, exposure from fluctuations in foreign currencies rates and the Israeli CPI rates. Bezeq’s policy is to hedge, in part and where required according to policies determined by the board, exposure to fluctuations in foreign currencies and the Israeli CPI. C. Credit risk The Company’s management monitors the Company’s exposure to credit risks on a regular basis. Bezeq’s management monitors the Bezeq Group’s exposure to credit risks on a regular basis. Cash and investments in deposits and securities are deposited in highly-rated banks. Trade and other receivables Bezeq’s management regularly monitors customer debts, and the financial statements include provisions for doubtful debts which properly reflect, in the management’s estimation, the loss inherent in doubtful debts. In addition, the balances of trade receivables are widely spread. Investments in financial assets The Company’s investment policy, which was approved by its Audit Committee, and established by the Company’s Board of Directors, seeks to preserve principal and maintain adequate liquidity while maximizing the income received from investments without significantly increasing the risk of loss. According to the Company’s investment policy approximately 75% of the funds must be invested in investment-grade securities. The Company’s securities consist of investment grade securities, corporate debt securities and equity investments (stocks). The Company’s investment policy imposes limitations on invested amounts by investment ratings, duration, exposure to a single issuer, exposure to a group of issuers with the same ownership, industries, geographic spread and currency exposure, thereby reducing credit risk concentrations. Transactions involving derivatives are made with entities that have high credit ratings. Any investments made by Bezeq in securities are made in securities which are liquid, marketable and have low risk. Transactions involving derivatives are made with entities that have high credit ratings. As of the reporting date there is no significant concentration of credit risk. D. Liquidity risk Liquidity risk is the risk that the Group will be unable to honor its financial obligations on time. The Group’s policy for liquidity management is to ensure, as far as possible, that it will always have sufficient liquidity to honor those liabilities on time, without incurring undesirable losses. In addition, for debentures issued by the Group and its subsidiaries, see Note 13. E. Market risks The purpose of market risk management is to manage and oversee the exposure to market risks within accepted parameters to prevent significant exposures to market risks that will influence the Group’s results, liabilities and cash flows. During the normal course of its business, the Group enters into full or partial hedging actions. The Group takes into account the effects of the exposure in its considerations for determining the type of loans it takes and in the management of its investment portfolio. Israeli CPI risk Changes in the rate of Israeli inflation affect the Group’s profitability and its future cash flows, mainly due to its Israeli CPI-linked liabilities. In applying a policy of minimizing the exposure the Company has invested in bonds that are linked to the Israeli CPI in order to partially hedge the exposure to changes in the Israeli CPI. In addition, the Group enters into forward transactions against the Israeli CPI. The duration of the forward transactions is the same as or shorter than the duration of the hedged exposures. Bezeq applies hedge accounting with regards to its forward CPI hedge transactions. A considerable part of Bezeq’s cash balances are invested in deposits, monetary funds or ETFs which are exposed to changes in their real value as a result of changes in the Israeli CPI. Foreign currency risk Bezeq is exposed to foreign currency risks mainly due to payments for purchases of terminal equipment and property, plant and equipment which are in or linked to the US$ or the Euro. In addition, the Group provides services for customers and receives services from suppliers worldwide for which it is paid and it pays in foreign currency, mainly US$. |
Financial Instruments
Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Financial Instruments [Abstract] | |
Financial Instruments | Note 17 - Financial Instruments A. Liquidity risk Below are the contractual repayment dates of financial liabilities, including estimated interest payments: December 31, 2017 Carrying Contractual 2023 amount cash flow 2018 2019 2020-2022 and later NIS NIS NIS NIS NIS NIS Non-derivative financial liabilities Trade and other payables 1,596 1,596 1,596 - - - Bank loans 5,093 5,813 855 776 2,388 1,794 Debentures 9,202 10,448 1,381 1,367 3,675 4,025 Total 15,891 17,857 3,832 2,143 6,063 5,819 Financial liabilities for derivative instruments Forward contracts on the Israeli CPI 200 200 41 47 112 - B. Linkage and foreign currency risks December 31, 2016 Foreign currency linked Unlinked Israeli (mainly US$) NIS NIS NIS Current assets Cash and cash equivalents 733 - 29 Trade receivables 1,954 18 28 Other receivables 20 48 - Investments including derivatives 719 34 154 Total current assets 3,426 100 211 Non-current assets Investments including derivatives 429 215 - Total non-current assets 429 215 - Total assets 3,855 315 211 Current liabilities Debentures, loans and borrowings 1,668 383 - Trade and other payables 1,340 56 203 Total current liabilities 3,008 439 203 Non-current liabilities Debentures and bank loans 7,667 3,779 - Other liabilities including derivatives - 176 9 Total non-current liabilities 7,667 3,955 9 Total liabilities 10,675 4,394 212 Total exposure in the statement of financial position (6,820 ) (4,079 ) (1 ) Forward transactions (2,266 ) 1,994 272 December 31, 2017 Foreign currency linked Unlinked Israeli (mainly US$) NIS NIS NIS Current assets Cash and cash equivalents 2,322 - 64 Trade receivables 1,862 36 17 Other receivables 44 154 - Related party 43 - - Investments including derivatives 445 32 119 Total current assets 4,716 222 200 Non-current assets Trade and other receivables 372 121 - Investments including derivatives 51 - 67 Total non-current assets 423 121 67 Total assets 5,139 343 267 Current liabilities Debentures, loans and borrowings 1,213 645 - Trade and other payables 1,344 56 237 Total current liabilities 2,557 701 237 Non-current liabilities Debentures and bank loans 9,104 3,333 - Other liabilities including derivatives - 159 10 Total non-current liabilities 9,104 3,492 10 Total liabilities 11,661 4,193 247 Total exposure in the statement of financial position (6,522 ) (3,850 ) 20 Forward transactions (2,308 ) 1,994 314 Information regarding the Israeli CPI and significant exchange rates: Year ended December 31 December 31 2015 2016 2017 2015 2016 2017 Rate of change Reporting date spot rate % % % NIS NIS NIS 1 US dollar 0.3 (1.5 ) (9.8 ) 3.902 3.845 3.467 1 euro (10.1 ) (4.8 ) 2.7 4.247 4.044 4.153 Israeli CPI in Points (0.9 ) (0.3 ) 0.4 140.01 139.59 140.00 A change of 1% of the CPI as at December 31, 2016 and 2017 would have immaterial effect on total equity and net income. This analysis assumes that all other variables, in particular interest rates, remain constant. In addition, A change of 10% in the US$ exchange rate as at December 31, 2016 and 2017 would have immaterial effect on total equity and net income. C. Interest rate risk 1. Profile At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was: December 31 2016 2017 NIS NIS Fixed rate instruments Financial assets 2,189 1,986 Financial liabilities (11,786 ) (12,888 ) (9,597 ) (10,902 ) Variable rate instruments Financial assets 31 30 Financial liabilities (1,712 ) (1,407 ) (1,681 ) (1,377 ) 2. Fair value sensitivity analysis for fixed rate financial liabilities and derivatives The Group does not account for any fixed rate financial liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest swap contracts) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the reporting date would not affect profit or loss. 3. Sensitivity analysis of cash flow for instruments at variable interest An increase of 100 basis points in the interest rates at the reporting date would have decreased shareholders’ equity and profit or loss by NIS 10 (2016: NIS 13). D. Cash flow hedge accounting Cash flow hedges for CPI-linked liabilities Bezeq entered into several forward contracts, as described in the table below, in order to reduce its exposure to changes in the CPI for its CPI-linked debentures (Series 6). These transactions hedge specific cash flows of certain of the Bezeq debentures and are recognized as cash flow hedge accounting. The expiry date of these transactions complies with the repayment schedule of the relevant debentures. The fair value of the forward contracts is based on observable market-based data (level 2) in fair value hierarchy. Hedge item Repayment date Number of Nominal Fair value Capital NIS NIS NIS December 31, 2016: Debentures (Series 6) December 2018 - December 2022 9 1,994 (176 ) 54 1,994 (176 ) 54 December 31, 2017: Debentures (Series 6) December 2018 - December 2022 9 1,994 (200 ) 48 1,994 (200 ) 48 DBS has forward transaction to reduce exposure to changes in the US$ exchange rate. As at December 31, 2017, the net fair value of these transactions is a liability of NIS 12 (as at December 31, 2016, an asset of NIS 6). E. Fair value (1) Financial instruments measured at fair value for disclosure purposes only The table below shows the difference between the carrying amount and the fair value of groups of financial instruments. The carrying amount of other financial assets and liabilities does not differ significantly from their fair value. The fair value of debentures issued to the public is based on their quoted closing price at the reporting date (Level 1). The fair value of loans and non-marketable debentures is based on the present value of future principal and interest cash flows, discounted at the market rate of interest suitable for similar liabilities plus the required adjustments for risk premium and non-marketability at the reporting date December 31, 2016 December 31, 2017 Fair value weighted average Carrying Fair Carrying Fair discount amount value amount value rate NIS NIS NIS NIS % Secured loans from banks and others Unlinked 2,947 3,089 4,436 4,693 2.63 Debentures Issued to the public (CPI linked) 3,473 3,656 4,088 4,338 0.52 Issued to the public (Unlinked) 4,166 4,246 4,097 4,322 2.35 Issued to institutional investors (CPI linked) 830 879 15 17 0.73 Issued to institutional investors (unlinked) 403 440 302 326 1.62 11,819 12,310 12,938 13,696 (2) Financial instruments measured at fair value The table below analyses financial instruments carried at fair value, by valuation method. December 31, 2016 Level 1 Level 2 Level 3 Total NIS NIS NIS NIS Financial assets held for trading Monetary funds and ETFs 31 - - 31 Marketable securities 321 - - 321 Derivatives not used in hedging Forward contracts on CPI - (170 ) - (170 ) Contingent consideration for a business combination - - (84 ) (84 ) 352 (170 ) (84 ) 98 December 31, 2017 Level 1 Level 2 Level 3 Total NIS NIS NIS NIS Financial assets held for trading Monetary funds and ETFs 14 - - 14 Marketable securities 307 - - 307 Derivatives not used in hedging Forward contracts - (212 ) - (212 ) Contingent consideration for a business combination - - 43 43 321 (212 ) 43 152 a. The fair value of investments in financial funds and ETFs is determined by reference to their average quoted selling price at the reporting date (Level 1). b. The fair value of forward contracts on the CPI or foreign currency is based on discounting the difference between the price in the forward contact and the price of the present forward contact for the balance of the contract term until redemption, at an appropriate interest rate (Level 2). The estimate is made under the assumption that a market participant takes into account the credit risks of the parties when pricing such contracts. c. Information about fair value measurement of contingent consideration in a business combination (Level 3) Below is the fair value of the contingent consideration liability for a business combination, as described in Note 12B: December 31, 2016 December 31, 2017 Maximum Maximum additional additional consideration consideration under the under the agreement Fair value agreement Fair value NIS NIS NIS NIS Additional consideration for the business results of DBS (second additional consideration) 170 84 170 43 F. Offset of financial assets and liabilities The Group has agreements with various communication companies to supply and receive communication services. The table below presents the carrying amount of the balances as stated in the statement of financial position: December 31, 2016 2017 NIS NIS Trade and other receivables, gross 119 115 Offset amounts (97 ) (99 ) Trade and other receivables presented in the statement of financial position 22 16 Trade payables, gross 147 143 Offset amounts (97 ) (99 ) Trade and other payables presented in the statement of financial position |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefits [Abstract] | |
Employee Benefits | Note 18 - Employee Benefits Employee benefits include post-employment benefits, other long-term benefits, termination benefits, short-term benefits. A. Liabilities for employee benefits December 31, 2016 2017 NIS NIS Current liabilities for: Holiday 104 115 Sick leave 122 142 Early retirement 82 16 Current maturities of pensioner benefits 7 7 Total current liability for employee benefits 315 280 Non-current liabilities for: Liability for pensioner benefits 118 120 Severance compensation (net) (see composition below) 51 57 Early notice 19 23 Pension 70 72 Total non-current liabilities for employee Benefits 258 272 Total liabilities for employee benefits 573 552 Composition of liabilities for severance pay: Liabilities for severance pay 212 224 Fair value of plan assets (161 ) (167 ) 51 57 B. Defined contribution plans (1) Liabilities for employee benefits at retirement age in respect of the period of their service with Bezeq and its subsidiaries, and for employees to which Section 14 of the Severance Pay Law – 1963 applies, are covered in full by regular payments made by Bezeq and its subsidiaries to pension funds and insurance companies. Year ended December 31, 2015 2016 2017 NIS NIS NIS Amount recognized as an expense for a defined contribution plan 199 209 228 (2) The pension rights of Bezeq’s employees for the period of their employment in the civil service through January 31, 1985, are covered by a pension fund (the “Makefet Fund”), which assumed the obligations of State of Israel following an agreement among the Government of Israel, Bezeq, the General Federation of Laborers in Israel (“Histadrut”) and the Makefet Fund. (3) Severance obligation to employees who will retire on terms entitling them to compensation is covered for the period from February 1, 1985 by on-going contributions to such pension funds and insurance companies (in accordance with Section 14 of the Severance Pay Law). Severance pay for the period of employment in the civil service through January 31, 1985, is paid by Bezeq, and the sums accumulated in the Makefet Fund for that period are kept in a fund that will be used for the employees’ rights. (4) For certain employees, Bezeq has an obligation to pay severance in excess of the amount accumulated on behalf such employees in the compensation fund. See section 18.C(1) below. C. Defined benefit plans Obligations for defined benefit plans in the Bezeq Group include the following: (1) Severance obligation for the balance of the obligation that is not covered by contributions and/or insurance policies in accordance with the existing labor agreements, the Severance Pay Law, and the salary components for which the management of the Bezeq Group believes entitle the employees to receive compensation. For this part of the obligation, there are deposits in the name of the Bezeq Group in pension funds and insurance companies. The deposits in pension funds and insurance companies include accrued linkage differences and interest. Withdrawal of the reserve sums is contingent upon fulfillment of the provisions in the Severance Pay Law. (2) An obligation in accordance with the collective agreement of 2006 for employees who were transferred from civil service to Bezeq and who are entitled following retirement to a supplement in pension payments for the difference between the Civil Service Law and the standard policy of the Makefet Fund. Bezeq also has an obligation to a number of senior employees who are entitled to early retirement terms (pension and retirement grants) which are not dependent on the existing retirement agreements for all employees. (3) An obligation in accordance with the employment agreements of some of the senior employees in the Bezeq Group for payment of a benefit for early termination notice. (4) Bezeq’s retirees receive, in addition to pension payments, benefits which consist mainly of a holiday gift (linked to the dollar exchange rate), financing for the upkeep of retiree clubs and social activities. Bezeq’s liability for these costs accumulates during the employment period. The Company’s financial statements include the liabilities for expected costs in the post-employment period. D. Sick leave provision The financial statements include a provision in respect of redemption and utilization of sick leave. The right to accumulate sick leave was taken into account for all employees in the Bezeq Group. Only employees eligible under the terms of the employment agreement may redeem sick leave. The provision was computed on the basis of an actuarial calculation, including the assumption of positive accumulation of days by most of the employees and utilization of days in accordance with the last in first out (LIFO) method. E. Benefits for early retirement and termination According to the collective agreement of December 2006, among Bezeq, the employees’ union and the Histadrut, and according to the amendment to the agreement of August 2015, Bezeq may, at its discretion, terminate the employment of 163 permanent employees in each of the years 2015-2021 (Bezeq’s right is cumulative for the period). Bezeq recognizes expenses for early retirement when it is significantly committed, without any real possibility of withdrawal, to a defined plan to terminate employment before the defined date, according to a defined plan. The collective agreement allows Bezeq to dismiss employees, but does not create a significant commitment without any real possibility of withdrawal. Accordingly, the expenses for voluntary redundancy are recognized in Bezeq’s financial statements at the approval date of the plan. In 2017, expenses of the early retirement plan amounted to NIS 23. In addition, the Bezeq Group companies have collective agreements with the Histadrut and the employees’ committees. The agreements include mechanisms to integrate the employees’ committees in decisions regarding the termination of permanent employees and the terms of severance. F. Actuarial assumptions Principal actuarial assumptions for defined benefit plans at the reporting date are as follows: (1) Mortality rates are based on the rates published in Insurance Circulars 2017-3-6 of the Ministry of Finance. (2) Churn rates were determined on the basis of the past experience of Bezeq and its subsidiaries, distinguishing between different employee populations and taking into account the number of years of employment. The churn rates include a distinction between severance with entitlement to full severance compensation and severance without entitlement to this right. (3) The discount rate (nominal) is based on the yield on linked high-quality corporate debentures with maturity dates approximating those of the gross obligation. The main discount rates are as follows: December 31, December 31, Average capitalization rate Average capitalization rate % % Severance compensation 4.2 3.3 Retirement benefits 4.3 3.6 (4) Assumptions regarding salary increments for calculation of the liabilities were made on the basis of the management’s assessments, distinguishing between the groups of employees. The main assumptions (in nominal terms) regarding salary increases are as follows: Salary increase assumptions Bezeq permanent employees Average update of 7% for young employees, decreasing gradually to 2.7% at the age of 66. New Bezeq permanent employees Average update of 3.2% for young employees, decreasing gradually to 1.4% at the age of 66. Bezeq non-permanent employees 6.5% for young employees decreasing gradually to 0%, 3.5% for senior employees Pelephone employees An increase of 3.1%, as set out in the collective agreement at Pelephone Bezeq International employees An increase of 3.0%, as set out in the collective agreement at Bezeq International DBS employees Rate of increase of 3.5% Regarding Bezeq’s employees, as well as the assumption of the age-dependent wage increase, an expected individual wage growth was assumed for 2019-2026, arising from the collective agreement that was signed in August 2015. (5) Sensitivity analysis for actuarial assumptions The following is an analysis of the possible effect of the changes in the principal actuarial assumptions on liabilities to employee benefits. The calculation is made for each assumption separately, assuming that the remaining assumptions remain unchanged. Year ended December 31, 2016 2017 Years Years Discount rate - addition of 0.5% (28 ) (29 ) Rate of future salary increases - addition of 0.5% 36 40 Rate of employees leaving - addition of 5.0% (10 ) (17 ) (6) Average weighted useful life of liabilities for the main severance benefits: Year ended December 31, 2016 2017 Years Years Severance compensation 10.0 10.4 Retirement benefits 14.1 14.7 |
Income Tax
Income Tax | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax [Abstract] | |
Income Tax | Note 19 - Income Tax A. Corporate tax rate The corporate tax rate for 2015, 2016 and 2017 was 26.5%, 25% and 24%, respectively. On January 4, 2016, the Knesset plenum passed the Law for the Amendment of the Income Tax Ordinance (Amendment 216), 2016, which includes a reduction in the corporate tax rate from 26.5% to 25% as from January 1, 2016. On December 22, 2016, the Knesset plenum passed the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in 2017 and 2018) – 2016, by which, among other things, the corporate tax rate was reduced from 25% to 24% in 2017 and to 23% as from January 1, 2018 and thereafter. Deferred tax balances as at December 31, 2017 were calculated according to the new tax rates expected to apply on the date of reversal. The current taxes for the reported periods are calculated according to the actual tax rates as set out above. B. Composition of income tax expenses (income) Year ended December 31, 2015 2016 2017 NIS NIS NIS Current tax expenses Expenses for the current year 567 437 438 Adjustments for prior years - (28 ) 54 Total current tax expenses 567 409 492 Deferred tax expenses (income) Adjustments for prior years according to an assessment agreement - - (54 ) Reversal of temporary differences according to an assessment agreement - - 21 Creation and reversal of temporary differences (209 ) (33 ) (112 ) Total deferred tax expenses (209 ) (33 ) (145 ) Income tax expense 358 442 347 C. Reconciliation between the theoretical tax on the pre-tax income and the tax expense Year ended December 31, 2015 2016 2017 NIS NIS NIS Income before income tax 1,494 930 1,088 Statutory tax rate 26.5 % 25 % 24 % Income tax at the statutory tax rate 395 232 260 Changes in tax rate - 67 - Expenses not recognized for tax purposes (13 ) 46 48 Adjusted tax calculated for the Company’s share in equity- accounted investees (3 ) 1 - Recognition of deferred tax assets which were not recognized on prior periods (101 ) - - Current year tax losses and benefits for which deferred taxes were not created 80 124 39 Taxes in respect of previous years - (28 ) - Income tax expenses 358 442 347 D. Unrecognized deferred tax liabilities The calculation of deferred taxes does not take into account the taxes that would be applicable in the event of the sale of investments in subsidiaries and associates, since the Group intends to retain the investments. Deferred taxes in respect of a distribution of profit in subsidiaries and associates were also not taken into account since the dividends are not taxable. E. Unrecognized deferred tax assets and carry-forward tax loss As at December 31, 2017, the Company has tax loss carry-forwards in the amount of NIS 72 and capital loss carry forwards in the amount of NIS 42. Deferred tax assets relating to carry-forward losses and tax benefits were not recognized because their utilization in the foreseeable future is not probable. The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognized in respect of these items since it is not probable that future taxable profit will be available against which the Group can utilize the benefits. As a result, as at December 31, 2017, deferred taxes were not created on carry-forward losses and on carry-forwards capital losses of the Company as detailed above. On February 1, 2016, The Company sold shares of Bezeq (see Note 1) and as a result recognized a deferred tax asset due to the basis difference attributed to its investment in Bezeq in the amount of NIS 101 during 2015. F. Recognized deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following items: Property, plant equipment, Carry- Brand and Employee forward Names and intangible benefits losses for Customers assets* plan DBS Others* relationship Total NIS NIS NIS NIS NIS NIS Balance of deferred tax asset (liability) as at December 31, 2015 (422 ) 208 1,419 184 (839 ) 550 Recognized in profit or loss 74 (26 ) (231 ) (75 ) 224 (34 ) Recognized in equity - (4 ) - (98 ) - (102 ) Balance of deferred tax assets (liability) as at December 31, 2016 (348 ) 178 1,188 11 (615 ) 414 Balance of deferred tax asset (liability) as at December 31, 2016 (348 ) 178 1,188 11 (615 ) 414 Recognized in profit or loss 25 (13 ) (22 ) 28 127 145 Recognized in equity - - - 1 - 1 Balance of deferred tax assets (liability) as at December 31, 2017 (323 ) 165 1,166 40 (488 ) 560 * Reclassified As at December 31, 2017 deferred taxes are presented in the statement of financial position as follows: under deferred tax assets NIS 1,019 (December 31, 2016: NIS 1,007) and under deferred tax liabilities NIS 459 (December 31, 2016: NIS 593). A deferred tax asset for the carryforward tax losses of DBS appears in the financial statements of the Group in the amount of NIS 1,166. Recognition of the asset is based on the forecast of its future utilization in accordance with the expected merger, as set out in Note 19G, which will take place after receiving the regulatory approval for cancellation of the structural separation in Bezeq. The assumption of utilization of the tax asset in the merger is based on the assessment of Bezeq’s management, which relies on ongoing discussions between Bezeq’s management and the Ministry of Communications and on the work plan of the Ministry of Communications, that it is more likely than not that cancellation of the structural separation between Bezeq and DBS will be approved. G. Final tax assessments (1) The Company has final tax assessments up to and including 2014. (2) On January 22, 2015, the Company entered into a tax assessment agreement with the Israeli Tax Authority (the “Agreement”), with respect to final tax assessments with respect to: (i) tax years 2007-2009; and (ii) the sale of its legacy communications business that was completed on January 31, 2010. According to the Agreement, the Company paid the Israeli Tax Authority NIS 148, including interest and CPI linkage differences, in 24 monthly installments starting in February 2015. (3) On April 27, 2017, the Company entered into a tax assessment agreement with the Israeli Tax Authority (the “Agreement”) with respect to final tax assessments for the tax years 2010-2014. The Agreement covers all pending tax assessments and other tax matters with respect to such years. According to the Agreement, the Company paid the Israeli Tax Authority NIS 25, including interest and CPI linkage differences. (4) Bezeq has final tax assessments up to and including 2014. (5) On September 15, 2016, Bezeq and the Israel Tax Authority signed an assessment agreement (“the Assessment Agreement”) ending the disputes involving the tax assessor’s claims regarding the financing income from the shareholder loans to DBS and about the rights and holdings in DBS acquired by Bezeq. Concurrently, the Tax Authority granted approval for tax purposes for the merger of DBS with and into Bezeq, in accordance with Section 103(B) of the Income Tax Ordinance, whereby subsequent to the merger, the losses of DBS as at the merger date may be offset against the profits of the absorbing company, provided that in each tax year, it will not be permitted to offset an amount exceeding 12.5% (spread over eight years) of the total losses of the transferring company and the absorbing company, or 50% of the taxable income of the absorbing company in that tax year prior to offsetting the loss from previous years, whichever is lower. The approval was granted in accordance with the applicable tax laws in effect at the time. Without derogating from the amount of the losses set out in the Assessment Agreement, if there is any change in the applicable tax laws, the Income Tax Authority will reconsider the taxation decision in accordance with the tax laws applicable at the merger date. The Approval is effective until December 31, 2019. The Income Tax Authority will extend the date of the Approval each year by an additional year, subject to the declaration of Bezeq and DBS that there has been no material change in their business affairs and subject to the terms of the taxation decision, and subject to the interpretation given to the tax laws, provided that such interpretation is published in writing. Any change in the tax laws that does not require a change in the Approval will not result in any such change. The tax losses of DBS as at December 31, 2017 amount to NIS 5 billion. On December 26, 2017, Bezeq and the tax assessor signed a final assessment agreement for 2011-2014, which settles all the disputes that arose between the parties, including the non-recognition of financing expenses and timing differences in depreciation expenses. The net tax liability that was added as a result of the assessment agreement is NIS 70, for which a full provision is included in these financial statements. The assessment agreement regulates the claims of the tax assessor for 2015 and thereafter, regarding attribution of financing expenses to Bezeq’s capital amortization in 2011-2013, as well as attribution of financing expenses to Bezeq’s income from an intercompany dividend received or to be received from the subsidiaries, as from 2015 and thereafter, for the amounts of investments in Bezeq’s financial statements as at the end of 2014 (for DBS, up to September 27, 2016). (6) Pelephone has received final tax assessments up to and including 2014. (7) Bezeq International has received final tax assessments up to and including 2012. (8) DBS has received final tax assessments up to and including 2013. (9) Walla has received final tax assessments up to and including 2011. On November 12, 2017, as part of the assessment discussions of Walla, the tax assessor issued a best-judgment assessment for Walla for 2014. The tax assessor is demanding an additional payment of NIS 19. The main dispute between Walla and the tax assessor concerns Walla’s tax liability following the sale of its holdings in the subsidiary Coral Tell Ltd. Walla intends to file a reservation on the assessment. The management of Walla believes that the financial statements include appropriate provisions. |
Contingent Liabilities
Contingent Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Contingent Liabilities [Abstract] | |
Contingent Liabilities | Note 20 - Contingent Liabilities In addition to pending claims, during the normal course of business, new legal claims were filed against Group companies (in this section: “Legal Claims”). In the opinion of the managements of the Bezeq Group companies, which is based, among other things, on legal opinions as to the likelihood of success of the claims, the financial statements (Note 15 above) include appropriate provisions, where provisions are required to cover the exposure resulting from such claims. In the opinion of the management of each of the Bezeq Group companies, the additional exposure as at December 31, 2017, due to claims filed against the Group companies on various matters and which are unlikely to be realized, amounts to NIS 6.4 billion. There is also an additional exposure of NIS 4 billion for claims for which the likelihood of realization cannot yet be assessed. In addition, motions for certification of class actions have been filed against the Group companies, for which the Group has additional exposure beyond the aforesaid, since the exact amount of the claim is not stated in the claim. These amounts and all the amounts of the additional exposure in this Note are linked to the CPI and are stated net of interest. For updates subsequent to the reporting date, see section B below. A. Following is a detailed description of the Group’s contingent liabilities at December 31, 2017, classified into groups with similar characteristics. Balance of provisions Amount of additional exposure Amount of exposure for claims for which the amount of exposure cannot be assessed Claims group Nature of the claims NIS NIS NIS Customer claims Mainly motions for certification of class actions concerning contentions of unlawful collection of payment and deterioration in service provided by the Group companies. 59 4,183 2,148 * Claims by enterprises and companies Claims alleging liability of the Group companies in respect of their activities and/or the investments made in various projects. 11 2,005 ** 1,808 *** Claims of employees and former employees of Group companies Mainly collective and individual claims filed by employees and former employees of the Group in respect of various payments and recognition of various salary components as components for calculation of payments to Group employees. 1 4 1 Claims by the State and authorities Various claims by the State of Israel, government institutions and authorities (“the Authorities”). These are mainly procedures related to regulations relevant to the Group companies and financial disputes concerning monies paid by the Group companies to the Authorities (including property taxes). 16 24 - Supplier and communication provider claims Legal claims for compensation for alleged damage as a result of the supply of the service and/or the product. - 148 4 Claims for punitive damages, real estate and infrastructure Claims for alleged physical damage or damage to property caused by Group companies and in relation to real estate and infrastructure. The additional amount of exposure for punitive damages does not include claims for which the insurance coverage is not disputed. - 66 - Total legal claims against Bezeq Group companies 87 6,430 3,961 * Including exposure in the amount of NIS 1.11 billion for a motion for certification as a class action against Bezeq, as well as against the subsidiary Walla, Yad 2 and an advertising company owned by Walla, which addresses with Bezeq’s 144B service. Subsequent to the date of the financial statements, the motion was dismissed. ** Including exposure of NIS 2 billion for a motion for certification as a class action filed by a shareholder against Bezeq and officers in Bezeq, referring to alleged reporting omissions by Bezeq regarding the wholesale market and the reduction of interconnect fees, which the plaintiff estimates at NIS 1.1 billion or NIS 2 billion (depending on the method used to calculate the damage). *** See Below table: Date Parties Instance Type of proceeding Description June 2017 Shareholders of Bezeq Against Bezeq, Chairman of Bezeq’s Board of Directors, members of Bezeq’s Board of Directors, B Communications, Internet Gold, and companies in the Eurocom Group (the first motion also against the CEO of Bezeq and the CEO and CFO of DBS). At the Tel Aviv District Court (Economic Department) Two motions to certify class actions The subject of the motions is the transaction from 2015 in which Bezeq acquired from Eurocom DBS Ltd (a company controlled by Bezeq's controlling shareholders) the balance of shares of DBS that it held. The first motion was filed in the name of anyone who acquired Bezeq shares between February 11, 2015 and June 19, 2017 (excluding the respondents and/or those acting on their behalf and/or connected with them). In the motion it is argued that the report concerning the transaction was misleading and/or deficient, and on account of which, due to the opening of a public investigation into the transaction by the ISA, the public has become aware of details concerning the transaction and its implementation, which led to a drop in Bezeq's share price in the days following the disclosure and analysis of the new information. The plaintiff argues that the respondents acted contrary to the provisions of the Securities Law, and contrary to the provisions of additional laws, and caused holders of Bezeq's securities heavy financial losses, amounting to millions of shekels if not more. The second motion was filed in the name of three sub-classes - anyone who acquired (1) shares of Bezeq, (2) shares of our company, B Communications, and (3) shares of Internet Gold on the Tel Aviv Stock Exchange between May 21, 2015 and June 19, 2017. The plaintiff argues that the public that invested in these shares was seriously misled, which was uncovered following the opening of a public investigation into the transaction by the ISA on June 20, 2017, whereby the increase in the cash flow of DBS as reported in Bezeq's financial statements was artificially inflated, according to their claim, thereby misleading reasonable investors who based themselves on DBS cash flow data to estimate its worth, which led to over-valuation of the above companies. The plaintiff also claims additional damage caused to the groups of shareholders in B Communications and Internet Gold. On October 25, 2017, a ruling was given ordering the striking out of another (third) class action certification motion filed in the same court in July 2017 concerning a transaction for the purchase of DBS shares and a transaction to continue the agreement between DBS and Spacecom, after the court ruled that the above motions should be preferred and after failing to find any added value in the other motion to advancing the class’s interests or facilitating the hearing. In accordance with a procedural arrangement approved earlier by the court, the plaintiffs agreed in the above motions to administer the motions jointly and they will file a consolidated motion. On December 10, 2017, the court resolved to postpone the hearing in the case for 4 months after the Attorney General’s attorney submitted his position whereby the hearing in this case should be delayed at this stage for 4 months, to enable the evidence in connection with the ISA investigation to be examined by the District Attorney’s office, to allow the investigation to be completed to the extent that this is necessary, and so that the District Attorney’s office can formulate its position. On May 2, 2018 the Court granted the Attorney General's request and ordered the proceeding stayed for an additional four months. The Attorney General is required to update the Court by August 12, 2018. Date Parties Instance Type of proceeding Description June-August 2017 and a motion from December 2017 Bezeq shareholders against Bezeq and DBS (not including two motions that were filed only against Bezeq) Tel Aviv District Court Various motions to disclose documents prior to filing a motion to certify a derivative claim under Section 198A of the Companies Law filed further to the ISA investigation In some of these motions (three in all), the court was moved to instruct Bezeq (and DBS, as applicable) to submit to the plaintiffs, documents and information in connection with the agreement for Bezeq’s purchase of DBS, and specifically in connection with the Second Contingent Payment according to that agreement (payment of NIS 170 million which is contingent on DBS meeting free cash flow targets in the period 2015-2017). On October 24, 2017, the court resolved to strike out the three motions after accepting the plaintiff’s request in the motion to certify a derivative action in the matter of an agreement for Bezeq to purchase DBS (see above), and this after concluding that these motions give rise to questions of fact and law that are essentially similar to the questions that arise in the Earlier Motion. In its decision, the court also noted that if the plaintiff in the Earlier Motion does not submit a motion to amend the motion for certification (such that it also applies to the matters included in the disclosure motions) or, alternatively, it files such a motion and its motion is dismissed, the plaintiffs in the foregoing three motions will have the right to initiate legal proceedings should they so determine. In some of the motions, the court was moved to instruct Bezeq (and DBS, as applicable) to submit to the plaintiffs, certain documents in connection with an interested party transaction between DBS and Spacecom from 2013, as amended early in 2017. On December 10,2017, the plaintiffs in three motions notified they were “joining forces” and cooperating with each other. A hearing on the question of which motions should be dismissed and which should remain was held on January 8, 2018 and a ruling on the matter has not yet been given. Further to ISA’s position that in view of the investigation the proceedings in these cases should be delayed, the court ordered the proceedings to be delayed until April 10, 2018. In an additional motion, the court was moved to instruct Bezeq and DBS to submit to the plaintiffs, documents and information also in connection with the agreement for Bezeq’s purchase of DBS and in connection with the DBS - Spacecom Transaction. In this motion, the plaintiff wishes to explore the filing of a motion to certify a derivative claim against officers in Bezeq and DBS who were in breach of their fiduciary duty against Bezeq in these transactions, according to the plaintiff, where the relief requested is to return all the benefits they received for the positions they held in Bezeq or DBS (salary, bonuses, management fees, etc.). The court consolidated the preliminary hearing in this case with the preliminary hearing on the motions to disclose documents prior to filing the motion to certify a derivative claim, detailed above. Motion from December 2017 - motion to order Bezeq to disclose various documents to the plaintiff with respect to advance payments on account of the second contingent payment in the DBS transaction, claiming that the decision to pay advances and to pay them without any collateral was flawed. On January 21, 2018, Bezeq filed an application for instructions and requesting the court to strike out one of the two motions, either this motion or the motion to certify a derivative claim since they deal with overlapping issues. On June 29, 2017, Plaintiff Lynne P. Maleeff commenced litigation on behalf of a purported class of all persons and entities who purchased or otherwise acquired our shares between March 18, 2015 and September 6, 2017. The original defendants were our company, Doron Turgeman (our CEO), Itzik Tadmor (our CFO) and Ehud Yahalom (our former CFO). On December 8, 2017, lead plaintiffs filed an amended complaint adding ten new defendants: Shaul Elovitch, Or Elovitch, Ron Eilon, Stella Handler, David Mizrahi, Micky Neiman, Allon Raveh, Linor Yochelman, DBS and Eurocom Communications. The amended complaint alleges a single cause of action against our company for violation of Section 10(b) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder. The complaint alleges that we made false and misleading statements and omissions in our SEC filings. On February 20, 2018, we moved to dismiss the litigation for failure to state a claim or, alternatively, to stay the litigation pending the outcome of criminal investigations in Israel. Our motion to dismiss asserts, among other things, that plaintiffs failed to allege that we had the required knowledge or scienter about the purported wrongdoing by other defendants and that we did not make any materially false statements. Plaintiffs filed their opposition to the motion to dismiss or stay on April 17, 2018. The court may schedule oral argument on our motion to dismiss sometime in June or July, and it is possible that a decision will be issued before the end of October. While we have solid arguments in our favor, it is impossible to predict how the court will rule on the motion to dismiss or stay. Similar class action lawsuits were filed in Israel, and are described in the table below. Our company, Internet Gold and five members of our Board of Directors were named as respondents in a motion to certify a claim as a derivative claim instituted in the Tel Aviv District Court (Economic Affairs Division) on July 28, 2016. The plaintiff has alleged that NIS 113 out of the dividends distributed by us in May 2016 was distributed unlawfully as such amount was not included in our profit and loss report, and therefore does not qualify as a "surplus" that may be lawfully distributed as dividends under the Israeli Companies Law. A pretrial hearing was held in March 2017, in which the court allows us to file an additional brief response and a supplementary expert opinion, in order to respond to the arguments. We filed the additional responses on in June 2017. The court further held that the parties should consider the possibility of a constructive dialogue regarding the issues in dispute and instructed the parties to inform the court about the results of this dialogue, and whether they want to set a date for an evidence hearing or additional preliminary motions. The dialogue process failed, and accordingly, the court set dates for the evidence hearing (as part of the motion to certify) for January 6, 2019. B. Subsequent customer claims Subsequent to the reporting date, claims amounting to NIS 571 was filed against Bezeq and officers of Bezeq. At the approval date of the financial statements, the exposure for these claims cannot yet be assessed. In addition, claims against Group companies with exposure of NIS 1.2 billion came to an end. In addition, subsequent to the date of the financial statements, a motion for certification of the claim as a derivative action was filed against Bezeq as a formal respondent, and against directors of Bezeq at the times relevant to the motion and against the controlling shareholders in Bezeq. The matter of the motion is Bezeq ’s engagement in an assessment agreement with the Tax Authority, which was signed on September 15, 2016 (described in Note 19G), according to which the Company paid taxes in the amount of NIS 462 to the Tax Authority for financing income from loans to DBS. On the other hand, it was agreed, among other things, that the losses of DBS for the financing expenses for the shareholders’ loans of Bezeq to DBS will be recognized in full for Bezeq after the merger between Bezeq and DBS. Bezeq and the CEO intend to study the notice of the Authority, to exercise the right to a hearing and to submit their arguments to the Commissioner. They are unable to assess at this stage the outcome of the proceeding. |
Agreements
Agreements | 12 Months Ended |
Dec. 31, 2017 | |
Agreements [Abstract] | |
Agreements | Note 21 - Agreements A. The Group companies have operating lease agreements for land, property cellular sites, real estate, and vehicles used by them. The minimum future contractual rental payments during the next five years, calculated according to the rental fees in effect as at December 31, 2017, are as follows: Real estate Vehicles Total Year ended December 31, NIS NIS NIS 2018 222 88 310 2019 213 74 287 2020 165 48 213 2021 86 - 86 2022 50 - 50 2023 onwards 74 - 74 810 210 1,020 B. In 2017, DBS signed an agreement with Spacecom Communications Ltd. (“Spacecom”), which is controlled by a controlling shareholder of the Company, with an amendment to the addendum to the existing agreement between the parties of November 4, 2013 for the receipt of satellite segments in Spacecom’s satellites (“the Agreement”), the principles of which are as follows: The Agreement is valid until December 31, 2028 (the same term as of the 2013 Agreement), subject to the options for early termination set out below. DBS will receive the following space segments: (A) Amos 3 satellite; (B) Amos 7 satellite, in which Spacecom holds the right to lease space segments; (C) Amos 8 satellite - a new satellite that is expected to serve DBS when it becomes operational. In the contract period (subject to events of unavailability and until the end of the lifespan of Amos 3, which is expected in 2026), DBS is expected to use 12 space segments from two different satellites, according to the division in the agreement. The agreement also establishes the positioning of backup space segments in the contract period, under the terms and within the limitations in the agreement. The overall nominal cost for the entire contract period is estimated at US$ 263 and represents an average annual cost of US$ 21.9, subject to discounts and reimbursements set out in the agreement. The agreement stipulates the right to early termination without cause, subject to advance notice of 12 months and payment of the consideration in accordance with the prescribed mechanism. The agreement also stipulates the right to early termination due to a delay in the entry into force of the agreement for construction of Amos 8, and the right to early termination at the end of the lifespan of Amos 3 due to non-availability of Amos 8, without payment of compensation and under the conditions set out in the agreement. In March 2018, Bezeq’s audit committee and Board of Directors approved the agreement between DBS and Spacecom with the amendment to the 2017 agreement, whereby in the period from April 2018 up to September 2018 (and for an additional year, if the parties agree to this), instead of one of the space sections leased by DBS from Spacecom in the Amos 3 satellite, DBS will lease a section on the Amos 7 satellite. For this exchange, DBS is entitled to a monthly discount of US$ 80 thousand in the interim period. As at the reporting date, the amendment has not yet been signed. For information about the agreement with Spacecom, see Note 30 regarding the agreements with related parties. C. In October 2016, the new agreement with Apple Distribution International (“Apple”) came into effect for the acquisition and distribution of iPhones. In accordance with the agreement, Pelephone is required to purchase a minimum number of iPhones for an additional three years at the prices in effect at the manufacturer at the actual purchase date. D. Pelephone has obligations as of December 31, 2017 amounting to NIS 147 (as at December 31, 2016, NIS 71) to acquire terminal equipment. E. Pelephone utilizes Ericsson infrastructure equipment for its UMTS/HSPA and LTE networks. Pelephone has multi-annual agreements for maintenance, support and upgrade of software for the UMTS/HSPA network and an agreement for deployment of the 4G network (LTE) with Ericsson, and Pelephone believes that it could be dependent on Ericsson for network support and its expansion. F. As at December 31, 2017, DBS has agreements for the acquisition of broadcast rights. In 2017, expenses for consumption of broadcast rights acquired by DBS amounted to NIS 342. G. For information about agreements for the acquisition of broadcasting rights by DBS, see Note 11. For information about agreements for the purchase of fixed assets, see Note 9 above. H. On January 21, 2018, Bezeq signed an agreement for the sale of a real estate asset in the Sakia complex for a total consideration of NIS 497, plus VAT, which may increase up to NIS 550, if the purchaser, in accordance with its right under the agreement, postpones the date of payment of up to two thirds of the consideration until December 31, 2022. Bezeq is expected to record a capital gain on the date on which the conditions for recognition of the sale of the asset are fulfilled in accordance with accounting principles. The final amount of the capital gain depends on the fees and levies that will apply to Bezeq for the sale of an asset. I . For agreement to issue private debentures in 2018, see Note 13 below. J. For information about transactions with related parties, see Note 30. |
Securities, Pledges and Guarant
Securities, Pledges and Guarantees | 12 Months Ended |
Dec. 31, 2017 | |
Securities, Pledges and Guarantees [Abstract] | |
Securities, Pledges and Guarantees | Note 22 - Securities, Pledges and Guarantees The Group’s policy is to provide tender, performance and legal guarantees. In addition, the Company provides bank guarantees, where necessary, for banking obligations of subsidiaries. A. The Bezeq Group companies have provided guarantees of NIS 152 in favor of the Ministry of Communications to secure the terms of their licenses (of which an amount of NIS 37 is linked to the CPI and NIS 35 is linked to the US$ exchange rate). B. The Bezeq Group companies have provided bank guarantees of NIS 61 in favor of third parties. C. In accordance with its cellular license, Pelephone is not permitted to sell, lease or pledge any of its assets used for the implementation of the license, without the consent of the Minister of Communications, except for: 1) A pledge on one of the license assets in favor of a bank operating lawfully in Israel, to receive bank credit, provided that it submitted notice to the Ministry of Communications regarding the pledge it intends to register, noting that the pledge agreement includes a clause ensuring that in any event, exercise of the rights by the bank will not impair, in any way, the services provided under the license. 2) Sale of items of equipment when implementing an upgrade, including sale of equipment by the trade-in method. D. For information about the conditions for loans and borrowings, see Note 13. |
Capital and Capital Reserves
Capital and Capital Reserves | 12 Months Ended |
Dec. 31, 2017 | |
Capital and Capital Reserves [Abstract] | |
Capital and Capital Reserves | Note 23 - Capital and Capital Reserves A. Equity Authorized Registered and paid up December 31 December 31 2016 and 2017 2016 and 2017 Number of shares Ordinary shares of NIS 0.1 par value each 50,000,000 29,889,045 B. Dividend distributions On May 21, 2015, the Company’s Board of Directors declared a dividend of NIS 2.24 per share and NIS 67 in the aggregate. The payment date was June 16, 2015. On August 31, 2015, the Company’s Board of Directors declared a dividend of NIS 0.73 per share and NIS 22 in the aggregate. The payment date was September 29, 2015. On November 19, 2015, the Company’s Board of Directors declared a dividend of NIS 1.27 per share and NIS 38 in the aggregate. The payment date was December 10, 2015. On May 25, 2016, the Company’s Board of Directors declared a dividend of NIS 11.88 per share and NIS 355 in the aggregate. The payment date was June 29, 2016. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2017 | |
Revenues [Abstract] | |
Revenues | Note 24 - Revenues Year ended December 31, 2015 2016 2017 NIS NIS NIS Domestic fixed line communications Fixed line telephony 1,456 * 1,352 * 1,255 Internet - infrastructure 1,438 * 1,461 * 1,488 Transmission and data communication 835 * 835 * 775 Cloud and digital services 184 * 203 * 230 Other services 212 213 205 4,125 4,064 3,953 Cellular Cellular services and terminal equipment 1,948 1,777 1,743 Sale of terminal equipment 884 811 757 2,832 2,588 2,500 International communications, internet services and NEP 1,487 1,480 1,467 Multi-channel television 1,333 1,745 1,650 Others 208 207 219 9,985 10,084 9,789 |
Salaries
Salaries | 12 Months Ended |
Dec. 31, 2017 | |
Salaries [Abstract] | |
Salaries | Note 25 - Salaries Year ended December 31, 2015 2016 2017 NIS NIS NIS Salaries and incidentals: Operating 1,871 1,922 1,931 General and administrative 586 622 647 Total salaries and incidentals 2,457 2,544 2,578 Less - salaries recognized in investments in property, plant and equipment and in intangible assets 499 529 571 1,958 2,015 2,007 |
General and Operating Expenses
General and Operating Expenses | 12 Months Ended |
Dec. 31, 2017 | |
General and Operating Expenses [Abstract] | |
General and Operating Expenses | Note 27 - Other Operating Expenses (Income), net Year ended December 31, 2015 2016 2017 NIS NIS NIS Loss from impairment of goodwill - - 129 Provision for severance pay in early retirement 117 96 23 Capital gain from sale of property plant and equipment (136 ) (86 ) (27 ) Others 22 11 24 3 21 149 |
Other Operating Expenses (Incom
Other Operating Expenses (Income), Net | 12 Months Ended |
Dec. 31, 2017 | |
Other Operating Expenses (Income), Net [Abstract] | |
Other Operating Expenses (Income), net | Note 27 - Other Operating Expenses (Income), net Year ended December 31, 2015 2016 2017 NIS NIS NIS Provision for severance pay in early retirement 117 96 23 Loss from impairment of goodwill - - 117 Capital gain from sale of property plant and equipment (136 ) (86 ) (27 ) Others 22 11 24 3 21 137 |
Financing Expenses (Income)
Financing Expenses (Income) | 12 Months Ended |
Dec. 31, 2017 | |
Financing Expenses (Income) [Abstract] | |
Financing Expenses (Income) | Note 28 - Financing Expenses (Income) Year ended December 31 2015 2016 2017 NIS NIS NIS Income on bank deposits, investments and others (14 ) (13 ) (2 ) Change in fair value of financial assets measured at fair value through profit or loss (27 ) (29 ) (7 ) Income in respect of credit in sales, net of discount (52 ) (42 ) (35 ) Linkage and exchange rate differences, net - (16 ) - Interest and linkage differences from loans to an associate (21 ) - - Other finance income (40 ) (23 ) (25 ) Total financing income (154 ) (123 ) (69 ) Interest expenses on financial liabilities 634 871 445 Linkage and exchange rate differences, net 61 38 48 Change in contingent consideration in a business combination - 55 (14 ) Change in fair value of financial assets measured at fair value through profit or loss 4 23 39 Financing expenses for employee benefits, net 16 15 35 Reduction of the provision for assessor interest expenses (76 ) - - Other financing expenses 50 52 33 Total financing expenses 689 1,054 586 Financing expense, net 535 931 517 |
Earnings (Loss) per Share
Earnings (Loss) per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings (Loss) per Share [Abstract] | |
Earnings (Loss) per Share | Note 29 - Earnings (Loss) per Share The calculation of basic and diluted earnings per share was based on income (loss) attributable to ordinary shareholders, and on a weighted average number of ordinary shares outstanding, calculated as follows: Year ended December 31 2015 2016 2017 NIS NIS NIS Earnings (loss) attributable to ordinary Shareholders Basic earnings (loss) for the year 210 (236 ) 78 Effect of diluted per share loss in a subsidiary (2 ) - - Diluted earnings (loss) for the year 208 (236 ) 78 Year ended December 31 2015 2016 2017 Thousands of Thousands of Thousands of shares of NIS 0.1 shares of NIS 0.1 Shares of NIS 0.1 par value par value par value Weighted average number of ordinary shares (basic and diluted) 29,889 29,889 29,889 |
Transactions with Related Parti
Transactions with Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Transactions with Related Parties [Abstract] | |
Transactions with Related Parties | Note 30 - Transactions with Related Parties A. Identity of related parties The Company’s related parties are as defined in IAS 24 (2009) - Related Party Disclosures and include: Internet Gold, its ultimate parent Eurocom, other Eurocom Group companies, related parties of Eurocom, directors and key management personnel in the Company, Internet Gold, the Eurocom Group companies and persons who are close to a family member of any of these individuals. In the ordinary course of business, some of the Company’s subsidiaries and affiliates engage in business activities with each other. Such business activities are primarily between Bezeq and its subsidiaries and between other Eurocom Group companies, such as Eurocom Digital Communications, Eurocom Cellular Communications, Spacecom, Gilat Satcom and to a lesser extent other affiliated companies. Such business activities primarily relate to the provision, purchase or sale of communications or digital services and products , The transactions among these related parties are made at prices and on terms equivalent to those charged in transactions with unrelated parties under similar conditions. Ordinary course of business transactions are aggregated in this Note. This Note also includes detailed descriptions of material related party transactions. It should be noted that the transactions described below with interested and related parties do not include reference to Note 1 regarding the investigation of the ISA and the Israel Police. B. Balances with related parties December 31, 2016 2017 NIS NIS Receivables - associates 10 8 Liabilities to related parties, net * (12 ) (23 ) Advanced payment (Liability) to Eurocom DBS (not including interest) for contingent consideration (see Note 12B) (32 ) 99 * The amounts are for IGLD, its ultimate parent Eurocom, and their related parties. C. Transactions with related parties Year ended December 31, 2015 2016 2017 NIS NIS NIS Revenues From associates (including interest income in respect of shareholders loans) * 30 7 8 From related parties ** 10 13 23 Expenses To related parties ** 128 110 **** 122 To associates 3 2 5 Investments Related parties ** 76 59 28 Acquisition of DBS 913 55 **** (70 )*** Revised fair value of the excess advance payments for acquisition of DBS - 56 *** * Revenues from associates in 2015 include mainly finance income from shareholders loans to DBS, prior to the acquisition of control in DBS. ** The amounts are for Internet Gold, Eurocom, and their related parties. *** Adjustment of the liability for contingent consideration for a business combination with DBS and adjustment of the fair value estimate of the amount expected to be returned to Bezeq from the excess of the advance payments that it paid was recognized as financing income, net. **** Reclassified Approval date of the general meeting (after approval of Bezeq’s audit committee and Board of Directors) Nature of the transaction Amount of the transaction March 23, 2015 Approval of Bezeq’s acquisition agreement with Eurocom DBS Ltd. (“Eurocom DBS”) whereby Bezeq will acquire the entire holdings of Eurocom DBS in DBS shares DBS and all the shareholder loans provided by Eurocom DBS to DBS (including acceptance of the terms established by the Antitrust Commissioner’s in his approval of the merger on March 26, 2014, both by Bezeq and by DBS, and announcement of the exercise of Bezeq’s option for the allotment of 6,221 DBS shares, at no cost, representing 8.6% of the share capital of DBS). The total cost is comprised of: a) total cash of NIS 680; b) total cash of up to NIS 200, subject to certain conditions; c) total cash of up to NIS 170, subject to certain conditions. For additional information about the conditions relating to b and c, see Note 12B above. October 19, 2015 Approval of Bezeq’s vote at the general meeting of shareholders of DBS in favor of DBS’s agreement with Eurocom and ADB for the order of yesMaxTotal3 converters, under the existing agreement, until December 31, 2017. Total cost of US$ 14. December 8, 2015 Amendment to the framework agreement between Pelephone and Eurocom Cellular Communications Ltd., so that it will be extended to other products and brands, including related services for all products and its extension until December 31, 2018 (or three years after the acquisition date of any additional products or brands, whichever is earlier). Annual scope of up to NIS 50 (for all the products). June 30, 2016* Extension of the amended agreement with Eurocom Communications for ongoing management and consultation services for Bezeq. The agreement is for three years, valid until May 31, 2019, unless one of the parties submits three-month notice of termination of the agreement. NIS 6.4 per year. November 27, 2014 Bezeq’s agreement to bring forward payments with Eurocom, according to which DBS may advance, at the supplier’s request, payments that are due, or will be due, to Eurocom for orders of converters. Up to a total cost of US$ 6. this approval was not used in the reporting year November 3, 2016 Bezeq’s agreement with Eurocom for the additional acquisition of up to 90 thousand VTECH N VDSL routers, valid until June 30, 2017. Approval for acquisition of up to US$ 11.3 (not including VAT). Approval date of the general meeting (after approval of Bezeq’s audit committee and Board of Directors) Nature of the transaction Amount of the transaction April 3, 2017 Approval of Bezeq’s vote at the general meeting of DBS in favor of the agreement between DBS and Spacecom with an amendment/addendum to the existing agreement between the parties dated November 4, 2013, for the lease of satellite segments in Spacecom’s satellites (“the Agreement”), including in favor of implementation of the Agreement. The validity of the Agreement remains the same as the original agreement, namely, until the end of 2028. A total nominal cost of up to US$ 263 for the entire term of the Agreement (until December 31, 2028), reflecting an average annual cost of US$ 21.9. It should be noted that the overall cost of the Agreement may be lower if surplus revenue sharing mechanisms are applied and/or the assumptions set out in the amendment to the Agreement. July 5, 2017 The agreement between Bezeq International and Eurocom Digital for the purchase of up to 100,000 TECH VDSL routers Approval of the acquisition in an amount of up to US$ 3.2 (not including VAT) * Eurocom will also provide ongoing consultation services in diverse areas, in a monthly scope of at least 60 hours of consulting services, provided by Or Elovitch, Orna Elovitch-Peled, Amikam Shorer, Felix Cohen, Ami Bar-Lev, and any other party set out in the agreement. For services provided by the Eurocom Communications as described above, Bezeq will pay the following consideration to Eurocom Communications: (A) directors’ compensation, consisting of annual participation compensation and actual participation compensation based on a maximum amount for one meeting (as this term is defined in the Companies Regulations (Rules for Compensation and Expenses of an External Director), 2000), based on the relevant rating of Bezeq of the subsidiary/sub-subsidiary (as the case may be) at that date, for the participation of the directors serving on behalf of Bezeq ’s controlling shareholders, as part of their membership and their position as directors in Bezeq and/or its subsidiaries and the various committees, subject to adjustments in accordance with their number and presence at meetings; (B) NIS 3.5 per year for the service and activities of Shaul Elovitch as active chairman of the Board of Directors of Bezeq and its subsidiaries; and (C) NIS 432 thousand per year for ongoing consultation services. In view of the restrictions imposed on the activities Shaul Elovitch and other directors who serve or who served in the reporting year on behalf of Eurocom Communications on the Board of Directors of Bezeq and its subsidiaries, in connection with the investigation conducted by the ISA, the Board of Directors OF Bezeq resolved on September 25, 2017, that the amount to be paid by Bezeq to Eurocom Communications for the services component of the Chairman of the Board of Directors, in accordance with the management agreement, for the period from June 20, 2017 to December 31, 2017, will be 50% of the amount set out in the agreement for this period. On January 29, 2018, the Board of Directors of Bezeq resolved that the payments under the agreement for the period as from June 20, 2017 will be withheld, and that for the period from January 1, 2018, Bezeq will start a review of changes to the management agreement, while withholding payments until a final decision on the matter is made. Due to the opening of another investigation by the ISA and the Israel Police (see Note 1), negotiations have not yet commenced, and Eurocom Communications does not provide the services of the chairman of the board and consulting services. The financial value of the transactions described above, which were carried out in 201 7 Amounts included in the consolidated financial statements NIS Expenses 91 Property plant and equipment 11 Acquisition of Eurocom DBS holdings in DBS (see Note 12B) (70 ) Adjustment of the fair value of excess advance payments for the acquisition of DBS (see Note 12B) 56 The Company both receives various services and products from, and provides various services and products to, related parties at market rates and in the ordinary course of business. Other than the transactions described below, none of these related party transactions are material to the Company or to the Company’s related parties. If a related party wishes to supply products or services to the Company, the Company generally obtain a bid from a third party to enable us to determine whether the related party’s bid is on arm’s-length terms. Any of such transaction is subject to the approval of the Company’s audit committee and the Company’s board of directors (and in some circumstances, The Company’s shareholders). In addition, generally the Company will not purchase a particular type of product or service solely from related parties, but will also have non-related vendors. Prices offered by non-related vendors are compared to those offered by related parties to ensure that the related parties are offering arm’s length terms. In the ordinary course of business, some of the Company’s subsidiaries and affiliates engage in business activities with each other. Such business activities are primarily among Bezeq, other Bezeq Group companies and Eurocom Group companies, such as Eurocom Digital, Eurocom Cellular, Spacecom, Satcom, and to a lesser extent other affiliated companies. Such business activities primarily relate to the provision, purchase or sale of communications and digital services and products, including the provision of satellite or broadcasting services, cellular and electronic products and equipment, and Internet and telephony services. The transactions among these related parties are made at prices and on terms equivalent to those charged in transactions with unrelated parties under similar conditions. 1. Registration rights agreement with Internet Gold The Company entered into a registration rights agreement with Internet Gold granting it the right to demand registration of the ordinary shares it owns under the Securities Act. Under the registration rights agreement, the Company has granted to Internet Gold “demand” registration rights that allow it to request that the Company register some or all of its ordinary shares. Internet Gold is entitled to an aggregate of five demand registrations. The Company is not required to affect any demand registration unless such demand registration is for a number of ordinary shares with a market value that is equal to at least US$ 7.5. The Company is also not required to affect more than one demand registration during any 12-month period thereafter or to grant a request for a demand registration within 90 days of any other demand registration. Internet Gold also has “piggyback” registration rights that allow it to include the Company’s ordinary shares it owns in any public offering of equity securities initiated by the Company (other than those public offerings pursuant to registration statements on Forms F-4, S-8 or any other successor forms). The Company also granted Internet Gold the right to request a shelf registration on Form F-3, provided that the Company will be eligible to utilize a registration statement on such form, providing for an offering to be made on a continuous basis but for no longer than one year without the consent of the Company audit committee. Under the registration rights agreement the Company agreed to indemnify Internet Gold against any losses or damages resulting from any untrue statement or omission of material fact in any registration statement or prospectus pursuant to which Internet Gold sell ordinary shares, unless such liability arose in reliance upon and in strict conformity with information furnished in writing from Internet Gold. The Company will pay all expenses incident to any demand registration and Internet Gold will pay its respective portions of all underwriting discounts, commissions and fees attributable to the sale of its ordinary shares. 2. Related party transactions The Company both receives various services and products from, and provides various services and products to, related parties at market rates in the ordinary course of business. Other than the transactions described below, none of these related party transactions are material to the Company or to the related parties. If a related party wishes to supply products or services to the Company, The Company generally obtain bids from a third party to enable the Company to determine whether the related party’s bid is on arm’s-length terms. Any of such transaction is subject to the approval of the Company’s audit committee and our board of directors (and in some instances, the shareholders). In addition, generally The Company will not purchase a particular type of product or service solely from related parties, but will also have non-related vendors. Prices offered by non-related vendors are compared to those offered by related parties to ensure that the related parties are offering arm’s length terms. 1. In February 2008, the Company entered into an execution services agreement with Eurocom Capital Finance Ltd. (“Eurocom Capital”), under which Eurocom Capital handled the execution of the Company’s financial investments pursuant to direct instructions from our Chief Executive Officer. The Company paid Eurocom Capital aggregate fees of NIS 604 thousand, NIS 288 thousand and NIS 110 thousand ($32 thousand) for its services in 2015, 2016 and 2017, respectively. The execution services agreement with Eurocom Capital was terminated on November 30, 2017. 2. The Company entered into an arrangement with Internet Gold according to which the Company’s employees provide services to both companies and the Company will pay 2/3 and Internet Gold will pay 1/3 of their compensation. 3. The Company and Internet Gold together lease their principal offices from Eurocom Communications for an annual rent of NIS 110 thousand (approximately $32 thousand) for both companies. Eurocom Digital provides the Company and Internet Gold with additional services, such as computing services for an annual fee of NIS 24 thousand (approximately $7 thousand) for both companies. All of these expenses are divided one-third to Internet Gold and two-thirds to the Company. 4. In June 2017, the Company’s shareholders approved our entering into a Services Agreement with Eurocom Communications pursuant to which it will provide us with the services of its Legal Department in consideration of a monthly fee of NIS 20 thousand, plus an annual fixed amount of up to NIS 8 thousand in respect of various other expenses to be paid against receipts and documentation. Based on our prior experience, we estimated that the scope of the legal services provided to the company averaged approximately 60 hours per month on an annual basis. The legal services’ portion of the Services Agreement was terminated on March 31, 2018. 5. In February 2018, our Board of Directors appointed Adv. Ami Barlev to serve as a director and as Acting Chairman of the Company’s Board of Directors until the next annual shareholders’ meeting. In March 2018, Eurocom and the Company terminated the rest of the Services Agreement. The Company’s Compensation Committee and Board of Directors have confirmed, among other things, that upon termination of the Services Agreement, Messrs. Or Elovitch and Ami Barlev will be entitled to compensation as directors pursuant to the “Fixed” statutory amount in accordance with the Companies Regulations (Rules Regarding Compensation and Expenses for an External Director) 5760-2000 for companies within the range of the Company’s size. In addition, the directors will be entitled to receive reimbursement of expenses in accordance with the provisions of these Compensation Regulations, to receive coverage under the insurance policy that applies to all of the Company’s directors and officers, and to receive indemnification letter as given to all of the Company’s directors and officers. Mr. Barlev’s compensation is effective starting February 7, 2018. The compensation of Mr. Or Elovitch is effective starting April 1, 2018. Key management personnel compensation comprised: NIS NIS NIS Year ended December 31 2015 2016 2017 Employee benefits 1 2 2 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 31 - Subsequent Events A. On April 22, 2018, the Tel Aviv-Jaffa District Court issued a liquidation order for Eurocom Communications effective May 3, 2018. According to the order, the official receiver will be the temporary liquidator of Eurocom Communications until the appointment of a permanent liquidator, and attorneys Pinchas Rubin, Amnon Lorch and Uri Gaon were appointed as special managers. The liquidation order did not constitute a change of control under the Control Permit, but this may change in the future. B. On April 26, 2018, Bezeq held its annual meeting of shareholders (the “Meeting”). In the Meeting, the following directors were elected to Bezeq’s Board: Shlomo Rodav, Doron Turgeman, Ami Barlev, Orly Guy, Ilan Biran, Dov Kotler, David Granot, Rami Nomkin, Idit Lusky (an external director) and Amnon Dik (an external director). Three additional external directors were not up for re-election are remain in office. All the elected directors were either recommended by the Company or their election was supported by the Company. |
Significant Accounting Polici38
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies [Abstract] | |
Initial application of new standards | A. Initial application of new standards As from January 1, 2017, the Group has early adopted IFRS 15, Revenue from Contracts with Customers (“IFRS 15”), which sets out guidelines for recognition of revenue. IFRS 15 presents a new model for recognizing revenue from contracts with customers, which includes five steps for analyzing transactions so as to determine when to recognize revenue and in what amount: 1. Identifying the contract with the customer. 2. Identifying separate performance obligations in the contract. 3. Determining the transaction price. 4. Allocating the transaction price to separate performance obligations. 5. Recognizing revenue when the performance obligations are satisfied. In accordance with the model, the Group recognizes revenue when the customer gains control over the goods or services. Revenue is based on the consideration that the Group expects to receive for the transfer of the goods or services promised to the customer. Revenue is recognized when it is expected that the economic benefits will flow to the Group. Application of the model did not have a material effect on the measurement of the Group’s revenue in 2017, compared to the provisions of the previous standard. The main effect of the Group’s application of IFRS 15 is the accounting treatment for the incremental costs of obtaining a contract with a customer (“Subscriber Acquisition”), which are costs incurred to obtain a contract with a customer and which costs would not have been incurred had the contract not be obtained (such as sales commissions). These are recognized as an asset when the costs are attributed directly to a contract that the Group can specifically identify, they produce or improve the Group’s resources that will be used for its future performance obligation and it is probable that the Group will recover these costs, and not only where there is an obligation of the customer to acquire services from the Group for a defined period. Accordingly, direct commissions paid to agents and sales employees of the Group for sales and upgrades under agreements that do not include an obligation period for the customer, are recognized as an asset for obtaining a contract instead of an expense in the statement of income, since the Group expects to recover the incremental costs for achieving the contract in the framework of the contracts. An asset for obtaining a contract is amortized in accordance with the expected useful life of the subscribers and in accordance with the average churn rate of subscribers based on the type of subscriber and service received (mainly over 1-4 years). Contract acquisition costs that would arise regardless of whether the contract was obtained are recognized as an expense when incurred. The Group applied IFRS 15 using the cumulative effect approach without a restatement of comparative figures. As part of the initial implementation of IFRS 15, the Group has chosen to apply the expedients in the transitional provisions, according to which the cumulative effect approach is applied only for contracts not yet complete at the transition date and the accounting treatment for the contracts completed at the transition date will not be amended. The contracts that are renewed every month and that may be cancelled by the customer at any time, without any penalty, are contracts that ended at the date of initial application of IFRS 15. Therefore, Subscriber Acquisition costs incurred prior to January 1, 2017 and recognized in the statement of income as an expense were not accounted for retroactively. Other than the accounting treatment of Subscriber Acquisition costs, implementation of IFRS 15 had no other material effects on the financial statements. In addition, implementation of IFRS 15 had no effect on retained earnings as at the transition date. The tables below summarize the effects on the consolidated statement of financial position as at December 31, 2017 and on the consolidated statements of income and cash flows for 2017, assuming that the Group’s previous policy regarding subscriber acquisition costs continued during that period. Effect on the consolidated statement of financial position of the Group as at December 31, 2017: In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net subscriber acquisition asset (stated as deferred expenses and non-current investments) 4 111 115 Equity attributable to shareholders of the Company 1,224 22 1,246 Non-controlling interests 1,778 62 1,840 Total equity 3,002 84 3,086 Effect on the consolidated cash flows statement of the Group for 2017: Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net cash from operating activities 3,322 165 3,487 Net cash used in investing activities (963 ) (165 ) (1,128 ) Effect on the consolidated statement of income of the Group for 2017: Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS General and operating expenses 4,037 (131 ) 3,906 Salaries 2,041 (34 ) 2,007 Depreciation and amortization expenses 2,063 54 2,117 Operating profit 1,499 111 1,610 Profit after financing expenses 982 111 1,093 Profit before income tax 977 111 1,088 Income tax 320 27 347 Net profit for the period 657 84 741 Profit attributable to shareholders of the Company 56 22 78 Profit attributable to non-controlling interests 601 62 663 Earnings per share (Basic and Diluted) 1.88 0.74 2.62 As from January 1, 2017, the Group applies the amendment to IAS 12, Income Taxes: Recognition of Deferred Tax Assets for Unrealized Losses. The Amendment clarifies that for purposes of recognizing a deferred tax asset, the effect of reversal of deductible temporary differences should be excluded when assessing future taxable profit. Moreover, the Amendment provides that probable future profits may include profits from the recovery of assets at more than their carrying value, if there is sufficient supporting evidence. Application of the amendment did not have an effect on the Group’s financial statements. |
Non-controlling interests | B. Non-controlling interests On January 1, 2016 the Group changed its accounting policy with respect to transactions with non-controlling interests, while retaining control. According to the new accounting policy, the difference between the consideration paid or received for change in non-controlling interests is recognized in retained earnings. The Group believes that this presentation provides more relevant information about its distributable earnings. This change in accounting policy was applied retrospectively and did not have any impact on earnings per share. Allocation of impairment loss to non-controlling interests If an impairment loss allocated to non-controlling interests relates to goodwill that was not recognized in the consolidated financial statements, the impairment is not recognized as an impairment loss on goodwill. In such cases, only an impairment loss relating to goodwill that was allocated to the owners of the Company is recognized as an impairment loss on goodwill. For purposes of goodwill impairment testing, when the non-controlling interests are initially measured according to their relative share of the acquiree’s net identifiable assets, the carrying amount of the goodwill is adjusted according to the share which the Group holds in the cash-generating unit to which the goodwill is allocated. |
Consolidation of the financial statements and investments in associates | C. Consolidation of the financial statements and investments in associates (1) Business combinations A. The Group implemented the acquisition method for all business combinations. The acquisition date is the date on which the acquirer obtained control over the acquiree. B. The Group recognized goodwill at acquisition based on the fair value of the consideration transferred, and the fair value at the acquisition date of any pre-existing equity right of the Group in the acquiree, less the net amount of the identifiable assets acquired and the liabilities assumed. C. The consideration transferred includes the fair value of the assets transferred to the previous owners of the acquiree and the liabilities incurred by the acquirer to the previous owners of the acquiree, including the obligation to acquire the acquiree’s equity instruments. In addition, the consideration transferred includes the fair value of any contingent consideration. Subsequent to the acquisition date, the Group recognizes changes in fair value of contingent consideration classified as a financial liability in profit or loss under financing expenses. D. In step acquisitions, the difference between the fair value at the acquisition date of the Group’s pre-existing equity rights in the acquiree and the carrying amount at that date is recognized in the statement of income under other operating income or expenses. E. Costs associated with the acquisition that were incurred by the Group in the business combination such as advisory, legal, valuation and other professional or consulting fees were recognized as expenses in the period the services are received. (2) Subsidiaries Subsidiaries are entities controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date of loss of control. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the acquiree and it has the ability to affect those returns through its power over the acquiree. Substantive rights held by the Group and others are taking into account when assessing control. (3) Transactions eliminated on consolidation Intra-group balances and income and expense arising from intra-group transactions are eliminated in the preparation of the consolidated financial statements. |
Foreign currency transactions | D. Foreign currency transactions Transactions in foreign currency are translated into the functional currency of the Group at the exchange rate on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies on the reporting date are retranslated to the functional currency at the exchange rate at that date. |
Financial instruments | E. Financial instruments (1) Non-derivative financial assets Non-derivative financial assets include mainly investments in exchange traded notes, financial funds, exchange traded funds (“ETFs”), deposit certificates, debt instruments, shares, trade and other receivables, and cash and cash equivalents. The Group initially recognizes financial assets at the date the Group becomes a party to contractual provisions of the instrument, meaning the date that the Group undertakes to buy or sell the asset. Financial assets are derecognized when the contractual rights of the Group to the cash flows from the asset expire, or the Group transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Regular way sales of financial assets are recognized on the trade date, meaning on the date the Group undertook to sell the asset. (2) Classification of financial assets and the accounting treatment in each group The Group classifies its financial assets as follows: Cash and cash equivalents Cash consists of cash balances available for immediate use and call deposits. Cash equivalents consist of short-term highly liquid investments (with original maturities of three months or less) that are readily convertible into known amounts of cash and are exposed to insignificant risks of change in value. Financial assets at fair value through profit or loss A financial asset is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Upon initial recognition. These financial assets are measured at fair value and changes therein are recognized in the statement of income. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, net of impairment losses. (3) Non-derivative financial liabilities Non-derivative financial liabilities include debentures issued by the Group, loans and borrowings from banks and other credit providers, and trade and other payables. The Group initially recognizes debt instruments as they are incurred. Financial liabilities are initially recognized at fair value plus any attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is discharged or canceled. (4) CPI-linked assets and liabilities that are not measured at fair value The value of CPI-linked financial assets and liabilities, which are not measured at fair value, is revaluated in each period according to the actual increase in the CPI. (5) Offsetting financial instruments Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. (6) Derivative financial instruments including hedge accounting a. Hedge accounting The Group holds derivative financial instruments to hedge cash flows against risks to future changes in the CPI. Forward contracts are measured at fair value. Changes in the fair value of a derivative hedging instrument designated as a cash flow hedge are recognized through other comprehensive income, in a hedging reserve under equity, to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in profit or loss. The amount recognized in the hedging reserve is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss under the same line item in the statement of income as the hedged item. b. Economic hedges The Group holds other derivative financial instruments to hedge cash flows against foreign currency risks. Hedge accounting is not applied for these instruments. The derivative instruments are recognized at fair value; changes in fair value are recognized in profit and loss as incurred. (7) Share capital a. Ordinary shares Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity. b. Treasury shares When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares |
Broadcast rights | F. Broadcast rights Broadcasting rights are stated at cost, net of rights exercised. The net adjustment of the broadcasting rights is presented as an adjustment of earnings as part of the ongoing operations in the statements of cash flows. |
Property, plant and equipment | G. Property, plant and equipment (1) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labor and financing costs as well as any other cost directly attributable to bringing the asset to the condition for its use intended by the management, and the estimated costs of dismantling and removing the items and restoring the site on which they are located when the Group has an obligation to vacate and restore the site. The cost of purchased software that is integral to the functionality of the related equipment is recognized as part of the cost of the equipment. Spare parts, servicing equipment and stand-by equipment are classified as property, plant and equipment when they meet the definition of property, plant and equipment under IAS 16, otherwise they are classified as inventory. When major parts of the property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of the property, plant and equipment. Gain or loss from the disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal of the asset with its carrying amount. Gain or loss from the sale of fixed assets is recognized under operating income in the statement of income. (2) Subsequent expenditure The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefit embodied in the replaced item will flow to the Group and its cost can be measured reliably. The costs of day-to-day servicing are recognized in the statement of income as incurred. (3) Depreciation Depreciation is recognized in the statement of income on a straight-line basis over the estimated useful life of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets under finance lease agreements are depreciated over the shorter of the lease term and their useful lives. An asset is depreciated when it is ready for use, meaning when it reaches the location and condition necessary for it to be capable of operating in the manner intended by management. Leasehold improvements are depreciated over the shorter of the lease term, including the extension option held by the Group and expected to be exercised and the expected life of the improvement. The estimated useful lives for the current period are as follows: Useful life Fixed line and international network equipment (switches, transmission, power) 4-12 Network 12-33 Subscriber equipment and installations 4-8 Equipment and infrastructure for multichannel television 3-15 Vehicles 6-7 Office and general equipment 5-10 Electronic equipment, computers and internal communication systems 3-7 Cellular network 4-10 Passive radio equipment at cellular network sites up to December 31, 2037 Buildings 25 Seabed cable 4-25 (mainly 25) Depreciation methods, useful lives and residual values are reviewed at least at each reporting year and adjusted as required. |
Intangible assets | H. Intangible assets (1) Goodwill and brand names Goodwill and brand names that arise upon the acquisition of subsidiaries are included in intangible assets. Subsequent to initial recognition, brand name (Bezeq CGU, Bezeq International CGU and Pelephone CGU) and goodwill are measured at cost less accumulated impairment losses. Goodwill and brand names are measured at least once a year to assess impairment. (2) Software development costs Software development costs are recognized as an intangible asset only if the development costs can be measured reliably; the software is technically and commercially feasible; and the Group has sufficient resources to complete the development and intends to use the software. The costs recognized as an intangible asset include the cost of the materials, direct labor and overhead expenses directly attributable to preparation of the asset for its intended use. Other development costs are recognized in the statement of income as incurred. Capitalized development costs are measured at cost less amortization and accumulated impairment losses. (3) Software Software that is an integral part of the hardware, which cannot function without the programs installed on it, is classified as property, plant and equipment. However, licenses for stand-alone software, which adds functionality to the hardware, is classified (mainly) as intangible assets. (4) Frequency rights Rights to frequencies refer to frequencies assigned to Pelephone for cellular activities, after it won the dedicated tenders of the Ministry of Communications. Depreciation of the asset is recognized in the statement of income on the straight-line method over the term of the allocation of frequencies, which started from the use of the frequencies. The 4G frequencies (LTE) and 3.5G frequencies (UMTS/HSEA) are amortized until August 22, 2028. (5) Other intangible assets Other intangible assets acquired by the Group, which have a definite useful life, are measured at cost less amortization and accumulated impairment losses. (6) Subsequent expenditures Subsequent expenditures are recognized as intangible assets only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures relating to generated goodwill and brands, are recognized in the statement of income as incurred. (7) Amortization Amortization, except for goodwill, brand names (excluding brands acquired in the DBS business combination) and customer relationships, is recognized in the statement of income on a straight-line basis over the estimated useful life of the intangible assets, from the date on which the assets are available for use. Goodwill and brand names are not systematically amortized but are tested for impairment at least once a year. Customer relationships are amortized according to the economic benefit expected from those customers each period based on their expected churn rate, which results in accelerated amortization during the early years of the relationship. Estimated useful lives for the current and comparative periods are as follows: Type of asset Amortization period Frequency usage rights Over the term of the license until 2028 Computer programs and software licenses 3 - 10 years according to the term of the license or the estimated time of use of the program Customer relationships 5 - 7 years Brand acquired in a business combination 12 Amortization methods and useful lives are reviewed at least once a year and adjusted if appropriate. |
Leased assets | I. Leased assets Leases, including leases of land from the Israel Land Administration, where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are measured at cost less accumulated amortization and impairment losses. Other leases are classified as operating leases and the leased assets are not recognized in the Group’s statement of financial position. Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. At inception or upon reassessment of an arrangement, the Group determines whether such an arrangement is or contains a lease. An arrangement is a lease or contains a lease if the following two criteria are met: A. The fulfillment of the arrangement is dependent on the use of a specific asset or assets. B. The arrangement contains rights to use the asset. If, in accordance with these terms, the Group determines that the agreement does not contain a lease, the agreement is accounted for as a service agreement and payments for the service are recognized in profit or loss on a straight-line basis, over the service period. |
Right of use of capacities | J. Right of use of capacities Transactions for acquiring an indefeasible right of use of submarine communication cable capacities are mostly accounted for as service transactions. The prepaid expense is amortized on a straight-line basis as stated in the agreement, but for no longer than the expected estimated useful life of those capacities. Identifiable capacities which serve Bezeq exclusively meet the definition of a finance lease and are recognized in property, plant and equipment. The asset is depreciated on a straight-line basis as stated in the agreement, but for no longer than the expected estimated useful life of those capacities. |
Inventory | K. Inventory The cost of inventories includes the cost of purchase and cost incurred in bringing the inventories to their present location and condition. Inventories are measured at the lower of cost or net realizable value. The Group elected to base the cost of inventories on the moving average principle. The inventories include terminal equipment and accessories intended for sale and service, as well as spare parts used for repairs in the repair service provided to its customers. Slow-moving inventory of terminal equipment, accessories and spare parts are stated net of the provision for impairment. |
Impairment | L. Impairment (1) Non-derivative financial assets The Group tests a financial asset for impairment when objective evidence indicates that one or more loss events have had a negative effect on the estimated future cash flows of that asset. Significant financial assets are tested for impairment on an individual basis. Other financial assets are assessed for impairment collectively in groups that share similar credit risk characteristics, taking into account past experience. The financial statements include specific provisions and Group provisions for doubtful debts, which properly reflect, in the estimation of the management, the loss inherent in debts for which collection is in doubt. (2) Non-financial assets Timing of impairment testing The carrying amounts of the Group’s non-financial assets, other than inventory and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the recoverable amount of the asset is estimated. The Group assesses the recoverable amount of goodwill and brand name once a year, or more frequently if there are indications of impairment. Measurement of recoverable amount The recoverable amount of an asset or cash-generating unit is the greater of its value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit, for which the estimated future cash flows from the asset or cash-generating unit (for which future cash flows were not adjusted). Determining cash-generating units For the purpose of impairment testing, the assets are grouped together into the smallest group of assets that generates cash from continuing use that are largely independent of other assets or groups of assets (“cash-generating unit”). Allocation of goodwill to cash-generating units For purposes of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes, but in any event is not larger than an operating segment. Goodwill acquired in a business combination is allocated to cash-generating units that are expected to generate benefits from the synergies of the combination. Recognition of impairment loss An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. As regards cash-generating units that include goodwill, an impairment loss is recognized when the carrying amount of the cash-generating unit, after including the balance of goodwill, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis. See Note 9. |
Employee benefits | M. Employee benefits (1) Post-employment benefits The Group has a number of post-employment benefit plans. The plans are usually financed by deposits with insurance companies and they are classified as defined contribution plans and defined benefit plans. a. Defined contribution plans A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. The Group’s obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the statement of income in the periods during which services are rendered by employees. b. Defined benefit plans The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is presented at its present value, and the fair value of any plan assets is deducted. The calculation is performed annually by a qualified actuary. The discount rate is the yield at the reporting date on high-quality linked corporate debentures denominated in NIS, with maturity dates approximating the terms of the Group’s obligations. Net interest costs on a defined benefit plan are calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability. The Group elected to recognize the interest costs that were recognized in profit or loss under financing expenses. Remeasurement of the net defined benefit liability comprises actuarial gains and losses and the return on plan assets (excluding interest). Remeasurements are recognized immediately directly in retained earnings When the benefits of a plan are improved or curtailed, the portion of the increased benefit relating to past service by employees or the gain or loss on curtailment are recognized immediately in profit or loss when the plan improvement or curtailment occurs. (2) Other long-term employee benefits The Group’s net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The amount of these benefits is stated at its present value. The discount rate is the yield at the reporting date on high-quality linked corporate debentures denominated in NIS, with maturity dates approximating the terms of the Group’s obligations. Any actuarial gains or losses are recognized in the statement of income in the period in which they arise. Any actuarial changes arising from a change in the discount rate are recognized in the financing expenses item, while the other differences are recognized in salary expenses. (3) Benefits for early retirement and dismissal Termination benefits are recognized as an expense when the Group is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognized as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. (4) Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits depending on the date when the benefits are expected to be to be wholly settled. In the statement of financial position, the employee benefits are classified as current benefits or as non-current benefits according to the time the liability is due to be settled. |
Provisions | N. Provisions A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is more likely than not that an outflow of economic benefits will be required to settle the obligation. (1) Legal claims Contingent liabilities are accounted for according to IAS 37 and its related provisions. Accordingly, the claims are classified by likelihood of realization of the exposure to risk, as follows: a. More likely than not - more than 50% probability b. Possible - probability higher than unlikely and less than 50% c. Remote - probability of 10% or less For claims which the Group has a legal or constructive obligation as a result of a past event, which are more likely than not to be realized, the financial statements include provisions which, in the opinion of the Group, based, among other things, on the opinions of its legal advisers retained in respect of those claims, are appropriate to the circumstances of each case, despite the claims being denied by the Group companies. There are also a few recently filed legal proceedings for which the risks cannot be assessed at this stage, therefore no provisions have been made. Note 20 describes the amount of additional exposure due to contingent liabilities that are likely to be realized. (2) Site restoration and clearing costs A provision in respect of an obligation to restore and clear sites is recognized for those rental agreements where the Group has an undertaking to restore the rental property to its original state at the end of the rental period, after dismantling and transferring the site, and restoring it as necessary. The provisions are determined by discounting the expected future cash flows. The carrying amount of the provision is adjusted each period to reflect the time that has passed and is recognized as a financing expense. |
Revenues | O. Revenues As from January 1, 2017, the Group has early adopted IFRS 15, Revenue from Contracts with Customers (“IFRS 15” or “the Standard”). As set out in Note 3A, the application of IFRS 15 did not have a material effect on the measurement of the Group’s revenue in 2017, compared to the provisions in the previous standard, and the main effect of application of IFRS 15 in the Group is the accounting treatment of incremental costs of obtaining a contract with a customer. IFRS 15 presents a new model for recognizing revenue from contracts with customers, which includes five steps for analyzing transactions so as to determine when to recognize revenue and in what amount: (1) Identifying the contract The Group accounts for a contract with a customer only when the following conditions are met: a. The parties to the contract have approved the contract (in writing, orally or according to other customary business practices) and they are committed to satisfying the obligations attributable to them. b. The Group can identify the rights of each party in relation to the goods or services that will be transferred. c. The Group can identify the payment terms for the goods or services that will be transferred. d. The contract has a commercial substance (i.e. the risk, timing and amount of the entity’s future cash flows are expected to change as a result of the contract). e. It is probable that the consideration, to which the Group is entitled to in exchange for the goods or services transferred to the customer, will be collected. (2) Identifying performance obligations On the contract’s inception date, the Group assesses the goods or services promised in the contract with the customer and identifies as a performance obligation any promise to transfer to the customer one of the following: a. Goods or services (or a bundle of goods or services) that are distinct; or b. A series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. (3) Determining the transaction price The transaction price is the amount of the consideration to which the Group expects to be entitled in exchange for the transfer of goods or services promised to the customer, other than amounts collected in favor of third parties. When determining the transaction price, the Group takes into account the effects of all the following: variable consideration, the existence of a significant financing component in the contract, non-cash consideration and consideration to be paid to the customer. Existence of a significant financing component In order to measure the transaction price, the Group adjusts the amount of the promised consideration in respect of the effects of the time value of money if the timing of the payments agreed between the parties provides to the customer or the Group a significant financing benefit. In these cases, the contract contains a significant financing component. When assessing whether a contract includes a significant financing component, the Group examines, among other things, the expected length of time between the date the Group transfers the promised goods or services to the customer and the date the customer pays for these goods or services, as well as the difference, if any, between the amount of the consideration promised and the cash selling price of the promised goods or services. When the contract contains a significant financing component, the Group recognizes the amount of the consideration using the discount rate that would be reflected in a separate financing transaction between it and the customer on the inception date of the contract. The financing component is recognized as interest income or expenses over the period, which are calculated according to the effective interest method. In cases where the difference between the time of receiving payment and the time of transferring the goods or services to the customer is one year or less, the Group applies the practical expedient included in the standard and does not separate a significant financing component. (4) Existence of performance obligation Revenue is recognized when the Group satisfies a performance obligation by transferring to the customer control over promised goods or services. (5) Contract costs Incremental costs of obtaining a contract with a customer such as sales fees to agents, are recognized as an asset when the Group is likely to recover these costs. Costs to obtain a contract that would have been incurred regardless of the contract are recognized as an expense as incurred, unless the customer can be billed for those costs. Capitalized costs are amortized in the income statement on a systematic basis that is consistent with the average projected churn rate of subscribers based on the type of subscriber and the service received (mainly over 1-4 years). Every reporting period the Group examines whether the carrying amount of the asset recognized as aforesaid exceeds the consideration the entity expects to receive in exchange for the goods or services to which the asset relates, less the costs directly attributable to the provision of these goods or services that were not recognized as expenses, and if necessary an impairment loss is recognized in profit or loss. (6) Principal supplier or agent When another party is involved in providing goods or services to the customer, the Group examines whether the nature of its promise is a performance obligation to provide the defined goods or services itself, which means the Group is a principal and therefore recognizes revenue in the gross amount of the consideration, or to arrange that another party provide the goods or services which means the Group is an agent and therefore recognizes revenue in the amount of the net commission. The Group is a principal when it controls the promised goods or services before their transfer to the customer. Indicators that the Group controls the goods or services before their transfer to the customer include, inter alia, as follows: the Group is the primary obligor for fulfilling the promises in the contract; the Group has inventory risk before the goods or services are transferred to the customer; and the Group has discretion in setting the prices of the goods or services. |
Financing income and expense | P. Financing income and expense Finance income includes mainly accrued interest income using the effective interest method in respect of the sale of terminal equipment in installments, interest income from deposits and changes in the fair value of financial assets at fair value through profit or loss. Finance expenses include mainly interest and linkage expenses on borrowings received and debentures issued and financing expenses for provisions arising from legal claims. In the statements of cash flows, interest received and dividends received are presented as part of cash flows from investing activities. The Group elected to present interest and linkage differences paid for loans and debentures under cash flows used for financing activities. |
Income tax expense | Q. Income tax expense Income tax expense consists of current and deferred tax and is recognized in the statement of income, or in other comprehensive income to the extent it relates to items recognized in other comprehensive income. Current taxes Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Current taxes also include taxes in respect of prior years. Uncertain tax positions A provision for uncertain tax positions, including additional tax and interest expenses, is recognized when it is more likely than not that the Group will have to use its economic resources to pay the obligation. Deferred taxes Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The Group does not recognize deferred taxes for the following temporary differences: ● Initial recognition of goodwill. ● Differences arising from investment in subsidiaries and associates, if it is probable that they will not reverse in the foreseeable future and if the Group controls the date of reversal. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognized for carry-forward losses, tax benefits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Offsetting deferred tax assets and liabilities The Group sets off deferred tax assets and liabilities if there is a legally enforceable right to offset deferred tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, but they intend to settle deferred tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. Presentation of tax expenses in the statement of cash flows Cash flows arising from taxes on income are classified in the statement of cash flows as cash flows from operating activities, unless they can be specifically identified with investing and financing activities. |
Earnings per share | R. Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise warrants and share options granted to employees. |
Dividend | S. Dividend An obligation relating to a dividend proposed or declared after the reporting date is recognized only in the period in which the declaration was made (approved by the general shareholders’ meeting). In the statement of cash flows, dividend paid is presented as part of cash flows used in financing activities. |
New standards and interpretations not yet adopted | T. New standards and interpretations not yet adopted (1) IFRS 9, Financial Instruments (“IFRS 9”) IFRS 9 replaces the current guidance in IAS 39, Financial Instruments: Recognition and Measurement. The new Standard includes revised guidance on the classification and measurement of financial instruments, a new ‘expected credit loss’ model for calculating impairment for most financial assets, and new guidance and requirements with respect to hedge accounting. IFRS 9 is effective for annual periods beginning on January 1, 2018, with early adoption being permitted. IFRS 9 will be applied retrospectively, except for a number of exemptions. The Group has examined the effects of applying IFRS 9, and in its opinion the effect on the financial statements will be immaterial. (2) IFRS 16, Leases (“IFRS 16”) IFRS 16 replaces IAS 17, Leases (“IAS 17”) and its related interpretations. IFRS 16 must be applied for annual periods beginning on January 1, 2019, with early application being permitted. The Group has decided to early apply IFRS 16 as from January 1, 2018 using the cumulative effect approach. The standard’s instructions rescind the existing requirement that lessees classify leases as operating or finance leases. The standard presents a unified model for the accounting treatment of all leases according to which the lessee has to recognize a right-of-use asset and a lease liability in its financial statements IFRS 16 includes two exceptions to the general model whereby a lessee may elect to not apply the requirements for recognizing a right-of-use asset and a liability with respect to short-term leases of up to one year and/or leases where the underlying asset has a low value. The Group has decided not to apply the expedient for short-term leases. On the date of initial application, the Group will recognize a lease liability for the leases previously classified as operating leases in accordance with IAS 17. The liability will be measured at the present value of the remaining lease payments, discounted at the Group’s incremental interest rate on the date of initial application. The Group elected to apply the expedient in the standard according to which at the transition date, a right-of-use asset for leases previously classified as operating leases in accordance with IAS 17, will be recognized in the amount equal to the lease liability. In view of the above, adoption of IFRS 16 is not expected to have an effect on the retained earnings at the transition date. The Group elected to adopt the Standard while applying the expedients that are permitted in the transitional provisions to the standard as follows: a. It was not re-examined whether the contract is a lease or contains a lease as at the application date of the Standard. Accordingly, the agreements that were previously accounted for as operating leases will be accounted for in accordance with the new Standard, and the agreements that were previously accounted for as service contracts will continue to be accounted for as such without change. b. The use of one capitalization rate for a lease contracts portfolio with similar characteristics. c. The use of an earlier estimate of an onerous contract under IAS 37 at the transition date as an alternative to assessing the impairment of right-of-use assets. d. Exclusion of direct costs incurred in the lease as part of the asset at the transition date. e. Use of hindsight in determining the lease period if the contract includes options to extend or cancel the lease. IFRS 16 is expected to affect the accounting treatment of real estate leasing agreements, cellular sites, vehicles and other Group assets. The Group believes that at the initial implementation date of the standard, non-current assets are expected to increase by NIS 1.4 billion, current liabilities by NIS 0.4 billion, and non-current liabilities by NIS 1 billion. Accordingly, as from the initial application date, instead of presenting the rental expenses for the leased assets under operating leases, the Group will recognize depreciation expenses for depreciation of the right-of-use assets that were recognized and will also recognize financing expenses for the lease liability. Therefore, application of the standard is expected to result in a decrease in operating expenses in the amount of NIS 0.4 billion in 2018 and an increase in depreciation and amortization and in financing expenses in a similar amount. In addition, following application of the standard, there is expected to be an increase in cash flows from operating activities and a decrease in cash flows from financing activities in the amount of NIS 0.4 billion. Application of the standard is expected to have a negligible effect on the Group’s net profit for 2018. The effect of application of the standard on the financial results, statement of cash flows, and statement of financial position is based on the existing lease contracts as at January 1, 2018 and the Group’s expectations regarding future agreements, and will depend on the actual scope of the lease agreements to which the Group will be a party as from application of the standard at inflation rates in 2018 and other economic variables. Actual results may differ from this estimate. (3) IFRIC 22, Foreign Currency Transactions and Advance Consideration The interpretation provides that the transaction date for the purpose of determining the exchange rate for recording a foreign currency transaction that includes advance consideration is the date of initial recognition of the non-monetary asset/liability from the prepayment If there are multiple payments or receipts in advance, the Group will establish a transaction date for each payment or receipt. IFRIC 22 will be applied for annual periods beginning on January 1, 2018. The Group believes that application of IFRIC 22 will not have a material effect on the financial statements. (4) IFRIC 23, Uncertainty Over Income Tax Treatments IFRIC 23 clarifies application of recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. IFRIC 23 will be effective for annual periods beginning on January 1, 2019, with early application being permitted. The Group believes that application of IFRIC 23 will not have a material effect on the financial statements |
Significant Accounting Polici39
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies [Abstract] | |
Summary of statement of financial position | In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net subscriber acquisition asset (stated as deferred expenses and non-current investments) 4 111 115 Equity attributable to shareholders of the Company 1,224 22 1,246 Non-controlling interests 1,778 62 1,840 Total equity 3,002 84 3,086 |
Summary of statement of consolidated cash flows | Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS Net cash from operating activities 3,322 165 3,487 Net cash used in investing activities (963 ) (165 ) (1,128 ) |
Summary of consolidated statement of income | Year ended December 31, 2017 In accordance with the previous policy Change In accordance with IFRS15 NIS NIS NIS General and operating expenses 4,037 (131 ) 3,906 Salaries 2,041 (34 ) 2,007 Depreciation and amortization expenses 2,063 54 2,117 Operating profit 1,499 111 1,610 Profit after financing expenses 982 111 1,093 Profit before income tax 977 111 1,088 Income tax 320 27 347 Net profit for the period 657 84 741 Profit attributable to shareholders of the Company 56 22 78 Profit attributable to non-controlling interests 601 62 663 Earnings per share (Basic and Diluted) 1.88 0.74 2.62 |
Summary of estimated useful lives property, plant and equipment | Useful life Fixed line and international network equipment (switches, transmission, power) 4-12 Network 12-33 Subscriber equipment and installations 4-8 Equipment and infrastructure for multichannel television 3-15 Vehicles 6-7 Office and general equipment 5-10 Electronic equipment, computers and internal communication systems 3-7 Cellular network 4-10 Passive radio equipment at cellular network sites up to December 31, 2037 Buildings 25 Seabed cable 4-25 (mainly 25) |
Summary of estimated useful lives for the current and comparative periods | Type of asset Amortization period Frequency usage rights Over the term of the license until 2028 Computer programs and software licenses 3 - 10 years according to the term of the license or the estimated time of use of the program Customer relationships 5 - 7 years Brand acquired in a business combination 12 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of operating segments | Year ended December 31, 2015 Domestic Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 4,122 2,831 1,485 1,774 197 (440 ) 9,969 Inter-segment revenues 285 59 93 - 24 (445 ) 16 Total revenue 4,407 2,890 1,578 1,774 221 (885 ) 9,985 Depreciation and amortization 725 419 132 322 13 520 2,131 Segment results - operating income 2,148 157 240 250 (15 ) (763 ) 2,017 Finance income 30 53 7 32 17 15 154 Finance expenses (362 ) (4 ) (15 ) (635 ) (2 ) 329 (689 ) Total financing income (expense), net (332 ) 49 (8 ) (603 ) 15 344 (535 ) Segment profit (loss) after finance expenses, net 1,816 206 232 (353 ) - (419 ) 1,482 Share in profit (loss) of equity-accounted investee - - - - (2 ) 14 12 Segment profit (loss) before income tax 1,816 206 232 (353 ) (2 ) (405 ) 1,494 Income tax 492 55 60 1 - (250 ) 358 Segment results - net profit (loss) 1,324 151 172 (354 ) (2 ) (155 ) 1,136 Additional information: Segment assets 7,311 3,269 1,160 1,667 659 4,965 19,031 Goodwill - - 6 - 10 3,050 3,066 Investment in equity-accounted investee - - 4 - 7 14 25 Segment liabilities 12,117 513 343 6,685 104 (1,031 ) 18,731 Investments in property, plant and equipment and intangible assets 837 419 127 281 33 (80 ) 1,617 Year ended December 31, 2016 Domestic Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 4,063 2,587 1,478 1,745 198 - 10,071 Inter-segment revenues 320 43 70 - 20 (440 ) 13 Total revenue 4,383 2,630 1,548 1,745 218 (440 ) 10,084 Depreciation and amortization 717 380 137 296 16 615 2,161 Segment results - operating income 2,076 32 176 264 (34 ) (648 ) 1,866 Finance income 30 52 5 13 4 19 123 Finance expenses (475 ) (6 ) (15 ) (539 ) (2 ) (17 ) (1,054 ) Total financing income (expense), net (445 ) 46 (10 ) (526 ) 2 2 (931 ) Segment profit (loss) after finance expenses, net 1,631 78 166 (262 ) (32 ) (646 ) 935 Share in profit (loss) of equity-accounted investee - - 1 - (5 ) (1 ) (5 ) Segment profit (loss) before income tax 1,631 78 167 (262 ) (37 ) (647 ) 930 Income tax 399 17 42 (330 ) - 314 442 Segment results - net profit (loss) 1,232 61 125 68 (37 ) (961 ) 488 Additional information: Segment assets 7,111 3,294 1,177 2,026 193 3,260 17,061 Goodwill - - 6 - 10 3,050 3,066 Investment in equity-accounted investee - - 5 - 1 12 18 Segment liabilities 11,988 569 380 1,434 104 2,369 16,844 Investments in property, plant and equipment and intangible assets 828 277 126 227 13 - 1,471 Year ended December 31, 2017 Domestic Cellular communications International communications and Internet services Multi-channel television Others Adjustments Consolidated NIS NIS NIS NIS NIS NIS NIS Revenue from external entities 3,953 2,500 1,466 1,650 220 - 9,789 Inter-segment revenues 291 46 71 - 17 (425 ) - Total revenue 4,244 2,546 1,537 1,650 237 (425 ) 9,789 Depreciation and amortization 728 383 135 285 20 566 2,117 Segment results - operating income 1,971 72 174 163 (20 ) (750 ) 1,610 Finance income 36 54 4 10 5 (40 ) 69 Finance expenses (439 ) (3 ) (12 ) (81 ) - (51 ) (586 ) Total financing income (expense), net (403 ) 51 (8 ) (71 ) 5 (91 ) (517 ) Segment profit (loss) after finance expenses, net 1,568 123 166 92 (15 ) (841 ) 1,093 Share in profit (loss) of equity-accounted investee - - - - (4 ) (1 ) (5 ) Segment profit (loss) before income tax 1,568 123 166 92 (19 ) (842 ) 1,088 Income tax 396 28 39 336 - (452 ) 347 Segment results - net profit (loss) 1,172 95 127 (244 ) (19 ) (390 ) 741 Additional information: Segment assets 9,086 3,271 1,199 1,502 174 2,460 17,692 Goodwill - - 6 - 10 2,921 2,937 Investment in equity-accounted investee - - 5 - (6 ) 11 10 Segment liabilities 13,901 536 410 1,154 64 1,488 17,553 Investments in property, plant and equipment and intangible assets 851 331 169 237 19 - 1,607 |
Schedule of adjustments for segment reporting of revenue, profit or loss, assets and liabilities | Year ended December 31, 2015 2016 2017 NIS NIS NIS Revenue Revenue from reporting segments 10,649 10,306 9,977 Revenue from other segments 221 218 237 Elimination of revenue from inter-segment sales except for revenue from sales to an associate reporting as a segment (445 ) (440 ) (425 ) Elimination of revenue for a segment classified as an associate (440 ) - - Consolidated revenue 9,985 10,084 9,789 Year ended December 31, 2015 2016 2017 NIS NIS NIS Profit or loss Operating income for reporting segments 2,795 2,548 2,380 Elimination of expenses from a segment classified as an associate (59 ) - - Financing expenses, net (535 ) (931 ) (517 ) Share in the losses (profit) of equity-accounted investees 12 (5 ) (5 ) Profit (loss) from operations classified in other categories 44 (34 ) (20 ) Depreciation and amortization of intangible assets resulting from the Bezeq PPA adjustments (545 ) (442 ) (483 ) Other adjustments (218 ) (206 ) (267 ) Consolidated profit before income tax 1,494 930 1,088 December 31, 2016 2017 NIS NIS Assets Assets from reporting segments 13,619 15,069 Assets attributable to operations in other categories 204 178 Goodwill not attributable to segment assets 3,050 2,921 Investment in an equity-accounted investee 12 11 Inter-segment assets 703 269 Assets resulting from the Bezeq PPA, net 2,119 1,678 Assets attributable to a non-reportable segment 438 513 Consolidated assets 20,145 20,639 December 31, 2016 2017 NIS NIS Liabilities Liabilities from reporting segments 14,371 16,001 Liabilities attributable to operations in other categories 104 64 Inter-segment liabilities (730 ) (1,360 ) Liabilities resulting from the Bezeq PPA, net 491 386 Liabilities attributable to a non-reportable segment 2,608 2,462 Consolidated liabilities 16,844 17,553 |
Investments Including Derivat41
Investments Including Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments Including Derivatives [Abstract] | |
Schedule of investments including derivatives | December 31, *2016 2017 NIS NIS Current investments Financial assets held for trading 352 321 Bank deposits 546 275 Monetary funds and others 9 - 907 596 *Reclassified |
Trade and Other Receivables (Ta
Trade and Other Receivables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Trade and Other Receivables [Abstract] | |
Summary of composition of trade and other receivables | December 31, 2016 2017 NIS NIS Trade receivables, net* Outstanding debts 785 765 Credit cards and checks receivable 450 428 Unbilled receivables 241 235 Current maturities of long-term receivables 505 472 Related parties 19 15 Total trade receivables 2,000 1,915 Other receivables and current tax assets Prepaid expenses 145 66 Other receivables (mainly from real estate sales) and current tax assets 71 204 Total other receivables 216 270 Long-term trade and other receivables Trade receivables- open debts (1) 445 387 Long term receivables (from real estate sales) 199 106 644 493 2,860 2,678 * The amount of trade receivables is stated net of the provision for doubtful debts (1) Discounted interest rates for long-term trade payables are based the estimated credit risk of trade payables. The discounted interest rates used by the Bezeq Group in 2017 are 3.4% - 3.5% (in 2016: 3.3% - 3.5%). |
Summary of excepted payment dates for long-term trade and other receivables | December 31, 2017 NIS 2019 345 2020 142 2021 and thereafter 6 493 |
Summary of change in provision for doubtful debts during the year | December 31, 2016 2017 NIS NIS Balance at January 1 173 111 Impaired loss recognized 25 20 Lost debts (87 ) (39 ) Balance at December 31 111 92 |
Summary of aging of trade receivables | December 31, 2016 December 31, 2017 Gross Impairment Gross Impairment NIS NIS NIS NIS Current 2,282 (8 ) 2,153 (6 ) Past due up to one year 183 (46 ) 165 (37 ) Past due one to two years 50 (31 ) 44 (27 ) Past due more than two years 41 (26 ) 32 (22 ) 2,556 (111 ) 2,394 (92 ) |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | Switching Transmission, Multi- Office power, channel equipment, Cellular, equipment computers Land and And satellite Network and Subscriber and buildings equipment equipment infrastructure equipment vehicles Total NIS NIS NIS NIS NIS NIS NIS Cost Balance as at January 1, 2016 1,061 5,000 5,505 867 1,203 941 14,577 Additions 27 457 247 180 265 73 1,249 Disposals (37 ) - (12 ) (11 ) (4 ) (11 ) (75 ) Balance as at December 31, 2016 1,051 5,457 5,740 1,036 1,464 1,003 15,751 Balance as at January 1, 2017 1,051 5,457 5,740 1,036 1,464 1,003 15,751 Additions 34 408 228 165 278 75 1,188 Disposals (81 ) - - (1 ) (4 ) (2 ) (88 ) Balance as at December 31, 2017 1,004 5,865 5,968 1,200 1,738 1,076 16,851 Depreciation and impairment losses Balance as at January 1, 2016 350 2,951 2,486 143 770 664 7,364 Depreciation for the year 64 521 250 236 183 83 1,337 Disposals (12 ) - - (10 ) - - (22 ) Balance as at December 31, 2016 402 3,472 2,736 369 953 747 8,679 Balance as at January 1, 2017 402 3,472 2,736 369 953 747 8,679 Depreciation for the year 53 481 204 222 187 85 1,232 Balance as at December 31, 2017 455 3,953 2,940 591 1,140 832 9,911 Carrying amounts As at January 1, 2016 711 2,049 3,019 724 433 277 7,213 As at December 31, 2016 649 1,985 3,004 667 511 256 7,072 As at December 31, 2017 549 1,912 3,028 609 598 244 6,940 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets and goodwill | Computer Right of use Customer software in cellular and Goodwill and licenses frequencies brand names Others Total NIS NIS NIS NIS NIS NIS Cost Balance as at January 1, 2016 3,066 1,592 480 7,479 269 12,886 Acquisitions or additions from independent development - 187 - - 11 198 Disposals - - - - (11 ) (11 ) Balance as at December 31, 2016 3,066 1,779 480 7,479 269 13,073 Balance as at January 1, 2017 3,066 1,779 480 7,479 269 13,073 Acquisitions or additions from independent development - 227 - - - 227 Disposals - - - - (48 ) (48 ) Balance as at December 31, 2017 3,066 2,006 480 7,479 221 13,252 Amortization and impairment losses Balance as at January 1, 2016 - 1,009 205 4,339 215 5,768 Amortization for the year - 229 37 487 24 777 Disposals - - - - (6 ) (6 ) Balance as at December 31, 2016 - 1,238 242 4,826 233 6,539 Balance as at January 1, 2017 - 1,238 242 4,826 233 6,539 Amortization for the year - 218 29 530 9 786 Disposals - - - - (42 ) (42 ) Impairment losses 129 - - - - 129 Balance as at December 31, 2017 129 1,456 271 5,356 200 7,412 Carrying amounts As at January 1, 2016 3,066 583 275 3,140 54 7,118 As at December 31, 2016 3,066 541 238 2,653 36 6,534 As at December 31, 2017 2,937 550 209 2,123 21 5,840 |
Schedule of goodwill | December 31 2016 2017 NIS NIS Domestic fixed-line communications 1,548 1,548 Cellular telephone 1,205 1,163 Multi-channel television (DBS) 120 33 International communications and internet services 181 181 Others 12 12 Total 3,066 2,937 |
Deferred Expenses and Non-Cur45
Deferred Expenses and Non-Current Investments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Expenses and Non-Current Investments [Abstract] | |
Schedule of deferred expenses and non-current investments | December 31 2016 2017 NIS NIS Deferred expenses (A) 337 314 Customer acquisition asset, net - 115 Deposit used as collateral against hedging transactions (B) 58 67 Bank deposit for loans to Company employees (C) 47 51 Investments in equity-accounted investees 18 11 Other investments 5 - 465 558 A. Transactions for acquiring an indefeasible right of use (IRU) of seabed cable capacities are accounted for as service transactions. Under the contract, Bezeq International has the right of use for capacities until 2022 with an option for an extension until 2027. The amount of the prepaid expense is amortized on a straight line until 2027. B. A deposit used as collateral for hedging transactions is payable in two increments in December 2019 and December 2020. C. A bank deposit for loans to the Bezeq Group employees without a repayment date. |
Broadcast Rights, Net of Righ46
Broadcast Rights, Net of Rights Exercised (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Broadcast Rights, Net of Rights Exercised [Abstract] | |
Schedule of broadcast rights net of rights exercised | December 31 2016 2017 NIS NIS Cost 800 797 Less rights exercised (368 ) (343 ) Total 432 454 |
Investees (Tables)
Investees (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investees [Abstract] | |
Schedule of material subsidiaries held directly and indirectly by the Company | Principal location of the company’s Ownership activity interest B Communications (SP1) Ltd. and B Communications (SP2) Ltd. (1) Israel 100 % Bezeq - The Israel Telecommunication Corp. Limited Israel 26.34 % Subsidiaries of Bezeq - The Israel Telecommunication Corp. Limited Pelephone Communications Ltd. Israel 100 % Bezeq International Ltd. Israel 100 % DBS Israel 100 % Walla! Communications Ltd. Israel 100 % (1) Held by B Communications (SP1) Ltd. |
Schedule of dividends cash declared and paid | 2016 2017 NIS NIS Distribution of a regular dividend (see section B4 above) 2017 (NIS 0.47 per share) - 1,286 2016 (NIS 0.52 per share) 1,441 - |
Summary information of the group's subsidiaries including fair value adjustments | December 31, Year ended December 31, Cash flow Total from Rate of comprehensive financing ownership Profit Income activities Total interests Carrying (loss) (loss) Cash Cash without Dividend increase held by amount of attributable attributable flow flow dividend to paid to (decrease) non- Non- Non- non- Other Total to non- to non- from from non- non- in cash controlling Current current Current current Total net controlling comprehensive comprehensive controlling controlling operating investing controlling controlling and cash interests assets assets liabilities liabilities assets interests Revenues Profit income income interests interests activities activities interests interests equivalents % NIS 2017 Bezeq Group 73.66 4,823 12,367 3,857 10,848 2,485 1,840 9,789 858 (8 ) 850 663 657 3,525 (1,148 ) 104 (948 ) 1,533 2016 Bezeq Group 73.66 3,559 13,083 3,966 10,270 2,406 2,131 10,084 989 (15 ) 974 724 713 3,526 (1,567 ) (804 ) (1,062 ) 93 2015 Bezeq Group 69.44 3,771 14,426 4,905 10,041 3,251 2,346 9,985 1,336 7 1,343 926 931 3,740 283 (2,896 ) (1,232 ) (105 ) |
Debentures, Bank Loans and Cr48
Debentures, Bank Loans and Credit (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debentures, Bank Loans and Credit [Abstract] | |
Schedule of composition debentures, bank loans and credit | December 31 2016 2017 NIS NIS Current liabilities Current maturities of debentures 1,212 1,166 Current maturities of bank loans 839 692 2,051 1,858 Non-current liabilities Debentures 8,362 8,036 Bank loans 3,084 4,401 11,446 12,437 13,497 14,295 |
Schedule of terms and debt repayment | December 31, 2016 December 31, 2017 Nominal Carrying Carrying interest Par value amount Par value amount Currency rate NIS NIS NIS NIS % Loans from banks and others: Unlinked - Variable interest 978 978 675 675 NIS P-0.33 to P+0.2 Unlinked - Fixed interest 2,931 2,945 4,398 4,418 NIS 2.40 to 6.85 3,909 3,923 5,073 5,093 Debentures: Linked to the Israeli CPI - fixed interest 4,027 4,309 3,897 4, 091 NIS 2.20 to 8.40 Unlinked - variable interest 734 734 734 732 NIS Makam + 1.4 Unlinked - fixed interest 4,505 4,531 4,347 4,379 NIS 3.60 to 6.65 9,266 9,574 8,978 9,202 Total interest-bearing liabilities 13,175 13,497 14,051 14,295 |
Schedule of movement in liabilities arising from financing activities | Debentures (including accrued interest) Loans (including accrued interest) Total NIS NIS NIS Balance as at January 1, 2017 9,637 3,944 13,581 Changes due to cash flows from financing activities Consideration from the issue of debentures and receipt of loans, less transaction costs 635 2,000 2,635 Repayment of debentures and loans (978 ) (835 ) (1,813 ) Interest paid (379 ) (158 ) (537 ) Net cash generated from (used in) finance activities (722 ) 1,007 285 Financing expenses recognized in the statement of income 320 163 483 Balance as at December 31, 2017 9,235 5,114 14,349 |
Trade and Other Payables (Table
Trade and Other Payables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Trade and Other Payables [Abstarct] | |
Schedule of trade and other payables | December 31, *2016 2017 NIS NIS Open accounts** 910 1,041 Checks payable 92 21 Trade payables 1,002 1,062 Other payables including derivatives: Liabilities to employees and other liabilities for salaries 353 355 Institutions 98 87 Accrued interest 84 53 Deferred income 82 90 Derivatives 10 54 Other payables 11 18 Total other payables including derivatives 638 657 Total Trade and Other Payables 1,640 1,719 * Reclassified ** Of which, the carrying amount of trade payables that are related parties and interested parties as at December 31, 2017 amounts to NIS 31 (as at December 31, 2016 – NIS 21). |
Provisions (Tables)
Provisions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Provisions [Abstract] | |
Schedule of provisions | Dismantling and clearing of cellular Customer Additional and other claims legal claims sites Total NIS NIS NIS NIS Balance as at January 1, 2017 44 30 53 127 Provisions created in the period 20 15 4 39 Provisions used in the period (4 ) (7 ) (1 ) (12 ) Provisions cancelled in the period (1 ) (10 ) (9 ) (20 ) Balance as at December 31, 2017 59 28 47 134 Current 59 28 7 94 Non-current - - 40 40 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financial Instruments [Abstract] | |
Schedule of contractual repayment dates of financial liabilities | December 31, 2017 Carrying Contractual 2023 amount cash flow 2018 2019 2020-2022 and later NIS NIS NIS NIS NIS NIS Non-derivative financial liabilities Trade and other payables 1,596 1,596 1,596 - - - Bank loans 5,093 5,813 855 776 2,388 1,794 Debentures 9,202 10,448 1,381 1,367 3,675 4,025 Total 15,891 17,857 3,832 2,143 6,063 5,819 Financial liabilities for derivative instruments Forward contracts on the Israeli CPI 200 200 41 47 112 - |
Schedule of linkage and foreign currency risk | December 31, 2016 Foreign currency linked Unlinked Israeli (mainly US$) NIS NIS NIS Current assets Cash and cash equivalents 733 - 29 Trade receivables 1,954 18 28 Other receivables 20 48 - Investments including derivatives 719 34 154 Total current assets 3,426 100 211 Non-current assets Investments including derivatives 429 215 - Total non-current assets 429 215 - Total assets 3,855 315 211 Current liabilities Debentures, loans and borrowings 1,668 383 - Trade and other payables 1,340 56 203 Total current liabilities 3,008 439 203 Non-current liabilities Debentures and bank loans 7,667 3,779 - Other liabilities including derivatives - 176 9 Total non-current liabilities 7,667 3,955 9 Total liabilities 10,675 4,394 212 Total exposure in the statement of financial position (6,820 ) (4,079 ) (1 ) Forward transactions (2,266 ) 1,994 272 December 31, 2017 Foreign currency linked Unlinked Israeli (mainly US$) NIS NIS NIS Current assets Cash and cash equivalents 2,322 - 64 Trade receivables 1,862 36 17 Other receivables 44 154 - Related party 43 - - Investments including derivatives 445 32 119 Total current assets 4,716 222 200 Non-current assets Trade and other receivables 372 121 - Investments including derivatives 51 - 67 Total non-current assets 423 121 67 Total assets 5,139 343 267 Current liabilities Debentures, loans and borrowings 1,213 645 - Trade and other payables 1,344 56 237 Total current liabilities 2,557 701 237 Non-current liabilities Debentures and bank loans 9,104 3,333 - Other liabilities including derivatives - 159 10 Total non-current liabilities 9,104 3,492 10 Total liabilities 11,661 4,193 247 Total exposure in the statement of financial position (6,522 ) (3,850 ) 20 Forward transactions (2,308 ) 1,994 314 |
Schedule of information regarding the israeli CPI and significant exchange rates | Year ended December 31 December 31 2015 2016 2017 2015 2016 2017 Rate of change Reporting date spot rate % % % NIS NIS NIS 1 US dollar 0.3 (1.5 ) (9.8 ) 3.902 3.845 3.467 1 euro (10.1 ) (4.8 ) 2.7 4.247 4.044 4.153 Israeli CPI in Points (0.9 ) (0.3 ) 0.4 140.01 139.59 140.00 |
Schedule of interest bearing financial instruments | December 31 2016 2017 NIS NIS Fixed rate instruments Financial assets 2,189 1,986 Financial liabilities (11,786 ) (12,888 ) (9,597 ) (10,902 ) Variable rate instruments Financial assets 31 30 Financial liabilities (1,712 ) (1,407 ) (1,681 ) (1,377 ) |
Schedule of fair value of observable market-based data (level 2) in fair value hierarchy | Hedge item Repayment date Number of Nominal Fair value Capital NIS NIS NIS December 31, 2016: Debentures (Series 6) December 2018 - December 2022 9 1,994 (176 ) 54 1,994 (176 ) 54 December 31, 2017: Debentures (Series 6) December 2018 - December 2022 9 1,994 (200 ) 48 1,994 (200 ) 48 |
Schedule of financial instruments measured at fair value for disclosure | December 31, 2016 December 31, 2017 Fair value weighted average Carrying Fair Carrying Fair discount amount value amount value rate NIS NIS NIS NIS % Secured loans from banks and others Unlinked 2,947 3,089 4,436 4,693 2.63 Debentures Issued to the public (CPI linked) 3,473 3,656 4,088 4,338 0.52 Issued to the public (Unlinked) 4,166 4,246 4,097 4,322 2.35 Issued to institutional investors (CPI linked) 830 879 15 17 0.73 Issued to institutional investors (unlinked) 403 440 302 326 1.62 11,819 12,310 12,938 13,696 |
Schedule of financial instruments measured at fair value | - December 31, 2016 Level 1 Level 2 Level 3 Total NIS NIS NIS NIS Financial assets held for trading Monetary funds and ETFs 31 - - 31 Marketable securities 321 - - 321 Derivatives not used in hedging Forward contracts on CPI - (170 ) (170 ) Contingent consideration for a business combination - - (84 ) (84 ) 352 (170 ) (84 ) 98 December 31, 2017 Level 1 Level 2 Level 3 Total NIS NIS NIS NIS Financial assets held for trading Monetary funds and ETFs 14 - - 14 Marketable securities 307 - - 307 Derivatives not used in hedging Forward contracts - (212 ) - (212 ) Contingent consideration for a business combination - - 43 43 321 (212 ) 43 152 |
Schedule of fair value of contingent consideration liability for business combination | December 31, 2016 December 31, 2017 Maximum Maximum additional additional consideration consideration under the under the agreement Fair value agreement Fair value NIS NIS NIS NIS Additional consideration for the business results of DBS (second additional consideration) 170 84 170 43 |
Schedule of carrying amount of balances as stated in statement of financial position | December 31, 2016 2017 NIS NIS Trade and other receivables, gross 119 115 Offset amounts (97 ) (99 ) Trade and other receivables presented in the statement of financial position 22 16 Trade payables, gross 147 143 Offset amounts (97 ) (99 ) Trade and other payables presented in the statement of financial position 50 44 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefits [Abstract] | |
Summary of liabilities for employee benefits | December 31, 2016 2017 NIS NIS Current liabilities for: Holiday 104 115 Sick leave 122 142 Early retirement 82 16 Current maturities of pensioner benefits 7 7 Total current liability for employee benefits 315 280 Non-current liabilities for: Liability for pensioner benefits 118 120 Severance compensation (net) (see composition below) 51 57 Early notice 19 23 Pension 70 72 Total non-current liabilities for employee Benefits 258 272 Total liabilities for employee benefits 573 552 Composition of liabilities for severance pay: Liabilities for severance pay 212 224 Fair value of plan assets (161 ) (167 ) |
Summary of employeebenefits for contribution plan | Year ended December 31, 2015 2016 2017 NIS NIS NIS Amount recognized as an expense for a defined contribution plan 199 209 228 |
Summary of actuarial assumptions | December 31, December 31, Average capitalization rate Average capitalization rate % % Severance compensation 4.2 3.3 Retirement benefits 4.3 3.6 |
Summary of assumptions regarding salary increments for calculation of the liabilities | Salary increase assumptions Bezeq permanent employees Average update of 7% for young employees, decreasing gradually to 2.7% at the age of 66. New Bezeq permanent employees Average update of 3.2% for young employees, decreasing gradually to 1.4% at the age of 66. Bezeq non-permanent employees 6.5% for young employees decreasing gradually to 0%, 3.5% for senior employees Pelephone employees An increase of 3.1%, as set out in the collective agreement at Pelephone Bezeq International employees An increase of 3.0%, as set out in the collective agreement at Bezeq International DBS employees Rate of increase of 3.5% |
Summary of principal actuarial assumptions | Year ended December 31, 2016 2017 Years Years Discount rate - addition of 0.5% (28 ) (29 ) Rate of future salary increases - addition of 0.5% 36 40 Rate of employees leaving - addition of 5.0% (10 ) (17 ) |
Summary of average weighted useful life of liabilities | Year ended December 31, 2016 2017 Years Years Severance compensation 10.0 10.4 Retirement benefits 14.1 14.7 |
Income Tax (Tables)
Income Tax (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax [Abstract] | |
Schedule of composition of income tax expenses (income) | Year ended December 31, 2015 2016 2017 NIS NIS NIS Current tax expenses Expenses for the current year 567 437 438 Adjustments for prior years - (28 ) 54 Total current tax expenses 567 409 492 Deferred tax expenses (income) Adjustments for prior years according to an assessment agreement - - (54 ) Reversal of temporary differences according to an assessment agreement - - 21 Creation and reversal of temporary differences (209 ) (33 ) (112 ) Total deferred tax expenses (209 ) (33 ) (145 ) Income tax expense 358 442 347 |
Schedule of reconciliation between the theoretical tax on the pre-tax income and the tax expense | Year ended December 31, 2015 2016 2017 NIS NIS NIS Income before income tax 1,494 930 1,088 Statutory tax rate 26.5 % 25 % 24 % Income tax at the statutory tax rate 395 232 260 Changes in tax rate - 67 - Expenses not recognized for tax purposes (13 ) 46 48 Adjusted tax calculated for the Company’s share in equity- accounted investees (3 ) 1 - Recognition of deferred tax assets which were not recognized on prior periods (101 ) - - Current year tax losses and benefits for which deferred taxes were not created 80 124 39 Taxes in respect of previous years - (28 ) - Income tax expenses 358 442 347 |
Schedule of recognized deferred tax assets and liabilities | Property, plant equipment, Carry- Brand and Employee forward Names and intangible benefits losses for Customers assets* plan DBS Others* relationship Total NIS NIS NIS NIS NIS NIS Balance of deferred tax asset (liability) as at December 31, 2015 (422 ) 208 1,419 184 (839 ) 550 Recognized in profit or loss 74 (26 ) (231 ) (75 ) 224 (34 ) Recognized in equity - (4 ) - (98 ) - (102 ) Balance of deferred tax assets (liability) as at December 31, 2016 (348 ) 178 1,188 11 (615 ) 414 Balance of deferred tax asset (liability) as at December 31, 2016 (348 ) 178 1,188 11 (615 ) 414 Recognized in profit or loss 25 (13 ) (22 ) 28 127 145 Recognized in equity - - - 1 - 1 Balance of deferred tax assets (liability) as at December 31, 2017 (323 ) 165 1,166 40 (488 ) 560 * Reclassified |
Contingent Liabilities (Tables)
Contingent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Contingent Liabilities [Abstract] | |
Schedule of detailed description of the Group's contingent liabilities | Balance of provisions Amount of additional exposure Amount of exposure for claims for which the amount of exposure cannot be assessed Claims group Nature of the claims NIS NIS NIS Customer claims Mainly motions for certification of class actions concerning contentions of unlawful collection of payment and deterioration in service provided by the Group companies. 59 4,183 2,148 * Claims by enterprises and companies Claims alleging liability of the Group companies in respect of their activities and/or the investments made in various projects. 11 2,005 ** 1,808 *** Claims of employees and former employees of Group companies Mainly collective and individual claims filed by employees and former employees of the Group in respect of various payments and recognition of various salary components as components for calculation of payments to Group employees. 1 4 1 Claims by the State and authorities Various claims by the State of Israel, government institutions and authorities (“the Authorities”). These are mainly procedures related to regulations relevant to the Group companies and financial disputes concerning monies paid by the Group companies to the Authorities (including property taxes). 16 24 - Supplier and communication provider claims Legal claims for compensation for alleged damage as a result of the supply of the service and/or the product. - 148 4 Claims for punitive damages, real estate and infrastructure Claims for alleged physical damage or damage to property caused by Group companies and in relation to real estate and infrastructure. The additional amount of exposure for punitive damages does not include claims for which the insurance coverage is not disputed. - 66 - Total legal claims against Bezeq Group companies 87 6,430 3,961 * Including exposure in the amount of NIS 1.11 billion for a motion for certification as a class action against Bezeq, as well as against the subsidiary Walla, Yad 2 and an advertising company owned by Walla, which addresses with Bezeq’s 144B service. Subsequent to the date of the financial statements, the motion was dismissed. ** Including exposure of NIS 2 billion for a motion for certification as a class action filed by a shareholder against Bezeq and officers in Bezeq, referring to alleged reporting omissions by Bezeq regarding the wholesale market and the reduction of interconnect fees, which the plaintiff estimates at NIS 1.1 billion or NIS 2 billion (depending on the method used to calculate the damage). *** See Below table: Date Parties Instance Type of proceeding Description June 2017 Shareholders of Bezeq Against Bezeq, Chairman of Bezeq’s Board of Directors, members of Bezeq’s Board of Directors, B Communications, Internet Gold, and companies in the Eurocom Group (the first motion also against the CEO of Bezeq and the CEO and CFO of DBS). At the Tel Aviv District Court (Economic Department) Two motions to certify class actions The subject of the motions is the transaction from 2015 in which Bezeq acquired from Eurocom DBS Ltd (a company controlled by Bezeq's controlling shareholders) the balance of shares of DBS that it held. The first motion was filed in the name of anyone who acquired Bezeq shares between February 11, 2015 and June 19, 2017 (excluding the respondents and/or those acting on their behalf and/or connected with them). In the motion it is argued that the report concerning the transaction was misleading and/or deficient, and on account of which, due to the opening of a public investigation into the transaction by the ISA, the public has become aware of details concerning the transaction and its implementation, which led to a drop in Bezeq's share price in the days following the disclosure and analysis of the new information. The plaintiff argues that the respondents acted contrary to the provisions of the Securities Law, and contrary to the provisions of additional laws, and caused holders of Bezeq's securities heavy financial losses, amounting to millions of shekels if not more. The second motion was filed in the name of three sub-classes - anyone who acquired (1) shares of Bezeq, (2) shares of our company, B Communications, and (3) shares of Internet Gold on the Tel Aviv Stock Exchange between May 21, 2015 and June 19, 2017. The plaintiff argues that the public that invested in these shares was seriously misled, which was uncovered following the opening of a public investigation into the transaction by the ISA on June 20, 2017, whereby the increase in the cash flow of DBS as reported in Bezeq's financial statements was artificially inflated, according to their claim, thereby misleading reasonable investors who based themselves on DBS cash flow data to estimate its worth, which led to over-valuation of the above companies. The plaintiff also claims additional damage caused to the groups of shareholders in B Communications and Internet Gold. On October 25, 2017, a ruling was given ordering the striking out of another (third) class action certification motion filed in the same court in July 2017 concerning a transaction for the purchase of DBS shares and a transaction to continue the agreement between DBS and Spacecom, after the court ruled that the above motions should be preferred and after failing to find any added value in the other motion to advancing the class’s interests or facilitating the hearing. In accordance with a procedural arrangement approved earlier by the court, the plaintiffs agreed in the above motions to administer the motions jointly and they will file a consolidated motion. On December 10, 2017, the court resolved to postpone the hearing in the case for 4 months after the Attorney General’s attorney submitted his position whereby the hearing in this case should be delayed at this stage for 4 months, to enable the evidence in connection with the ISA investigation to be examined by the District Attorney’s office, to allow the investigation to be completed to the extent that this is necessary, and so that the District Attorney’s office can formulate its position. On May 2, 2018 the Court granted the Attorney General's request and ordered the proceeding stayed for an additional four months. The Attorney General is required to update the Court by August 12, 2018. Date Parties Instance Type of proceeding Description June-August 2017 and a motion from December 2017 Bezeq shareholders against Bezeq and DBS (not including two motions that were filed only against Bezeq) Tel Aviv District Court Various motions to disclose documents prior to filing a motion to certify a derivative claim under Section 198A of the Companies Law filed further to the ISA investigation In some of these motions (three in all), the court was moved to instruct Bezeq (and DBS, as applicable) to submit to the plaintiffs, documents and information in connection with the agreement for Bezeq’s purchase of DBS, and specifically in connection with the Second Contingent Payment according to that agreement (payment of NIS 170 million which is contingent on DBS meeting free cash flow targets in the period 2015-2017). On October 24, 2017, the court resolved to strike out the three motions after accepting the plaintiff’s request in the motion to certify a derivative action in the matter of an agreement for Bezeq to purchase DBS (see above), and this after concluding that these motions give rise to questions of fact and law that are essentially similar to the questions that arise in the Earlier Motion. In its decision, the court also noted that if the plaintiff in the Earlier Motion does not submit a motion to amend the motion for certification (such that it also applies to the matters included in the disclosure motions) or, alternatively, it files such a motion and its motion is dismissed, the plaintiffs in the foregoing three motions will have the right to initiate legal proceedings should they so determine. In some of the motions, the court was moved to instruct Bezeq (and DBS, as applicable) to submit to the plaintiffs, certain documents in connection with an interested party transaction between DBS and Spacecom from 2013, as amended early in 2017. On December 10,2017, the plaintiffs in three motions notified they were “joining forces” and cooperating with each other. A hearing on the question of which motions should be dismissed and which should remain was held on January 8, 2018 and a ruling on the matter has not yet been given. Further to ISA’s position that in view of the investigation the proceedings in these cases should be delayed, the court ordered the proceedings to be delayed until April 10, 2018. In an additional motion, the court was moved to instruct Bezeq and DBS to submit to the plaintiffs, documents and information also in connection with the agreement for Bezeq’s purchase of DBS and in connection with the DBS - Spacecom Transaction. In this motion, the plaintiff wishes to explore the filing of a motion to certify a derivative claim against officers in Bezeq and DBS who were in breach of their fiduciary duty against Bezeq in these transactions, according to the plaintiff, where the relief requested is to return all the benefits they received for the positions they held in Bezeq or DBS (salary, bonuses, management fees, etc.). The court consolidated the preliminary hearing in this case with the preliminary hearing on the motions to disclose documents prior to filing the motion to certify a derivative claim, detailed above. Motion from December 2017 - motion to order Bezeq to disclose various documents to the plaintiff with respect to advance payments on account of the second contingent payment in the DBS transaction, claiming that the decision to pay advances and to pay them without any collateral was flawed. On January 21, 2018, Bezeq filed an application for instructions and requesting the court to strike out one of the two motions, either this motion or the motion to certify a derivative claim since they deal with overlapping issues. |
Agreements (Tables)
Agreements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Agreements [Abstract] | |
Schedule of minimum future contractual rental payments during the next five years | Real estate Vehicles Total Year ended December 31, NIS NIS NIS 2018 222 88 310 2019 213 74 287 2020 165 48 213 2021 86 - 86 2022 50 - 50 2023 onwards 74 - 74 810 210 1,020 |
Capital and Capital Reserves (T
Capital and Capital Reserves (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Capital and Capital Reserves [Abstract] | |
Schedule of equity | Authorized Registered and paid up December 31 December 31 2016 and 2017 2016 and 2017 Number of shares Ordinary shares of NIS 0.1 par value each 50,000,000 29,889,045 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Revenues [Abstract] | |
Schedule of revenues | Year ended December 31, 2015 2016 2017 NIS NIS NIS Domestic fixed line communications Fixed line telephony 1,456 * 1,352 * 1,255 Internet - infrastructure 1,438 * 1,461 * 1,488 Transmission and data communication 835 * 835 * 775 Cloud and digital services 184 * 203 * 230 Other services 212 213 205 4,125 4,064 3,953 Cellular Cellular services and terminal equipment 1,948 1,777 1,743 Sale of terminal equipment 884 811 757 2,832 2,588 2,500 International communications, internet services and NEP 1,487 1,480 1,467 Multi-channel television 1,333 1,745 1,650 Others 208 207 219 9,985 10,084 9,789 * Cloud and digital services were reclassified and presented separately to reflect the change in the mix of revenues in fixed-line domestic communications |
Salaries (Tables)
Salaries (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Salaries [Abstract] | |
Schedule of salaries | Year ended December 31, 2015 2016 2017 NIS NIS NIS Salaries and incidentals: Operating 1,871 1,922 1,931 General and administrative 586 622 647 Total salaries and incidentals 2,457 2,544 2,578 Less - salaries recognized in investments in property, plant and equipment and in intangible assets 499 529 571 1,958 2,015 2,007 |
General and Operating Expenses
General and Operating Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
General and Operating Expenses [Abstract] | |
Schedule of general and operating expenses | Year ended December 31, 2015 2016 2017 NIS NIS NIS Terminal equipment and materials 880 831 855 Interconnectivity and payments to domestic and international operators 909 825 805 Maintenance of buildings and sites 616 605 584 Marketing and general expenses 647 706 610 Services and maintenance by sub-contractors 199 261 260 Vehicle maintenance expenses 167 164 156 Content services expenses 458 629 636 3,876 4,021 3,906 * For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3A. |
Other Operating Expenses (Inc60
Other Operating Expenses (Income), Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Operating Expenses (Income), Net [Abstract] | |
Schedule of other operating expenses (income), net | Year ended December 31, 2015 2016 2017 NIS NIS NIS Loss from impairment of goodwill - - 129 Provision for severance pay in early retirement 117 96 23 Capital gain from sale of property plant and equipment (136 ) (86 ) (27 ) Others 22 11 24 3 21 149 |
Financing Expenses (Income) (Ta
Financing Expenses (Income) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financing Expenses (Income) [Abstract] | |
Schedule of financing expenses (income) | Year ended December 31 2015 2016 2017 NIS NIS NIS Income on bank deposits, investments and others (14 ) (13 ) (2 ) Change in fair value of financial assets measured at fair value through profit or loss (27 ) (29 ) (7 ) Income in respect of credit in sales, net of discount (52 ) (42 ) (35 ) Linkage and exchange rate differences, net - (16 ) - Interest and linkage differences from loans to an associate (21 ) - - Other finance income (40 ) (23 ) (25 ) Total financing income (154 ) (123 ) (69 ) Interest expenses on financial liabilities 634 871 445 Linkage and exchange rate differences, net 61 38 48 Change in contingent consideration in a business combination - 55 (14 ) Change in fair value of financial assets measured at fair value through profit or loss 4 23 39 Financing expenses for employee benefits, net 16 15 35 Reduction of the provision for assessor interest expenses (76 ) - - Other financing expenses 50 52 33 Total financing expenses 689 1,054 586 Financing expense, net 535 931 517 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings (Loss) per Share [Abstract] | |
Schedule of basic and diluted earnings per share was based on income (loss) attributable to ordinary shareholders | Year ended December 31 2015 2016 2017 NIS NIS NIS Earnings (loss) attributable to ordinary Shareholders Basic earnings (loss) for the year 210 (236 ) 78 Effect of diluted per share loss in a subsidiary (2 ) - - Diluted earnings (loss) for the year 208 (236 ) 78 |
Schedule of weighted average number of ordinary shares (basic and diluted) | Year ended December 31 2015 2016 2017 Thousands of Thousands of Thousands of shares of NIS 0.1 shares of NIS 0.1 Shares of NIS 0.1 par value par value par value Weighted average number of ordinary shares (basic and diluted) 29,889 29,889 29,889 |
Transactions with Related Par63
Transactions with Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Transactions with Related Parties [Abstract] | |
Schedule of balances with related parties | December 31, 2016 2017 NIS NIS Receivables - associates 10 8 Liabilities to related parties, net * (12 ) (23 ) Advanced payment (Liability) to Eurocom DBS (not including interest) for contingent consideration (see Note 12B) (32 ) 99 * The amounts are for IGLD, its ultimate parent Eurocom, and their related parties. |
Schedule of transactions with related parties | Year ended December 31, 2015 2016 2017 NIS NIS NIS Revenues From associates (including interest income in respect of shareholders loans) * 30 7 8 From related parties ** 10 13 23 Expenses To related parties ** 128 110 **** 122 To associates 3 2 5 Investments Related parties ** 76 59 28 Acquisition of DBS 913 55 **** (70 )*** Revised fair value of the excess advance payments for acquisition of DBS - - 56 *** * Revenues from associates in 2015 include mainly finance income from shareholders loans to DBS, prior to the acquisition of control in DBS. ** The amounts are for Internet Gold, Eurocom, and their related parties. *** Adjustment of the liability for contingent consideration for a business combination with DBS and adjustment of the fair value estimate of the amount expected to be returned to Bezeq from the excess of the advance payments that it paid was recognized as financing income, net. **** Reclassified |
Schedule of transactions listed in section 270(4) of the Companies Law | Approval date of the general meeting (after approval of Bezeq’s audit committee and Board of Directors) Nature of the transaction Amount of the transaction March 23, 2015 Approval of Bezeq’s acquisition agreement with Eurocom DBS Ltd. (“Eurocom DBS”) whereby Bezeq will acquire the entire holdings of Eurocom DBS in DBS shares DBS and all the shareholder loans provided by Eurocom DBS to DBS (including acceptance of the terms established by the Antitrust Commissioner’s in his approval of the merger on March 26, 2014, both by Bezeq and by DBS, and announcement of the exercise of Bezeq’s option for the allotment of 6,221 DBS shares, at no cost, representing 8.6% of the share capital of DBS). The total cost is comprised of: a) total cash of NIS 680; b) total cash of up to NIS 200, subject to certain conditions; c) total cash of up to NIS 170, subject to certain conditions. For additional information about the conditions relating to b and c, see Note 12B above. October 19, 2015 Approval of Bezeq’s vote at the general meeting of shareholders of DBS in favor of DBS’s agreement with Eurocom and ADB for the order of yesMaxTotal3 converters, under the existing agreement, until December 31, 2017. Total cost of US$ 14. December 8, 2015 Amendment to the framework agreement between Pelephone and Eurocom Cellular Communications Ltd., so that it will be extended to other products and brands, including related services for all products and its extension until December 31, 2018 (or three years after the acquisition date of any additional products or brands, whichever is earlier). Annual scope of up to NIS 50 (for all the products). June 30, 2016* Extension of the amended agreement with Eurocom Communications for ongoing management and consultation services for Bezeq. The agreement is for three years, valid until May 31, 2019, unless one of the parties submits three-month notice of termination of the agreement. NIS 6.4 per year. November 27, 2014 Bezeq’s agreement to bring forward payments with Eurocom, according to which DBS may advance, at the supplier’s request, payments that are due, or will be due, to Eurocom for orders of converters. Up to a total cost of US$ 6. this approval was not used in the reporting year November 3, 2016 Bezeq’s agreement with Eurocom for the additional acquisition of up to 90 thousand VTECH N VDSL routers, valid until June 30, 2017. Approval for acquisition of up to US$ 11.3 (not including VAT). Approval date of the general meeting (after approval of Bezeq’s audit committee and Board of Directors) Nature of the transaction Amount of the transaction April 3, 2017 Approval of Bezeq’s vote at the general meeting of DBS in favor of the agreement between DBS and Spacecom with an amendment/addendum to the existing agreement between the parties dated November 4, 2013, for the lease of satellite segments in Spacecom’s satellites (“the Agreement”), including in favor of implementation of the Agreement. The validity of the Agreement remains the same as the original agreement, namely, until the end of 2028. A total nominal cost of up to US$ 263 for the entire term of the Agreement (until December 31, 2028), reflecting an average annual cost of US$ 21.9. It should be noted that the overall cost of the Agreement may be lower if surplus revenue sharing mechanisms are applied and/or the assumptions set out in the amendment to the Agreement. July 5, 2017 The agreement between Bezeq International and Eurocom Digital for the purchase of up to 100,000 TECH VDSL routers Approval of the acquisition in an amount of up to US$ 3.2 (not including VAT) * Eurocom will also provide ongoing consultation services in diverse areas, in a monthly scope of at least 60 hours of consulting services, provided by Or Elovitch, Orna Elovitch-Peled, Amikam Shorer, Felix Cohen, Ami Bar-Lev, and any other party set out in the agreement. |
Schedule of financial value of the transactions | Amounts included in the consolidated financial statements NIS Expenses 91 Property plant and equipment 11 Acquisition of Eurocom DBS holdings in DBS (see Note 12B) (70 ) Adjustment of the fair value of excess advance payments for the acquisition of DBS (see Note 12B) 56 |
Schedule of key management personnel compensation | Year ended December 31 2015 2016 2017 NIS NIS NIS Employee benefits 1 2 2 |
Reporting Entity (Details)
Reporting Entity (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Reporting Entity (Textual) | |
Description of controlling shareholder | In accordance with the notice, the Israel Securities Authority concluded that there is prima facie evidence establishing the involvement of the main suspects in the case, in offenses of (1) fraudulently receiving funds in connection with the entitlement of Bezeq's controlling shareholder to a consideration of NIS 170 as part of the transaction for Bezeq's purchase of DBS shares from Bezeq's controlling shareholder, a consideration contingent on certain targets to be met by DBS; (2) leaking the material of the independent committee of Bezeq's Board of Directors that examined examine interested party transactions (the transaction for the acquisition of DBS shares by Bezeq and the transaction between DBS and Space Communications Ltd. for the purchase of satellite segments for DBS) to Bezeq's controlling shareholder and associates ;(3) promoting v's interests in the Ministry of Communications in violation of the Penal Law and the Israel Securities Law. |
Basis of Preparation (Details)
Basis of Preparation (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Basis of Preparation (Textual) | |
Foreige exchange rate, description | NIS 3.467 = US$ 1.00 |
Significant Accounting Polici66
Significant Accounting Policies (Details) ₪ in Thousands, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2016USD ($) | Dec. 31, 2015ILS (₪) | Dec. 31, 2015USD ($) | Dec. 31, 2014ILS (₪) | |
Significant Accounting Policies [Line Items] | ||||||||
Equity attributable to shareholders of the Company | ₪ 1,246,000 | [1] | $ 359 | ₪ 1,170,000 | ||||
Non-controlling interests | 1,840,000 | [1] | 531 | 2,131,000 | ||||
Total equity | 3,086,000 | $ 890 | ₪ 3,301,000 | $ 952 | ₪ 3,391,000 | $ 882 | ₪ 3,588,000 | |
As previously reported [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Net subscriber acquisition asset (stated as deferred expenses and non-current investments) | 4 | |||||||
Equity attributable to shareholders of the Company | 1,224,000 | |||||||
Non-controlling interests | 1,778,000 | |||||||
Total equity | 3,002,000 | |||||||
Change [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Net subscriber acquisition asset (stated as deferred expenses and non-current investments) | 111 | |||||||
Equity attributable to shareholders of the Company | 22,000 | |||||||
Non-controlling interests | 62,000 | |||||||
Total equity | 84,000 | |||||||
In accordance with IFRS15 [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Net subscriber acquisition asset (stated as deferred expenses and non-current investments) | 115 | |||||||
Equity attributable to shareholders of the Company | 1,246,000 | |||||||
Non-controlling interests | 1,840,000 | |||||||
Total equity | ₪ 3,086,000 | |||||||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Significant Accounting Polici67
Significant Accounting Policies (Details 1) ₪ in Thousands, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Significant Accounting Policies [Line Items] | |||||
Net cash from operating activities | ₪ 3,487,000 | [1] | $ 1,005 | ₪ 3,462,000 | ₪ 3,652,000 |
Net cash used in investing activities | (1,128,000) | [1] | $ (325) | ₪ (948,000) | ₪ 310,000 |
In accordance with the previous policy [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Net cash from operating activities | 3,322 | ||||
Net cash used in investing activities | (963) | ||||
Change [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Net cash from operating activities | 165,000 | ||||
Net cash used in investing activities | (165,000) | ||||
In accordance with IFRS15 [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Net cash from operating activities | 3,487,000 | ||||
Net cash used in investing activities | ₪ (1,128,000) | ||||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Significant Accounting Polici68
Significant Accounting Policies (Details 2) $ / shares in Units, ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Significant Accounting Policies [Line Items] | |||||
General and operating expenses | ₪ 3,906 | [1] | $ 1,127 | ₪ 4,021 | ₪ 3,876 |
Salaries | 2,007 | [1] | 579 | 2,015 | 1,958 |
Depreciation and amortization expenses | 2,117 | [1] | 611 | 2,161 | 2,131 |
Operating profit | 1,610 | [1] | 463 | 1,866 | 2,017 |
Profit after financing expenses | 1,093 | [1] | 314 | 935 | 1,482 |
Profit before income tax | 1,088 | [1] | 313 | 930 | 1,494 |
Income tax expense | 347 | [1] | 100 | 442 | 358 |
Net profit for the period | 741 | [1] | $ 213 | ₪ 488 | ₪ 1,136 |
In accordance with the previous policy [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
General and operating expenses | 4,037 | ||||
Salaries | 2,041 | ||||
Depreciation and amortization expenses | 2,063 | ||||
Operating profit | 1,499 | ||||
Profit after financing expenses | 982 | ||||
Profit before income tax | 977 | ||||
Income tax expense | 320 | ||||
Net profit for the period | 657 | ||||
Profit attributable to shareholders of the Company | 56 | ||||
Profit attributable to non-controlling interests | 601 | ||||
Earnings per share (Basic and Diluted) | $ / shares | $ 1.88 | ||||
Change [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
General and operating expenses | 131 | ||||
Salaries | 34 | ||||
Depreciation and amortization expenses | 54 | ||||
Operating profit | 111 | ||||
Profit after financing expenses | 111 | ||||
Profit before income tax | 111 | ||||
Income tax expense | 27 | ||||
Net profit for the period | 84 | ||||
Profit attributable to shareholders of the Company | 22 | ||||
Profit attributable to non-controlling interests | 62 | ||||
Earnings per share (Basic and Diluted) | $ / shares | 0.74 | ||||
In accordance with IFRS15 [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
General and operating expenses | 3,906 | ||||
Salaries | 2,007 | ||||
Depreciation and amortization expenses | 2,117 | ||||
Operating profit | 1,610 | ||||
Profit after financing expenses | 1,093 | ||||
Profit before income tax | 1,088 | ||||
Income tax expense | 347 | ||||
Net profit for the period | 741 | ||||
Profit attributable to shareholders of the Company | 78 | ||||
Profit attributable to non-controlling interests | ₪ 663 | ||||
Earnings per share (Basic and Diluted) | $ / shares | $ 2.62 | ||||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Significant Accounting Polici69
Significant Accounting Policies (Details 3) | 12 Months Ended |
Dec. 31, 2017 | |
Fixed line and international network equipment (switches, transmission, power) [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 4 to 12 |
Network [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 12 to 33 |
Subscriber equipment and installations [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 4-8 |
Equipment and infrastructure for multichannel television [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 3-15 |
Vehicles [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 6-7 |
Office and general equipment [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 5-10 |
Electronic equipment, computers and internal communication systems [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 3-7 |
Cellular network [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 4-10 |
Passive radio equipment at cellular network sites [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | up to December 31, 2037 |
Buildings [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 25 |
Seabed cable [Member] | |
Significant Accounting Policies [Line Items] | |
Property, plant and equipment estimated useful lives | 4-25 (mainly 25) |
Significant Accounting Polici70
Significant Accounting Policies (Details 4) | 12 Months Ended |
Dec. 31, 2017 | |
Frequency usage rights [Member] | |
Significant Accounting Policies [Line Items] | |
Amortization methods and estimated useful lives | Over the term of the license until 2028 |
Computer programs and software licenses [Member] | |
Significant Accounting Policies [Line Items] | |
Amortization methods and estimated useful lives | 3 - 10 years according to the term of the license or the estimated time of use of the program |
Customer relationships [Member] | |
Significant Accounting Policies [Line Items] | |
Amortization methods and estimated useful lives | 5 - 7 years |
Brand acquired in a business combination [Member] | |
Significant Accounting Policies [Line Items] | |
Amortization methods and estimated useful lives | 12 |
Significant Accounting Polici71
Significant Accounting Policies (Details Textual) ₪ in Billions | 12 Months Ended |
Dec. 31, 2017ILS (₪) | |
Significant Accounting Policies [Line Items] | |
Description of legal claims | Contingent liabilities are accounted for according to IAS 37 and its related provisions. Accordingly, the claims are classified by likelihood of realization of the exposure to risk, as follows: a. More likely than not - more than 50% probability b. Possible - probability higher than unlikely and less than 50% c. Remote - probability of 10% or less |
Initial implementation Non-Current Asset | ₪ 1.4 |
Initial implementation Non-Current Liabilities | 0.4 |
Initial implementation Current Liabilities | 1 |
Decrease in operating expenses | ₪ 0.4 |
Bottom of range [Member] | |
Significant Accounting Policies [Line Items] | |
Expected useful life of service received | 1 year |
Top of range [Member] | |
Significant Accounting Policies [Line Items] | |
Expected useful life of service received | 4 years |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands, ₪ in Millions | 12 Months Ended | ||||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | ||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||||||
Total revenue | ₪ 9,789 | [1] | $ 2,823,000 | ₪ 10,084 | ₪ 9,985 | ||
Depreciation and amortization expenses | 2,117 | [1] | 611,000 | 2,161 | 2,131 | ||
Segment results - operating income | (149) | [1] | (43,000) | (21) | (3) | ||
Total financing income (expense), net | 69 | [1] | 20,000 | 123 | 154 | ||
Segment profit (loss) before income tax | 1,088 | [1] | 313,000 | 930 | 1,494 | ||
Income tax | 438 | 437 | 567 | ||||
Segment results - net profit (loss) | 741 | [1] | $ 213,000 | 488 | 1,136 | ||
Additional information: | |||||||
Segment assets | 20,639 | [1] | 20,145 | $ 5,953,000 | |||
Investment in equity-accounted investee | $ | 11,000 | $ 12 | |||||
Segment liabilities | 17,553 | [1] | 16,844 | $ 5,063,000 | |||
Domestic fixed-line communications [Member] | |||||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||||||
Revenue from external entities | 3,953 | 4,063 | 4,122 | ||||
Inter-segment revenues | 291 | 320 | 285 | ||||
Total revenue | 4,244 | 4,383 | 4,407 | ||||
Depreciation and amortization expenses | 728 | 717 | 725 | ||||
Segment results - operating income | 1,971 | 2,076 | 2,148 | ||||
Finance income | 36 | 30 | 30 | ||||
Finance expenses | (439) | (475) | (362) | ||||
Total financing income (expense), net | (403) | (445) | (332) | ||||
Segment profit (loss) after finance expenses, net | 1,568 | 1,631 | 1,816 | ||||
Share in profit (loss) of equity-accounted investee | |||||||
Segment profit (loss) before income tax | 1,568 | 1,631 | 1,816 | ||||
Income tax | 396 | 399 | 492 | ||||
Segment results - net profit (loss) | 1,172 | 1,232 | 1,324 | ||||
Additional information: | |||||||
Segment assets | 9,086 | 7,111 | 7,311 | ||||
Goodwill | |||||||
Investment in equity-accounted investee | |||||||
Segment liabilities | 13,901 | 11,988 | 12,117 | ||||
Investments in property, plant and equipment and intangible assets | 851 | 828 | 837 | ||||
Cellular communications [Member] | |||||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||||||
Revenue from external entities | 2,500 | 2,587 | 2,831 | ||||
Inter-segment revenues | 46 | 43 | 59 | ||||
Total revenue | 2,546 | 2,630 | 2,890 | ||||
Depreciation and amortization expenses | 383 | 380 | 419 | ||||
Segment results - operating income | 72 | 32 | 157 | ||||
Finance income | 54 | 52 | 53 | ||||
Finance expenses | (3) | (6) | (4) | ||||
Total financing income (expense), net | 51 | 46 | 49 | ||||
Segment profit (loss) after finance expenses, net | 123 | 78 | 206 | ||||
Share in profit (loss) of equity-accounted investee | |||||||
Segment profit (loss) before income tax | 123 | 78 | 206 | ||||
Income tax | 28 | 17 | 55 | ||||
Segment results - net profit (loss) | 95 | 61 | 151 | ||||
Additional information: | |||||||
Segment assets | 3,271 | 3,294 | 3,269 | ||||
Goodwill | |||||||
Investment in equity-accounted investee | |||||||
Segment liabilities | 536 | 569 | 513 | ||||
Investments in property, plant and equipment and intangible assets | 331 | 277 | 419 | ||||
International communications and Internet services [Member] | |||||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||||||
Revenue from external entities | 1,466 | 1,478 | 1,485 | ||||
Inter-segment revenues | 71 | 70 | 93 | ||||
Total revenue | 1,537 | 1,548 | 1,578 | ||||
Depreciation and amortization expenses | 135 | 137 | 132 | ||||
Segment results - operating income | 174 | 176 | 240 | ||||
Finance income | 4 | 5 | 7 | ||||
Finance expenses | (12) | (15) | (15) | ||||
Total financing income (expense), net | (8) | (10) | (8) | ||||
Segment profit (loss) after finance expenses, net | 166 | 166 | 232 | ||||
Share in profit (loss) of equity-accounted investee | 1 | ||||||
Segment profit (loss) before income tax | 166 | 167 | 232 | ||||
Income tax | 39 | 42 | 60 | ||||
Segment results - net profit (loss) | 127 | 125 | 172 | ||||
Additional information: | |||||||
Segment assets | 1,199 | 1,177 | 1,160 | ||||
Goodwill | 6 | 6 | 6 | ||||
Investment in equity-accounted investee | 5 | 5 | 4 | ||||
Segment liabilities | 410 | 380 | 343 | ||||
Investments in property, plant and equipment and intangible assets | 169 | 126 | 127 | ||||
Multi-channel television [Member] | |||||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||||||
Revenue from external entities | 1,650 | 1,745 | 1,774 | ||||
Inter-segment revenues | |||||||
Total revenue | 1,650 | 1,745 | 1,774 | ||||
Depreciation and amortization expenses | 285 | 296 | 322 | ||||
Segment results - operating income | 163 | 264 | 250 | ||||
Finance income | 10 | 13 | 32 | ||||
Finance expenses | (81) | (539) | (635) | ||||
Total financing income (expense), net | (71) | (526) | (603) | ||||
Segment profit (loss) after finance expenses, net | 92 | (262) | (353) | ||||
Share in profit (loss) of equity-accounted investee | |||||||
Segment profit (loss) before income tax | 92 | (262) | (353) | ||||
Income tax | 336 | (330) | 1 | ||||
Segment results - net profit (loss) | (244) | 68 | (354) | ||||
Additional information: | |||||||
Segment assets | 1,502 | 2,026 | 1,667 | ||||
Goodwill | |||||||
Investment in equity-accounted investee | |||||||
Segment liabilities | 1,154 | 1,434 | 6,685 | ||||
Investments in property, plant and equipment and intangible assets | 237 | 227 | 281 | ||||
Others [Member] | |||||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||||||
Revenue from external entities | 220 | 198 | 197 | ||||
Inter-segment revenues | 17 | 20 | 24 | ||||
Total revenue | 237 | 218 | 221 | ||||
Depreciation and amortization expenses | 20 | 16 | 13 | ||||
Segment results - operating income | (20) | (34) | (15) | ||||
Finance income | 5 | 4 | 17 | ||||
Finance expenses | (2) | (2) | |||||
Total financing income (expense), net | 5 | 2 | 15 | ||||
Segment profit (loss) after finance expenses, net | (15) | (32) | |||||
Share in profit (loss) of equity-accounted investee | (4) | (5) | (2) | ||||
Segment profit (loss) before income tax | (19) | (37) | (2) | ||||
Income tax | |||||||
Segment results - net profit (loss) | (19) | (37) | (2) | ||||
Additional information: | |||||||
Segment assets | 174 | 193 | 659 | ||||
Goodwill | 10 | 10 | 10 | ||||
Investment in equity-accounted investee | (6) | 1 | 7 | ||||
Segment liabilities | 64 | 104 | 104 | ||||
Investments in property, plant and equipment and intangible assets | 19 | 13 | 33 | ||||
Adjustments [Member] | |||||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||||||
Revenue from external entities | (440) | ||||||
Inter-segment revenues | (425) | (440) | (445) | ||||
Total revenue | (425) | (440) | (885) | ||||
Depreciation and amortization expenses | 566 | 615 | 520 | ||||
Segment results - operating income | (750) | (648) | (763) | ||||
Finance income | (40) | 19 | 15 | ||||
Finance expenses | (51) | (17) | 329 | ||||
Total financing income (expense), net | (91) | 2 | 344 | ||||
Segment profit (loss) after finance expenses, net | (841) | (646) | (419) | ||||
Share in profit (loss) of equity-accounted investee | (1) | (1) | 14 | ||||
Segment profit (loss) before income tax | (822) | (647) | (405) | ||||
Income tax | (452) | 314 | (250) | ||||
Segment results - net profit (loss) | (390) | (961) | (155) | ||||
Additional information: | |||||||
Segment assets | 2,460 | 3,260 | 4,965 | ||||
Goodwill | 2,921 | 3,050 | 3,050 | ||||
Investment in equity-accounted investee | 11 | 12 | 14 | ||||
Segment liabilities | 1,488 | 2,369 | (1,031) | ||||
Investments in property, plant and equipment and intangible assets | (80) | ||||||
Consolidated [Member] | |||||||
Disclosure of disaggregation of revenue from contracts with customers [line items] | |||||||
Revenue from external entities | 9,789 | 10,071 | 9,969 | ||||
Inter-segment revenues | 13 | 16 | |||||
Total revenue | 9,789 | 10,084 | 9,985 | ||||
Depreciation and amortization expenses | 2,117 | 2,161 | 2,131 | ||||
Segment results - operating income | 1,610 | 1,866 | 2,017 | ||||
Finance income | 69 | 123 | 154 | ||||
Finance expenses | (586) | (1,054) | (689) | ||||
Total financing income (expense), net | (517) | (931) | (535) | ||||
Segment profit (loss) after finance expenses, net | 1,093 | 935 | 1,482 | ||||
Share in profit (loss) of equity-accounted investee | (5) | (5) | 12 | ||||
Segment profit (loss) before income tax | 1,088 | 930 | 1,494 | ||||
Income tax | 347 | 442 | 358 | ||||
Segment results - net profit (loss) | 741 | 488 | 1,136 | ||||
Additional information: | |||||||
Segment assets | 17,692 | 17,061 | 19,031 | ||||
Goodwill | 2,937 | 3,066 | 3,066 | ||||
Investment in equity-accounted investee | 10 | 18 | 25 | ||||
Segment liabilities | 17,553 | 16,844 | 18,731 | ||||
Investments in property, plant and equipment and intangible assets | ₪ 1,607 | ₪ 1,471 | ₪ 1,617 | ||||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Segment Reporting (Details 1)
Segment Reporting (Details 1) $ in Thousands, ₪ in Millions | 12 Months Ended | ||||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | ||
Revenue | |||||||
Revenue from reporting segments | ₪ 9,977 | ₪ 10,306 | ₪ 10,649 | ||||
Revenue from other segments | 237 | 218 | 221 | ||||
Elimination of revenue from inter-segment sales except for revenue from sales to an associate reporting as a segment | (425) | (440) | (445) | ||||
Elimination of revenue for a segment classified as an associate | (440) | ||||||
Consolidated revenue | 9,789 | [1] | $ 2,823,000 | 10,084 | 9,985 | ||
Profit or loss | |||||||
Operating income for reporting segments | 2,380 | 2,548 | 2,795 | ||||
Elimination of expenses from a segment classified as an associate | (59) | ||||||
Financing expenses, net | (517) | (931) | (535) | ||||
Share in the losses (profit) of equity-accounted investees | (5) | [1] | (1,000) | (5) | 12 | ||
Profit (loss) from operations classified in other categories | (20) | (34) | 44 | ||||
Depreciation and amortization of intangible assets resulting from the Bezeq PPA adjustments | (471) | (442) | (545) | ||||
Other adjustments | (260) | (206) | (218) | ||||
Consolidated profit before income tax | 1,088 | [1] | $ 313,000 | 930 | ₪ 1,494 | ||
Assets | |||||||
Assets from reporting segments | 15,069 | 13,619 | |||||
Assets attributable to operations in other categories | 178 | 204 | |||||
Goodwill not attributable to segment assets | 2,921 | 3,050 | |||||
Investment in an equity-accounted investee | $ | $ 11,000 | $ 12 | |||||
Inter-segment assets | 269 | 703 | |||||
Assets resulting from the Bezeq PPA, net | 1,678 | 2,119 | |||||
Assets attributable to a non-reportable segment | 513 | 438 | |||||
Consolidated assets | 20,639 | [1] | 20,145 | 5,953,000 | |||
Liabilities | |||||||
Liabilities from reporting segments | 16,001 | 14,371 | |||||
Liabilities attributable to operations in other categories | 64 | 104 | |||||
Inter-segment liabilities | (1,360) | (730) | |||||
Liabilities resulting from the Bezeq PPA, net | 386 | 491 | |||||
Liabilities attributable to a non-reportable segment | 2,462 | 2,608 | |||||
Consolidated liabilities | ₪ 17,553 | [1] | ₪ 16,844 | $ 5,063,000 | |||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash and Cash Equivalents (Textual) | ||
Maturity term | 90 days | 90 days |
Investments Including Derivat75
Investments Including Derivatives (Details) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | ||
Current investments | |||||
Financial assets held for trading | ₪ 321 | ₪ 352 | [1] | ||
Bank deposits | 275 | 546 | [1] | ||
Monetary funds and others | 9 | [1] | |||
Current investments | ₪ 596 | [2] | $ 172 | ₪ 907 | |
[1] | Reclassified | ||||
[2] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Trade and Other Receivables (De
Trade and Other Receivables (Details) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Trade receivables, net | ||||
Outstanding debts | ₪ 765 | ₪ 785 | ||
Credit cards and checks receivable | 428 | 450 | ||
Unbilled receivables | 235 | 241 | ||
Current maturities of long-term receivables | 472 | 505 | ||
Related parties | 15 | 19 | ||
Total trade receivables | 1,915 | $ 552 | 2,000 | |
Other receivables and current tax assets | ||||
Prepaid expenses | 66 | 145 | ||
Other receivables (mainly from real estate sales) and current tax assets | 204 | 71 | ||
Total other receivables | 270 | 216 | ||
Long-term trade and other receivables | ||||
Trade receivables- open debts | [1] | 387 | 445 | |
Long term receivables (from real estate sales) | 106 | 199 | ||
Long-term trade and other receivables | 493 | 644 | ||
Trade receivables, net | ₪ 2,678 | ₪ 2,860 | ||
[1] | Discounted interest rates for long-term trade payables are based the estimated credit risk of trade payables. The discounted interest rates used by the Bezeq Group in 2017 are 3.4% - 3.5% (in 2016: 3.3% - 3.5%). |
Trade and Other Receivables (77
Trade and Other Receivables (Details 1) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Trade and Other Receivables [Abstract] | ||||
2,019 | ₪ 345 | |||
2,020 | 142 | |||
2021 and thereafter | 6 | |||
Total | ₪ 493 | [1] | $ 142 | ₪ 644 |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Trade and Other Receivables (78
Trade and Other Receivables (Details 2) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Trade and Other Receivables [Abstract] | ||
Balance at January 1 | ₪ 111 | ₪ 173 |
Impaired loss recognized | 20 | 25 |
Lost debts | (39) | (87) |
Balance at December 31 | ₪ 92 | ₪ 111 |
Trade and Other Receivables (79
Trade and Other Receivables (Details 3) - ILS (₪) ₪ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Gross | ||
Current | ₪ 2,153 | ₪ 2,282 |
Past due up to one year | 165 | 183 |
Past due one to two years | 44 | 50 |
Past due more than two years | 32 | 41 |
Total | 2,394 | 2,556 |
Impairment | ||
Current | (6) | (8) |
Past due up to one year | (37) | (46) |
Past due one to two years | (27) | (31) |
Past due more than two years | (22) | (26) |
Total | ₪ (92) | ₪ (111) |
Property, Plant and Equipment80
Property, Plant and Equipment (Details) ₪ in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Cost | |||
Beginning Balance | ₪ 15,751 | ₪ 14,577 | |
Additions | 1,188 | 1,249 | |
Disposals | (88) | (75) | |
Ending Balance | 16,851 | 15,751 | |
Depreciation and impairment losses | |||
Begining Balance | 8,679 | 7,364 | |
Depreciation for the year | 1,232 | 1,337 | |
Disposals | (22) | ||
Ending Balance | 9,911 | 8,679 | |
Carrying amounts | |||
Begining Balance | 7,072 | $ 1,840 | 7,213 |
Ending Balance | 6,940 | $ 2,003 | 7,072 |
Land and buildings [Member] | |||
Cost | |||
Beginning Balance | 1,051 | 1,061 | |
Additions | 34 | 27 | |
Disposals | (81) | (37) | |
Ending Balance | 1,004 | 1,051 | |
Depreciation and impairment losses | |||
Begining Balance | 402 | 350 | |
Depreciation for the year | 53 | 64 | |
Disposals | (12) | ||
Ending Balance | 455 | 402 | |
Carrying amounts | |||
Begining Balance | 649 | 711 | |
Ending Balance | 549 | 649 | |
Switching Transmission, power, Cellular, And satellite equipment [Member] | |||
Cost | |||
Beginning Balance | 5,457 | 5,000 | |
Additions | 408 | 457 | |
Disposals | |||
Ending Balance | 5,865 | 5,457 | |
Depreciation and impairment losses | |||
Begining Balance | 3,472 | 2,951 | |
Depreciation for the year | 481 | 521 | |
Disposals | |||
Ending Balance | 3,953 | 3,472 | |
Carrying amounts | |||
Begining Balance | 1,985 | 2,049 | |
Ending Balance | 1,912 | 1,985 | |
Network equipment [Member] | |||
Cost | |||
Beginning Balance | 5,740 | 5,505 | |
Additions | 228 | 247 | |
Disposals | (12) | ||
Ending Balance | 5,968 | 5,740 | |
Depreciation and impairment losses | |||
Begining Balance | 2,736 | 2,486 | |
Depreciation for the year | 204 | 250 | |
Disposals | |||
Ending Balance | 2,940 | 2,736 | |
Carrying amounts | |||
Begining Balance | 3,004 | 3,019 | |
Ending Balance | 3,028 | 3,004 | |
Multi- channel equipment and infrastructure [Member] | |||
Cost | |||
Beginning Balance | 1,036 | 867 | |
Additions | 165 | 180 | |
Disposals | (1) | (11) | |
Ending Balance | 1,200 | 1,036 | |
Depreciation and impairment losses | |||
Begining Balance | 369 | 143 | |
Depreciation for the year | 222 | 236 | |
Disposals | (10) | ||
Ending Balance | 591 | 369 | |
Carrying amounts | |||
Begining Balance | 667 | 724 | |
Ending Balance | 609 | 667 | |
Subscriber equipment [Member] | |||
Cost | |||
Beginning Balance | 1,464 | 1,203 | |
Additions | 278 | 265 | |
Disposals | (4) | (4) | |
Ending Balance | 1,738 | 1,464 | |
Depreciation and impairment losses | |||
Begining Balance | 953 | 770 | |
Depreciation for the year | 187 | 183 | |
Disposals | |||
Ending Balance | 1,140 | 953 | |
Carrying amounts | |||
Begining Balance | 511 | 433 | |
Ending Balance | 598 | 511 | |
Office equipment, computers and vehicles [Member] | |||
Cost | |||
Beginning Balance | 1,003 | 941 | |
Additions | 75 | 73 | |
Disposals | (2) | (11) | |
Ending Balance | 1,076 | 1,003 | |
Depreciation and impairment losses | |||
Begining Balance | 747 | 664 | |
Depreciation for the year | 85 | 83 | |
Disposals | |||
Ending Balance | 832 | 747 | |
Carrying amounts | |||
Begining Balance | 256 | 277 | |
Ending Balance | ₪ 244 | ₪ 256 |
Property, Plant and Equipment81
Property, Plant and Equipment (Details Textual) ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Property, Plant and Equipment (Textual) | |||||
Derecognized fully depreciated property at a cost | ₪ 1,232 | ₪ 1,337 | |||
Commitments to purchase property, plant and equipment | ₪ 1,131 | [1] | $ 326 | ₪ 1,193 | ₪ 1,324 |
Option extension term | 49 years | 49 years | |||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Intangible Assets (Details)
Intangible Assets (Details) ₪ in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Cost | |||
Beginning Balance | ₪ 6,534 | $ 13,073 | ₪ 12,886 |
Acquisitions or additions from independent development | 227 | 198 | |
Disposals | (48) | (11) | |
Ending Balance | 5,840 | $ 1,684 | 6,534 |
Amortization and impairment losses | |||
Beginning Balance | 6,539 | 5,768 | |
Amortization for the year | 786 | 777 | |
Disposals | (42) | (6) | |
Impairment losses | 129 | ||
Ending Balance | 7,412 | 6,539 | |
Carrying amounts | |||
Beginning Balance | 6,534 | 7,118 | |
Ending Balance | 5,840 | 6,534 | |
Goodwill [Member] | |||
Cost | |||
Beginning Balance | 3,066 | 3,066 | |
Acquisitions or additions from independent development | |||
Disposals | |||
Ending Balance | 3,066 | 3,066 | |
Amortization and impairment losses | |||
Beginning Balance | |||
Amortization for the year | |||
Disposals | |||
Impairment losses | 129 | ||
Ending Balance | 129 | ||
Carrying amounts | |||
Beginning Balance | 3,066 | 3,066 | |
Ending Balance | 2,937 | 3,066 | |
Computer software and licenses [Member] | |||
Cost | |||
Beginning Balance | 1,779 | 1,592 | |
Acquisitions or additions from independent development | 227 | 187 | |
Disposals | |||
Ending Balance | 2,006 | 1,779 | |
Amortization and impairment losses | |||
Beginning Balance | 1,238 | 1,009 | |
Amortization for the year | 218 | 229 | |
Disposals | |||
Ending Balance | 1,456 | 1,238 | |
Carrying amounts | |||
Beginning Balance | 541 | 583 | |
Ending Balance | 550 | 541 | |
Right of use in cellular frequencies [Member] | |||
Cost | |||
Beginning Balance | 480 | 480 | |
Acquisitions or additions from independent development | |||
Disposals | |||
Ending Balance | 480 | 480 | |
Amortization and impairment losses | |||
Beginning Balance | 242 | 205 | |
Amortization for the year | 29 | 37 | |
Disposals | |||
Ending Balance | 271 | 242 | |
Carrying amounts | |||
Beginning Balance | 238 | 275 | |
Ending Balance | 209 | 238 | |
Customer relationships and brand names [Member] | |||
Cost | |||
Beginning Balance | 7,479 | 7,479 | |
Acquisitions or additions from independent development | |||
Disposals | |||
Ending Balance | 7,479 | 7,479 | |
Amortization and impairment losses | |||
Beginning Balance | 4,826 | 4,339 | |
Amortization for the year | 530 | 487 | |
Disposals | |||
Ending Balance | 5,356 | 4,826 | |
Carrying amounts | |||
Beginning Balance | 2,653 | 3,140 | |
Ending Balance | 2,123 | 2,653 | |
Others [Member] | |||
Cost | |||
Beginning Balance | 269 | 269 | |
Acquisitions or additions from independent development | 11 | ||
Disposals | (48) | (11) | |
Ending Balance | 221 | 269 | |
Amortization and impairment losses | |||
Beginning Balance | 233 | 215 | |
Amortization for the year | 9 | 24 | |
Disposals | (42) | (6) | |
Ending Balance | 200 | 233 | |
Carrying amounts | |||
Beginning Balance | 36 | 54 | |
Ending Balance | ₪ 21 | ₪ 36 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | ₪ 2,937 | ₪ 3,066 |
Domestic fixed-line communications [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 1,548 | 1,548 |
Cellular telephone [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 1,163 | 1,205 |
Multi-channel television (DBS) [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 33 | 120 |
International communications and Internet services [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | 181 | 181 |
Others [Member] | ||
Disclosure of detailed information about intangible assets [line items] | ||
Goodwill | ₪ 12 | ₪ 12 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) ₪ in Millions | 12 Months Ended |
Dec. 31, 2017ILS (₪) | |
Domestic fixed-line communications [Member] | |
Intangible Assets (Textual) | |
Nominal capital rate | 7.50% |
Permanent growth rate | 1.00% |
Computer software [Member] | |
Intangible Assets (Textual) | |
Nominal capital rate | 10.00% |
Permanent growth rate | 1.00% |
Multi-channel television (DBS) [Member] | |
Intangible Assets (Textual) | |
Nominal capital rate | 8.50% |
Permanent growth rate | 2.50% |
Expected cash flow, term | Five years |
Recoverable amount | ₪ 1,346 |
Impairment loss | ₪ 87 |
International communications and Internet services [Member] | |
Intangible Assets (Textual) | |
Nominal capital rate | 10.00% |
Permanent growth rate | 2.00% |
Cellular Telephone [Member] | |
Intangible Assets (Textual) | |
Recoverable amount | ₪ 5,561 |
Impairment loss | 42 |
Carrying amount | ₪ 137 |
Deferred Expenses and Non-Cur85
Deferred Expenses and Non-Current Investments (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred Expenses and Non-Current Investments [Abstract] | |||
Deferred expenses | [1] | ₪ 314 | ₪ 337 |
Customer acquisition asset, net | 115 | ||
Deposit used as collateral against hedging transactions | [2] | 67 | 58 |
Bank deposit for loans to Company employees | [3] | 51 | 47 |
Investments in equity-accounted investees | 11 | 18 | |
Other investments | 5 | ||
Total | ₪ 558 | ₪ 465 | |
[1] | Transactions for acquiring an indefeasible right of use (IRU) of seabed cable capacities are accounted for as service transactions. Under the contract, Bezeq International has the right of use for capacities until 2022 with an option for an extension until 2027. The amount of the prepaid expense is amortized on a straight line until 2027. | ||
[2] | A deposit used as collateral for hedging transactions is payable in two increments in December 2019 and December 2020. | ||
[3] | A bank deposit for loans to the Bezeq Group employees without a repayment date. |
Broadcast Rights, Net of Righ86
Broadcast Rights, Net of Rights Exercised (Details) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Broadcast Rights, Net of Rights Exercised [Abstract] | ||||
Cost | ₪ 797 | ₪ 800 | ||
Less rights exercised | (343) | (368) | ||
Total | ₪ 454 | [1] | $ 131 | ₪ 432 |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Broadcast Rights, Net of Righ87
Broadcast Rights, Net of Rights Exercised (Details Textual) ₪ in Millions | 12 Months Ended |
Dec. 31, 2017ILS (₪) | |
Broadcast Rights, Net of Rights Exercised (Textual) | |
Acquisition of broadcast rights amount | ₪ 248 |
Investees (Details)
Investees (Details) | 12 Months Ended | |
Dec. 31, 2017 | ||
B Communications (SP1) Ltd. and B Communications (SP2) Ltd. [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | [1] |
Bezeq - The Israel Telecommunication Corp. Limited [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 26.34% | |
Pelephone Communications Ltd. [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
Bezeq International Ltd. [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
DBS [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
DBS [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
Walla! Communications Ltd. [Member] | Israel [Member] | ||
Disclosure of subsidiaries [line items] | ||
Ownership interest | 100.00% | |
[1] | Held by B Communications (SP1) Ltd. |
Investees (Details 1)
Investees (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | May 25, 2016 | Nov. 19, 2015 | Aug. 31, 2015 | May 21, 2015 |
Disclosure of subsidiaries [line items] | ||||||
Distribution of regular dividend | ₪ 355 | ₪ 38 | ₪ 22 | ₪ 67 | ||
Bezeq [Member] | ||||||
Disclosure of subsidiaries [line items] | ||||||
Distribution of regular dividend | ₪ 1,286 | ₪ 1,441 | ||||
Bezeq [Member] | 2017 (NIS 0.47 per share) [Member] | ||||||
Disclosure of subsidiaries [line items] | ||||||
Distribution of regular dividend | 1,286 | |||||
Bezeq [Member] | 2016 (NIS 0.52 per share) [Member] | ||||||
Disclosure of subsidiaries [line items] | ||||||
Distribution of regular dividend | ₪ 1,441 |
Investees (Details 2)
Investees (Details 2) ₪ in Millions, $ in Millions | Aug. 04, 2009 | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | Dec. 31, 2017USD ($) | |
Disclosure of subsidiaries [line items] | |||||||
Current assets | ₪ 5,335 | [1] | ₪ 3,991 | $ 1,538 | |||
Non-current assets | 15,304 | [1] | 16,154 | 4,415 | |||
Current liabilities | 4,111 | [1] | 4,256 | 1,186 | |||
Non-current liabilities | 13,442 | [1] | 12,588 | 3,877 | |||
Total net assets | 20,639 | [1] | 20,145 | 5,953 | |||
Carrying amount of non-controlling interests | 1,840 | [1] | 2,131 | $ 531 | |||
Revenues | 9,789 | [1] | $ 2,823 | 10,084 | ₪ 9,985 | ||
Profit | 741 | [1] | 213 | 488 | 1,136 | ||
Other comprehensive income | (8) | (2) | (15) | 7 | |||
Total comprehensive income | 733 | [1] | 211 | 473 | 1,143 | ||
Profit (loss) attributable to non-controlling interests | 663 | [1] | 191 | 724 | 926 | ||
Total comprehensive Income (loss) attributable to non-controlling interests | 657 | [1] | 190 | 713 | 931 | ||
Cash flow from operating activities | 3,487 | [1] | 1,005 | 3,462 | 3,652 | ||
Cash flow from investing activities | (1,128) | [1] | (325) | (948) | 310 | ||
Cash flow from financing activities without dividend to non-controlling interests | (735) | [1] | (212) | (2,333) | (4,094) | ||
Dividend paid to non-controlling interests | (948) | [1] | (273) | (1,062) | (1,232) | ||
Total increase (decrease) in cash and cash equivalents | ₪ 1,624 | [1] | $ 468 | ₪ 181 | ₪ (132) | ||
Bezeq [Member] | |||||||
Disclosure of subsidiaries [line items] | |||||||
Rate of ownership interests held by non-controlling interests % | 100.00% | 73.66% | 73.66% | 73.66% | 69.44% | ||
Current assets | ₪ 4,823 | ₪ 3,559 | ₪ 3,771 | ||||
Non-current assets | 12,367 | 13,083 | 14,426 | ||||
Current liabilities | 3,857 | 3,966 | 4,905 | ||||
Non-current liabilities | 10,848 | 10,270 | 10,041 | ||||
Total net assets | 2,485 | 2,406 | 3,251 | ||||
Carrying amount of non-controlling interests | 1,840 | 2,131 | 2,346 | ||||
Revenues | 9,789 | 10,084 | 9,985 | ||||
Profit | 858 | 989 | 1,336 | ||||
Other comprehensive income | (8) | (15) | 7 | ||||
Total comprehensive income | 850 | 974 | 1,343 | ||||
Profit (loss) attributable to non-controlling interests | 663 | 724 | 926 | ||||
Total comprehensive Income (loss) attributable to non-controlling interests | 657 | 713 | 931 | ||||
Cash flow from operating activities | 3,525 | 3,526 | 3,740 | ||||
Cash flow from investing activities | (1,148) | (1,567) | 283 | ||||
Cash flow from financing activities without dividend to non-controlling interests | 104 | (804) | (2,896) | ||||
Dividend paid to non-controlling interests | (948) | (1,062) | (1,232) | ||||
Total increase (decrease) in cash and cash equivalents | ₪ 1,533 | ₪ 93 | ₪ (105) | ||||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Investees (Details Textual)
Investees (Details Textual) ₪ / shares in Units, ₪ in Thousands, $ in Millions | Aug. 04, 2009 | Mar. 28, 2018ILS (₪) | Sep. 30, 2016 | Mar. 25, 2015 | Dec. 31, 2017ILS (₪)₪ / shares | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪)₪ / shares | Dec. 31, 2015ILS (₪) |
Disclosure of subsidiaries [line items] | ||||||||
Dividend paid by Bezeq to non-controlling interests | ₪ (948,000) | $ (273) | ₪ (1,062,000) | ₪ (1,232,000) | ||||
Second contingent consideration liability amount | 14,000 | |||||||
Accrued for excess of advance payment | ₪ 10,000 | |||||||
Interest rate | 4.00% | |||||||
Bezeq [Member] | ||||||||
Disclosure of subsidiaries [line items] | ||||||||
Outstanding shares, percentage | 25.82% | |||||||
Outstanding shares held percentage | 0.52% | |||||||
Dividend paid by Bezeq to non-controlling interests | ₪ 948,000 | ₪ 1,062,000 | ₪ 1,232,000 | |||||
Dividends per share | ₪ / shares | ₪ 0.47 | ₪ 0.52 | ||||||
Share capital, percentage | 5.00% | |||||||
Ownership interest | 100.00% | 73.66% | 73.66% | 73.66% | 69.44% | |||
Payments of contingent consideration | ₪ 94,000 | |||||||
Distribution of cash dividend | ₪ 368 | |||||||
Bezeq [Member] | March 6, 2018 [Member] | ||||||||
Disclosure of subsidiaries [line items] | ||||||||
Ownership interest | 70.00% | 70.00% | ||||||
DBS [Member] | ||||||||
Disclosure of subsidiaries [line items] | ||||||||
Description of DBS share capital | Bezeq held 49.78% of the share capital of DBS and it held options to acquire 8.6% of DBS's shares, which Bezeq was unable to exercise. Eurocom DBS Ltd. held the balance of DBS shares. On March 25, 2015, Bezeq exercised the options for no consideration and on June 24, 2016, Bezeq completed a transaction ("the Acquisition Transaction") for the acquisition of the entire holdings of Eurocom DBS in DBS, which at that date represented 50.22% of the issued share capital of DBS (41.62% fully diluted) and all the shareholder loans provided by Eurocom to DBS. | |||||||
Share capital, percentage | 49.78% | |||||||
Percentage of acquired | 8.60% | |||||||
Ownership interest | 100.00% | 100.00% | ||||||
Cash consideration | ₪ 680,000 | |||||||
Description of Eurocom DBS payments | Bezeq paid Eurocom DBS NIS 188 (plus interest differences of NIS 10) for the First Contingent Consideration, under the Assessment Agreement. | |||||||
Payments of contingent consideration | 57,000 | ₪ 57,000 | ||||||
Equity of DBS amounted to NIS | 348,000 | 592,000 | ||||||
Working capital deficit of DBS | 535,000 | |||||||
Payments of debt estimated value | 43,000 | |||||||
DBS [Member] | First Contingent Consideration [Member] | ||||||||
Disclosure of subsidiaries [line items] | ||||||||
Cash consideration | 200,000 | |||||||
Payments of contingent consideration | 6,000 | |||||||
DBS [Member] | Second Contingent Consideration [Member] | ||||||||
Disclosure of subsidiaries [line items] | ||||||||
Cash consideration | 170,000 | |||||||
Second contingent consideration liability amount | ₪ 14,000 | ₪ 84,000 |
Debentures, Bank Loans and Cr92
Debentures, Bank Loans and Credit (Details) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Current liabilities | ||||
Total current liabilities | ₪ 4,111 | [1] | $ 1,186 | ₪ 4,256 |
Non-current liabilities | ||||
Total non-current liabilities | 13,442 | [1] | 3,877 | 12,588 |
Total liabilities | 17,553 | [1] | $ 5,063 | 16,844 |
Debt Composition [Member] | ||||
Current liabilities | ||||
Current maturities of debentures | 1,166 | 1,212 | ||
Current maturities of bank loans | 692 | 839 | ||
Total current liabilities | 1,858 | 2,051 | ||
Non-current liabilities | ||||
Debentures | 8,036 | 8,362 | ||
Bank loans | 4,401 | 3,084 | ||
Total non-current liabilities | 12,437 | 11,446 | ||
Total liabilities | ₪ 14,295 | ₪ 13,497 | ||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Debentures, Bank Loans and Cr93
Debentures, Bank Loans and Credit (Details 1) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 14,051 | ₪ 13,175 |
Total interest-bearing liabilities, Carrying amount | 14,295 | 13,497 |
Loans from banks and others [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | 5,073 | 3,909 |
Total interest-bearing liabilities, Carrying amount | 5,093 | 3,923 |
Loans from banks and others [Member] | Unlinked - Variable interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | 675 | 978 |
Total interest-bearing liabilities, Carrying amount | ₪ 675 | 978 |
Nominal interest rate % | P-0.33 to P+0.2 | |
Loans from banks and others [Member] | Unlinked - Fixed interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 4,398 | 2,931 |
Total interest-bearing liabilities, Carrying amount | ₪ 4,418 | 2,945 |
Nominal interest rate % | 2.40 to 6.85 | |
Debentures [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 8,978 | 9,266 |
Total interest-bearing liabilities, Carrying amount | 9,202 | 9,574 |
Debentures [Member] | Unlinked - Variable interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | 734 | 734 |
Total interest-bearing liabilities, Carrying amount | ₪ 732 | 734 |
Nominal interest rate % | Makam + 1.4 | |
Debentures [Member] | Unlinked - Fixed interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 4,347 | 4,505 |
Total interest-bearing liabilities, Carrying amount | ₪ 4,379 | 4,531 |
Nominal interest rate % | 3.60 to 6.65 | |
Debentures [Member] | Linked to the Israeli CPI - fixed interest [Member] | ||
Disclosure of financial instruments by type of interest rate [line items] | ||
Total interest-bearing liabilities, Par value | ₪ 3,897 | 4,027 |
Total interest-bearing liabilities, Carrying amount | ₪ 4,091 | ₪ 4,309 |
Nominal interest rate % | 2.20 to 8.40 |
Debentures, Bank Loans and Cr94
Debentures, Bank Loans and Credit (Details 2) ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||||
Balance, Beginning | ₪ 13,581 | ||||
Changes due to cash flows from financing activities | |||||
Consideration from the issue of debentures and receipt of loans, less transaction costs | 2,635 | ||||
Repayment of debentures and loans | (1,813) | ||||
Interest paid | 537 | [1] | $ 155 | ₪ 915 | ₪ 769 |
Net cash generated from (used in) finance activities | 285 | ||||
Financing expenses recognized in the statement of income | 483 | ||||
Balance, Ending | 14,349 | 13,581 | |||
Debentures [Member] | |||||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||||
Balance, Beginning | 9,637 | ||||
Changes due to cash flows from financing activities | |||||
Consideration from the issue of debentures and receipt of loans, less transaction costs | 635 | ||||
Repayment of debentures and loans | (978) | ||||
Interest paid | (379) | ||||
Net cash generated from (used in) finance activities | (722) | ||||
Financing expenses recognized in the statement of income | 320 | ||||
Balance, Ending | 9,235 | 9,637 | |||
Loans [Member] | |||||
Disclosure of reconciliation of liabilities arising from financing activities [line items] | |||||
Balance, Beginning | 3,944 | ||||
Changes due to cash flows from financing activities | |||||
Consideration from the issue of debentures and receipt of loans, less transaction costs | 2,000 | ||||
Repayment of debentures and loans | (835) | ||||
Interest paid | (158) | ||||
Net cash generated from (used in) finance activities | 1,007 | ||||
Financing expenses recognized in the statement of income | 163 | ||||
Balance, Ending | ₪ 5,114 | ₪ 3,944 | |||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Debentures, Bank Loans and Cr95
Debentures, Bank Loans and Credit (Details Textual) ₪ / shares in Units, $ / shares in Units, ₪ in Millions, $ in Millions | Jan. 16, 2017ILS (₪) | Sep. 18, 2016ILS (₪) | May 26, 2016USD ($)$ / shares | Apr. 01, 2016ILS (₪) | Feb. 19, 2014USD ($) | Jan. 20, 2016USD ($) | Dec. 31, 2017ILS (₪)₪ / shares | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪)₪ / shares | Dec. 31, 2015ILS (₪) | Dec. 31, 2017USD ($) | Jun. 30, 2017ILS (₪)₪ / shares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Aug. 10, 2014USD ($) | Sep. 21, 2010ILS (₪) | |
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Purchase notes, par value | $ | $ 18.6 | ||||||||||||||||
Nominal value | $ / shares | $ 1 | ||||||||||||||||
Repurchase of notes | ₪ 33 | ₪ 33 | |||||||||||||||
Equity shareholder without non-controlling interest | ₪ 1,246 | [1] | ₪ 1,170 | $ 359 | |||||||||||||
Equity, Description | (f) shall not apply with respect to the balance of the Company's profits/surpluses which are distributable in accordance with the provisions of the Companies Law, the Company's financial statements as of June 30, 2016 (i.e. a total of NIS 416 which shall be excluded from the distribution restrictions under this subsection (f); for the avoidance of doubt, the restrictions provided in subsections (a) through (e) shall apply with respect to such distribution). | (f) shall not apply with respect to the balance of the Company's profits/surpluses which are distributable in accordance with the provisions of the Companies Law, the Company's financial statements as of June 30, 2016 (i.e. a total of NIS 416 which shall be excluded from the distribution restrictions under this subsection (f); for the avoidance of doubt, the restrictions provided in subsections (a) through (e) shall apply with respect to such distribution). | |||||||||||||||
Amount of debentures and banks loans | ₪ 3,300 | ||||||||||||||||
Loan amount | ₪ 2,000 | ||||||||||||||||
Par value per share | ₪ / shares | ₪ 0.1 | ₪ 0.1 | |||||||||||||||
Jan. 23, 2018 [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debenture balance | ₪ 400 | ||||||||||||||||
Bottom of range [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Range of purchase price | $ / shares | 1 | ||||||||||||||||
Top of range [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Range of purchase price | $ / shares | $ 1.07 | ||||||||||||||||
Board of Directors [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debenture issued | $ | $ 50 | $ 50 | |||||||||||||||
Extension and increase of repurchase program | $ | $ 50 | ||||||||||||||||
Purchase notes, par value | $ | $ 65 | $ 65 | |||||||||||||||
Private Placements [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debentures of private placement | 118 | ||||||||||||||||
Bezeq [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Amount of debentures and banks loans | $ | $ 6,400 | ||||||||||||||||
Series B Debenture [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debenture issued | ₪ 400 | ||||||||||||||||
Description of debentures | The Series B Debentures are denominated in NIS, bear interest at a fixed annual rate of 6.5% which is payable semi-annually on March 31 and September 30 of each of the years 2011 through 2019 (the first interest payment was made on March 31, 2011 and the last interest payment is payable on March 31, 2019). The principal of the Series B Debentures is payable in four equal installments on March 31 of each year starting from 2016. | The Series B Debentures are denominated in NIS, bear interest at a fixed annual rate of 6.5% which is payable semi-annually on March 31 and September 30 of each of the years 2011 through 2019 (the first interest payment was made on March 31, 2011 and the last interest payment is payable on March 31, 2019). The principal of the Series B Debentures is payable in four equal installments on March 31 of each year starting from 2016. | |||||||||||||||
Outstanding par value | ₪ 452 | ||||||||||||||||
Percentage of interest paid | 6.5 | 6.5 | |||||||||||||||
Debenture balance | ₪ 435 | ||||||||||||||||
Repayment of debt | 419 | ||||||||||||||||
Series B Debenture [Member] | January 2012 and August 2013 [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Additional debentures of private placement | 126 | ||||||||||||||||
Debenture par value | ₪ 180 | ||||||||||||||||
Series B Debenture [Member] | Private Placements [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debentures of private placement | ₪ 148 | ||||||||||||||||
Series B Debenture [Member] | Israeli Institutional Investors [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Aggregate consideration amount | ₪ 162 | ||||||||||||||||
Senior Secured Notes [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debenture issued | $ | $ 800 | ||||||||||||||||
Percentage of interest paid | 7.375 | ||||||||||||||||
Debentures due date | 2,021 | ||||||||||||||||
Series C Debenture[Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debenture par value | ₪ 1,900 | ||||||||||||||||
Aggregate consideration amount | ₪ 118 | ||||||||||||||||
Description of debentures | Each of the first four instalments will be equal to 7.5% of the principal amount of the aggregate amount of the Series C Debentures issued and the last instalment will equal to 70% of such principal amount. The annual coupon of the Series C Debentures is 3.6% and is denominated in NIS. The interest on the outstanding principal of the Series C Debentures is payable in semi-annual payments on May 31 and November 30 of each year. | ||||||||||||||||
Outstanding par value | ₪ 2,000 | ||||||||||||||||
Description of transactions with related party | The Company undertook to refrain from creating in favor of any third party a lien of any ranking whatsoever over its direct and/or indirect holdings of 691,361,036 shares of Bezeq, including any of the rights accompanying such shares (hereinafter, the "Undertaken Shares") without the prior consent of the holders of the Series C Debentures by a special resolution (hereinafter, "Negative Lien Undertaking"). | The Company undertook to refrain from creating in favor of any third party a lien of any ranking whatsoever over its direct and/or indirect holdings of 691,361,036 shares of Bezeq, including any of the rights accompanying such shares (hereinafter, the "Undertaken Shares") without the prior consent of the holders of the Series C Debentures by a special resolution (hereinafter, "Negative Lien Undertaking"). | |||||||||||||||
Financial debt amount (principal) | ₪ 400 | ||||||||||||||||
Additional debt amount | ₪ 2,300 | ||||||||||||||||
Percentage of issued and paid-up capital | 25.00% | 25.00% | |||||||||||||||
Equity shareholder without non-controlling interest | ₪ 650 | ||||||||||||||||
Repayment of dividend | 75.00% | 75.00% | |||||||||||||||
Series C Debenture[Member] | Jan. 23, 2018 [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debentures of private placement | ₪ 240 | ||||||||||||||||
Aggregate consideration amount | 249 | ||||||||||||||||
Restriction Shares [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Equity post-distribution | 800 | ||||||||||||||||
Series 9-10 [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Loans from financial institutions | 1,000 | ||||||||||||||||
Telecommunication [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Amount of debentures and banks loans | 6,400 | ||||||||||||||||
Loans from financial institutions | ₪ 1,700 | ||||||||||||||||
DBS Debentures [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Debenture balance | ₪ 20 | ||||||||||||||||
Par value per share | ₪ / shares | ₪ 125 | ₪ 17.40 | |||||||||||||||
Recognized financing expenses | ₪ 13 | ||||||||||||||||
Immaterial amount | ₪ 15 | ||||||||||||||||
DBS Debentures [Member] | Bezeq [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Par value per share | ₪ / shares | ₪ 436.31 | ||||||||||||||||
Series 6 [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Par value per share | ₪ / shares | 125.75 | ||||||||||||||||
Series 10 [Member] | Bezeq [Member] | |||||||||||||||||
Debentures, Bank Loans and Credit (Textual) | |||||||||||||||||
Par value per share | ₪ / shares | ₪ 481.68 | ||||||||||||||||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Trade and Other Payables (Detai
Trade and Other Payables (Details) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |||
Trade and Other Payables [Abstarct] | ||||||
Open accounts | [1] | ₪ 1,041 | ₪ 910 | [2] | ||
Checks payable | 21 | 92 | [2] | |||
Trade payables | 1,062 | 1,002 | [2] | |||
Other payables including derivatives | ||||||
Liabilities to employees and other liabilities for salaries | 355 | 353 | [2] | |||
Institutions | 80 | 98 | [2] | |||
Accrued interest | 54 | 84 | [2] | |||
Deferred income | 90 | 82 | [2] | |||
Derivatives | 54 | 10 | [2] | |||
Other payables | 18 | 11 | [2] | |||
Total other payables including derivatives | 651 | 638 | [2] | |||
Trade and other payables | ₪ 1,719 | [3] | $ 496 | ₪ 1,640 | ||
[1] | Of which, the carrying amount of trade payables that are related parties and interested parties as at December 31, 2017 amounts to NIS 31 (as at December 31, 2016 - NIS 21). | |||||
[2] | Reclassified | |||||
[3] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Provisions (Details)
Provisions (Details) ₪ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | ||
Disclosure of other provisions [line items] | ||||
Balance as at January 1, 2017 | ₪ 127 | |||
Provisions created in the period | 39 | |||
Provisions used in the period | (12) | |||
Provisions cancelled in the period | (20) | |||
Balance as at December 31, 2017 | 134 | |||
Current | 94 | [1] | $ 27 | ₪ 80 |
Non-current | 40 | [1] | $ 12 | ₪ 47 |
Customer claims [Member] | ||||
Disclosure of other provisions [line items] | ||||
Balance as at January 1, 2017 | 44 | |||
Provisions created in the period | 20 | |||
Provisions used in the period | (4) | |||
Provisions cancelled in the period | (1) | |||
Balance as at December 31, 2017 | 59 | |||
Current | 59 | |||
Non-current | ||||
Additional legal claims [Member] | ||||
Disclosure of other provisions [line items] | ||||
Balance as at January 1, 2017 | 30 | |||
Provisions created in the period | 15 | |||
Provisions used in the period | (7) | |||
Provisions cancelled in the period | (10) | |||
Balance as at December 31, 2017 | 28 | |||
Current | 28 | |||
Non-current | ||||
Dismantling and clearing of cellular and other sites [Member] | ||||
Disclosure of other provisions [line items] | ||||
Balance as at January 1, 2017 | 53 | |||
Provisions created in the period | 4 | |||
Provisions used in the period | (1) | |||
Provisions cancelled in the period | (9) | |||
Balance as at December 31, 2017 | 47 | |||
Current | 7 | |||
Non-current | ₪ 40 | |||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Financial Risk Management (Deta
Financial Risk Management (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Financial Risk Management [Abstract] | |
Percentage of investment policy funds | 75.00% |
Financial Instruments (Details)
Financial Instruments (Details) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Non-derivative financial liabilities | ||||
Trade and other payables | ₪ 1,719 | [1] | $ 496 | ₪ 1,640 |
2018 [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 1,596 | |||
Bank loans | 855 | |||
Debentures | 1,381 | |||
Total | 3,832 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 41 | |||
2019 [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Bank loans | 776 | |||
Debentures | 1,367 | |||
Total | 2,143 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 47 | |||
2020-2022 [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Bank loans | 2,388 | |||
Debentures | 3,675 | |||
Total | 6,063 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 112 | |||
2023 and later [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | ||||
Bank loans | 1,794 | |||
Debentures | 4,025 | |||
Total | 5,819 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | ||||
Carrying amount [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 1,596 | |||
Bank loans | 5,093 | |||
Debentures | 9,202 | |||
Total | 15,891 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | 200 | |||
Contractual cash flow [Member] | ||||
Non-derivative financial liabilities | ||||
Trade and other payables | 1,596 | |||
Bank loans | 5,813 | |||
Debentures | 10,448 | |||
Total | 17,857 | |||
Financial liabilities for derivative instruments | ||||
Forward contracts on the Israeli CPI | ₪ 200 | |||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Financial Instruments (Details
Financial Instruments (Details 1) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2016USD ($) | Dec. 31, 2015ILS (₪) | Dec. 31, 2014ILS (₪) | |
Current assets | |||||||
Cash and cash equivalents | ₪ 2,386 | [1] | $ 688 | ₪ 762 | $ 220 | ₪ 581 | ₪ 713 |
Trade receivables | 1,915 | 552 | 2,000 | ||||
Other receivables | 270 | [1] | 78 | 216 | |||
Investments including derivatives | 596 | [1] | 172 | 907 | |||
Total current assets | 5,335 | [1] | 1,538 | 3,991 | |||
Non-current assets | |||||||
Trade and other receivables | 493 | [1] | 142 | 644 | |||
Total non-current assets | 15,304 | [1] | 4,415 | 16,154 | |||
Total assets | 20,639 | [1] | 5,953 | 20,145 | |||
Current liabilities | |||||||
Total current liabilities | 4,111 | [1] | 1,186 | 4,256 | |||
Non-current liabilities | |||||||
Total non-current liabilities | 13,442 | [1] | 3,877 | 12,588 | |||
Total liabilities | 17,553 | [1] | $ 5,063 | 16,844 | |||
Unlinked [Member] | |||||||
Current assets | |||||||
Cash and cash equivalents | 2,322 | 733 | |||||
Trade receivables | 1,862 | 1,954 | |||||
Other receivables | 44 | 20 | |||||
Related party | 43 | ||||||
Investments including derivatives | 445 | 719 | |||||
Total current assets | 4,716 | 3,426 | |||||
Non-current assets | |||||||
Trade and other receivables | 372 | ||||||
Investments including derivatives | 51 | 429 | |||||
Total non-current assets | 423 | 429 | |||||
Total assets | 5,139 | 3,855 | |||||
Current liabilities | |||||||
Debentures, loans and borrowings | 1,213 | 1,668 | |||||
Trade and other payables | 1,344 | 1,340 | |||||
Total current liabilities | 2,557 | 3,008 | |||||
Non-current liabilities | |||||||
Debentures and bank loans | 9,104 | 7,667 | |||||
Other liabilities including derivatives | |||||||
Total non-current liabilities | 9,104 | 7,667 | |||||
Total liabilities | 11,661 | 10,675 | |||||
Total exposure in the statement of financial position | (6,522) | (6,820) | |||||
Forward transactions | (2,308) | (2,266) | |||||
Israeli CPI-linked [Member] | |||||||
Current assets | |||||||
Cash and cash equivalents | |||||||
Trade receivables | 36 | 18 | |||||
Other receivables | 154 | 48 | |||||
Related party | |||||||
Investments including derivatives | 32 | 34 | |||||
Total current assets | 222 | 100 | |||||
Non-current assets | |||||||
Trade and other receivables | 121 | ||||||
Investments including derivatives | 215 | ||||||
Total non-current assets | 121 | 215 | |||||
Total assets | 343 | 315 | |||||
Current liabilities | |||||||
Debentures, loans and borrowings | 645 | 383 | |||||
Trade and other payables | 56 | 56 | |||||
Total current liabilities | 701 | 439 | |||||
Non-current liabilities | |||||||
Debentures and bank loans | 3,333 | 3,779 | |||||
Other liabilities including derivatives | 159 | 176 | |||||
Total non-current liabilities | 3,492 | 3,955 | |||||
Total liabilities | 4,193 | 4,394 | |||||
Total exposure in the statement of financial position | (3,850) | (4,079) | |||||
Forward transactions | 1,994 | 1,994 | |||||
Foreign currency linked (mainly US$) [Member] | |||||||
Current assets | |||||||
Cash and cash equivalents | 64 | 29 | |||||
Trade receivables | 17 | 28 | |||||
Other receivables | |||||||
Related party | |||||||
Investments including derivatives | 119 | 154 | |||||
Total current assets | 200 | 211 | |||||
Non-current assets | |||||||
Trade and other receivables | |||||||
Investments including derivatives | 67 | ||||||
Total non-current assets | 67 | ||||||
Total assets | 267 | 211 | |||||
Current liabilities | |||||||
Debentures, loans and borrowings | |||||||
Trade and other payables | 237 | 203 | |||||
Total current liabilities | 237 | 203 | |||||
Non-current liabilities | |||||||
Debentures and bank loans | |||||||
Other liabilities including derivatives | 10 | 9 | |||||
Total non-current liabilities | 10 | 9 | |||||
Total liabilities | 247 | 212 | |||||
Total exposure in the statement of financial position | 20 | (1) | |||||
Forward transactions | ₪ 314 | ₪ 272 | |||||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Financial Instruments (Detai101
Financial Instruments (Details 2) - ₪ / shares | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
1 US dollar [Member] | |||
Disclosure of risk management strategy related to hedge accounting [line items] | |||
Rate of change | (9.80%) | (1.50%) | 0.30% |
Reporting date spot rate | ₪ 3.467 | ₪ 3.845 | ₪ 3.902 |
1 euro [Member] | |||
Disclosure of risk management strategy related to hedge accounting [line items] | |||
Rate of change | 2.70% | (4.80%) | (10.10%) |
Reporting date spot rate | ₪ 4.153 | ₪ 4.044 | ₪ 4.247 |
Israeli CPI in Points [Member] | |||
Disclosure of risk management strategy related to hedge accounting [line items] | |||
Rate of change | 0.40% | (0.30%) | (0.90%) |
Reporting date spot rate | ₪ 140 | ₪ 139.59 | ₪ 140.01 |
Financial Instruments (Detai102
Financial Instruments (Details 3) - ILS (₪) ₪ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Disclosure of financial assets [line items] | ||
Fixed rate instruments | ₪ (10,902) | ₪ (9,597) |
Variable rate instruments | (1,377) | (1,681) |
Financial liabilities [Member] | ||
Disclosure of financial assets [line items] | ||
Fixed rate instruments | (12,888) | (11,786) |
Variable rate instruments | (1,407) | (1,712) |
Financial assets [Member] | ||
Disclosure of financial assets [line items] | ||
Fixed rate instruments | 1,986 | 2,189 |
Variable rate instruments | ₪ 30 | ₪ 31 |
Financial Instruments (Detai103
Financial Instruments (Details 4) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2017ILS (₪)Transactions | Dec. 31, 2016ILS (₪)Transactions | |
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | ||
Value | ₪ 1,994 | ₪ 1,994 |
Fair Value | (200) | (176) |
Capital reserve | ₪ 48 | ₪ 54 |
Debentures (Series 6) [Member] | ||
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items] | ||
Repayment date | December 2018 - December 2022 | December 2018 - December 2022 |
Number of transactions | Transactions | 9 | 9 |
Value | ₪ 1,994 | ₪ 1,994 |
Fair Value | (200) | (176) |
Capital reserve | ₪ 48 | ₪ 54 |
Financial Instruments (Detai104
Financial Instruments (Details 5) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 12,938 | ₪ 11,819 |
Fair value | 13,696 | 12,310 |
Unlinked [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | 4,436 | 2,947 |
Fair value | ₪ 4,693 | 3,089 |
Fair value weighted average discount rate | 2.63% | |
Issued to the public (CPI linked) [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 4,088 | 3,473 |
Fair value | ₪ 4,338 | 3,656 |
Fair value weighted average discount rate | 0.52% | |
Issued to the public (Unlinked) [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 4,097 | 4,166 |
Fair value | ₪ 4,322 | 4,246 |
Fair value weighted average discount rate | 2.35% | |
Issued to institutional investors (CPI linked) [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 15 | 830 |
Fair value | ₪ 17 | 879 |
Fair value weighted average discount rate | 0.73% | |
Issued to institutional investors (unlinked) [Member] | ||
Secured Loans From Banks And Others [Abstract] | ||
Carrying amount | ₪ 302 | 403 |
Fair value | ₪ 326 | ₪ 440 |
Fair value weighted average discount rate | 1.62% |
Financial Instruments (Detai105
Financial Instruments (Details 6) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Financial assets held for trading | ||
Monetary funds and ETFs | ₪ 14 | ₪ 31 |
Marketable securities | 307 | 321 |
Derivatives not used in hedging | ||
Forward contracts | (212) | (170) |
Contingent consideration for a business combination | 43 | (84) |
Total | 152 | 98 |
Level 1 [member] | ||
Financial assets held for trading | ||
Monetary funds and ETFs | 14 | 31 |
Marketable securities | 307 | 321 |
Derivatives not used in hedging | ||
Forward contracts | ||
Contingent consideration for a business combination | ||
Total | 321 | 352 |
Level 2 [member] | ||
Financial assets held for trading | ||
Monetary funds and ETFs | ||
Marketable securities | ||
Derivatives not used in hedging | ||
Forward contracts | (212) | (170) |
Contingent consideration for a business combination | ||
Total | (212) | (170) |
Level 3 [member] | ||
Financial assets held for trading | ||
Monetary funds and ETFs | ||
Marketable securities | ||
Derivatives not used in hedging | ||
Forward contracts | ||
Contingent consideration for a business combination | 43 | (84) |
Total | ₪ 43 | ₪ (84) |
Financial Instruments (Detai106
Financial Instruments (Details 7) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2016USD ($) |
Additional consideration for the business results of DBS (second additional consideration) [Member] | ||||
Business Combination Contingent Consideration Laibility [Line Items] | ||||
Fair value | ₪ 43 | $ 170 | ₪ 84 | $ 170 |
Financial Instruments (Detai107
Financial Instruments (Details 8) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | ||
Disclosure of detailed information about financial instruments [line items] | |||||
Trade and other receivables presented in the statement of financial position | ₪ 1,915 | $ 552 | ₪ 2,000 | ||
Trade payables, gross | 1,062 | 1,002 | [1] | ||
Trade and other payables presented in the statement of financial position | 1,719 | [2] | $ 496 | 1,640 | |
Supply and receive communication services [Member] | |||||
Disclosure of detailed information about financial instruments [line items] | |||||
Trade and other receivables, gross | 115 | 119 | |||
Offset amounts | (99) | (97) | |||
Trade and other receivables presented in the statement of financial position | 16 | 22 | |||
Trade payables, gross | 143 | 147 | |||
Offset amounts | (99) | (97) | |||
Trade and other payables presented in the statement of financial position | ₪ 44 | ₪ 50 | |||
[1] | Reclassified | ||||
[2] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Financial Instruments (Detai108
Financial Instruments (Details Textual) - ILS (₪) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Financial Instruments [Abstract] | ||
Interest rate, description | An increase of 100 basis points in the interest rates at the reporting date would have decreased shareholders' equity and profit or loss by NIS 10 (2016: NIS 13). | |
Net fair value of these transactions is a liability | ₪ 12 | ₪ 6 |
Description of functional currency risks | A change of 1% of the CPI as at December 31, 2016 and 2017 would have immaterial effect on total equity and net income. This analysis assumes that all other variables, in particular interest rates, remain constant. In addition, A change of 10% in the US$ exchange rate as at December 31, 2016 and 2017 would have immaterial effect on total equity and net income. |
Employee Benefits (Details)
Employee Benefits (Details) ₪ in Millions, $ in Millions | Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Current liabilities for: | ||||
Holiday | ₪ 115 | ₪ 104 | ||
Sick leave | 142 | 122 | ||
Early retirement | 16 | 82 | ||
Current maturities of pensioner benefits | 7 | 7 | ||
Total current liability for employee benefits | 280 | [1] | $ 81 | 315 |
Non-current liabilities for: | ||||
Liability for pensioner benefits | 120 | 118 | ||
Severance compensation (net) (see composition below) | 57 | 51 | ||
Early notice | 23 | 19 | ||
Pension | 72 | 70 | ||
Total non-current liabilities for employee Benefits | 272 | [1] | $ 78 | 258 |
Total liabilities for employee benefits | 552 | 573 | ||
Composition of liabilities for severance pay: | ||||
Liabilities for severance pay | 224 | 212 | ||
Fair value of plan assets | (167) | (161) | ||
Total composition of liabilities for severance pay | ₪ 57 | ₪ 51 | ||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Employee Benefits (Details 1)
Employee Benefits (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Employee Benefits [Abstract] | |||
Amount recognized as an expense for a defined contribution plan | ₪ 228 | ₪ 209 | ₪ 199 |
Employee Benefits (Details 2)
Employee Benefits (Details 2) - Average capitalization rate [Member] | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of defined benefit plans [line items] | ||
Severance compensation | 3.30% | 4.20% |
Retirement benefits | 3.60% | 4.30% |
Employee Benefits (Details 3)
Employee Benefits (Details 3) | 12 Months Ended |
Dec. 31, 2017 | |
Bezeq permanent employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | Average update of 7% for young employees, decreasing gradually to 2.7% at the age of 66. |
New Bezeq permanent employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | Average update of 3.2% for young employees, decreasing gradually to 1.4% at the age of 66. |
Bezeq non-permanent employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | 6.5% for young employees decreasing gradually to 0%, 3.5% for senior employees |
Pelephone employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | An increase of 3.1%, as set out in the collective agreement at Pelephone |
Bezeq International employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | An increase of 3.0%, as set out in the collective agreement at Bezeq International |
DBS employees [Member] | |
Schedule of Employees [Line Items] | |
Actuarial assumption of expected rate of salary | Rate of increase of 3.5% |
Employee Benefits (Details 4)
Employee Benefits (Details 4) | Dec. 31, 2017 | Dec. 31, 2016 |
Employee Benefits [Abstract] | ||
Discount rate - addition of 0.5% | (29.00%) | (28.00%) |
Rate of future salary increases - addition of 0.5% | 40.00% | 36.00% |
Rate of employees leaving - addition of 5.0% | (17.00%) | (10.00%) |
Employee Benefits (Details 5)
Employee Benefits (Details 5) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Severance Compensation [Member] | ||
Disclosure of defined benefit plans [line items] | ||
Average weighted useful life of liabilities | 10 years 4 months 24 days | 10 years |
Retirement Benefits [Member] | ||
Disclosure of defined benefit plans [line items] | ||
Average weighted useful life of liabilities | 14 years 8 months 12 days | 14 years 1 month 6 days |
Employee Benefits (Details Text
Employee Benefits (Details Textual) | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefits (Textual) | |
Description of retirement benefit plan termination terms | Terminate the employment of 163 permanent employees in each of the years 2015-2021 (Bezeq's right is cumulative for the period). |
Description of retirement benefit plan | In 2017, expenses of the early retirement plan amounted to NIS 23. |
Actuarial assumptions discount rate | 0.50% |
Actuarial assumptions future salary increase | 0.50% |
Actuarial assumptions employees leaving rate | 5.00% |
Expected individual wage growth assumed | 2019-2026 |
Income Tax (Details)
Income Tax (Details) ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Current tax expenses | |||||
Expenses for the current year | ₪ 438 | ₪ 437 | ₪ 567 | ||
Adjustments for prior years | 54 | (28) | |||
Total current tax expenses | 492 | 409 | 567 | ||
Deferred tax expenses (income) | |||||
Adjustments for prior years according to an assessment agreement | (54) | ||||
Reversal of temporary differences according to an assessment agreement | 21 | ||||
Creation and reversal of temporary differences | (112) | (33) | (209) | ||
Total deferred tax expenses | (145) | (33) | (209) | ||
Income tax expense | ₪ 347 | [1] | $ 100 | ₪ 442 | ₪ 358 |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Income Tax (Details 1)
Income Tax (Details 1) ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Income Tax [Abstract] | |||||
Income before income tax | ₪ 1,088 | ₪ 930 | ₪ 1,494 | ||
Statutory tax rate | 24.00% | 24.00% | 25.00% | 26.50% | |
Income tax at the statutory tax rate | ₪ 260 | ₪ 232 | ₪ 395 | ||
Changes in tax rate | 67 | ||||
Expenses not recognized for tax purposes | 48 | 46 | (13) | ||
Adjusted tax calculated for the Company's share in equity- accounted investees | 1 | (3) | |||
Recognition of deferred tax assets which were not recognized on prior periods | (101) | ||||
Current year tax losses and benefits for which deferred taxes were not created | 39 | 124 | 80 | ||
Taxes in respect of previous years | (28) | ||||
Income tax expenses | ₪ 347 | [1] | $ 100 | ₪ 442 | ₪ 358 |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Income Tax (Details 2)
Income Tax (Details 2) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Disclosure of detailed information about intangible assets [line items] | |||
Balance of deferred tax asset (liability) | ₪ 414 | ₪ 550 | |
Recognized in profit or loss | 145 | (34) | |
Recognized in equity | 1 | (102) | |
Balance of deferred tax assets (liability) | 560 | 414 | |
Property, plant equipment, and intangible assets [Member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Balance of deferred tax asset (liability) | (348) | (422) | |
Recognized in profit or loss | 25 | 74 | |
Recognized in equity | |||
Balance of deferred tax assets (liability) | (323) | (348) | |
Employeebenefits plan [Member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Balance of deferred tax asset (liability) | 178 | 208 | |
Recognized in profit or loss | (13) | (26) | |
Recognized in equity | (4) | ||
Balance of deferred tax assets (liability) | 165 | 178 | |
Carry-forward losses for DBS [Member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Balance of deferred tax asset (liability) | 1,188 | 1,419 | |
Recognized in profit or loss | (22) | (231) | |
Recognized in equity | |||
Balance of deferred tax assets (liability) | 1,166 | 1,188 | |
Others [Member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Balance of deferred tax asset (liability) | [1] | 11 | 184 |
Recognized in profit or loss | [1] | 28 | (75) |
Recognized in equity | [1] | 1 | (98) |
Balance of deferred tax assets (liability) | [1] | 40 | 11 |
Brand Names and Customers relationship [Member] | |||
Disclosure of detailed information about intangible assets [line items] | |||
Balance of deferred tax asset (liability) | (615) | (839) | |
Recognized in profit or loss | 127 | 224 | |
Recognized in equity | |||
Balance of deferred tax assets (liability) | ₪ (488) | ₪ (615) | |
[1] | Reclassified |
Income Tax (Details Textual)
Income Tax (Details Textual) - ILS (₪) ₪ in Millions | Jan. 04, 2016 | May 31, 2017 | Apr. 27, 2017 | Jan. 22, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax [Line Items] | |||||||
Corporate tax rate | 24.00% | 25.00% | 26.50% | ||||
Rate of tax, description | The Knesset plenum passed the Law for the Amendment of the Income Tax Ordinance (Amendment 216), 2016, which includes a reduction in the corporate tax rate from 26.5% to 25% as from January 1, 2016. On December 22, 2016, the Knesset plenum passed the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in 2017 and 2018) – 2016, by which, among other things, the corporate tax rate was reduced from 25% to 24% in 2017 and to 23% as from January 1, 2018 and thereafter. | ||||||
Tax loss carry-forward | ₪ 72 | ||||||
Capital loss carry forwards | ₪ 1,166 | 42 | |||||
Deferred tax assets | 1,019 | ₪ 1,007 | |||||
Deferred tax liabilities | ₪ 459 | ₪ 593 | |||||
Final tax assessment, description | The Company entered into a tax assessment agreement with the Israeli Tax Authority (the "Agreement") with respect to final tax assessments for the tax years 2010-2014. The Agreement covers all pending tax assessments and other tax matters with respect to such years. Pursuant to the Agreement, the Company will pay the Israeli Tax Authority NIS 25, including interest and CPI linkage differences. | The Company entered into a tax assessment agreement with the Israeli Tax Authority (the “Agreement”), with respect to final tax assessments with respect to: (i) tax years 2007-2009; and (ii) the sale of its legacy communications business that was completed on January 31, 2010. According to the Agreement, the Company paid the Israeli Tax Authority NIS 148, including interest and CPI linkage differences, in 24 monthly instalments starting in February 2015. | The net tax liability that was added as a result of the assessment agreement is NIS 70, for which a full provision is included in these financial statements. | ||||
Tax losses on DBS | ₪ 5,000 | ||||||
Additional losses | ₪ 19 | ||||||
Tax liability arising | ₪ 25 | ₪ 148 | |||||
Description tax authority granted approval | The Tax Authority granted approval for tax purposes for the merger of DBS with and into Bezeq, in accordance with Section 103(B) of the Income Tax Ordinance, whereby subsequent to the merger, the losses of DBS as at the merger date may be offset against the profits of the absorbing company, provided that in each tax year, it will not be permitted to offset an amount exceeding 12.5% (spread over eight years) of the total losses of the transferring company and the absorbing company, or 50% of the taxable income of the absorbing company in that tax year prior to offsetting the loss from previous years, whichever is lower. | ||||||
Recognized a deferred tax asset due to the basis difference attributed to its investment in Bezeq in the amount | ₪ 101 |
Contingent Liabilities (Details
Contingent Liabilities (Details) ₪ in Millions | 12 Months Ended | |
Dec. 31, 2017ILS (₪) | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | ₪ 87 | |
Amount of additional exposure | 6,430 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 3,961 | |
Customer claims [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | 59 | |
Amount of additional exposure | 4,183 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 2,148 | [1] |
Claims by enterprises and companies [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | 11 | |
Amount of additional exposure | 2,005 | [2] |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 1,808 | |
Claims of employees and former employees of Group companies [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | 1 | |
Amount of additional exposure | 4 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 1 | |
Claims by the State and authorities [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | 16 | |
Amount of additional exposure | 24 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | ||
Supplier and communication provider claims [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | ||
Amount of additional exposure | 148 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | 4 | |
Claims for punitive damages, real estate and infrastructure [Member] | ||
Disclosure of contingent liabilities in business combination [line items] | ||
Balance of provisions | ||
Amount of additional exposure | 66 | |
Amount of exposure for claims for which the amount of exposure cannot be assessed | ||
[1] | Including exposure in the amount of NIS 1.11 billion for a motion for certification as a class action against Bezeq, as well as against the subsidiary Walla, Yad 2 and an advertising company owned by Walla, which addresses with Bezeq's 144B service. Subsequent to the date of the financial statements, the motion was dismissed. | |
[2] | Including exposure of NIS 2 billion for a motion for certification as a class action filed by a shareholder against Bezeq and officers in Bezeq, referring to alleged reporting omissions by Bezeq regarding the wholesale market and the reduction of interconnect fees, which the plaintiff estimates at NIS 1.1 billion or NIS 2 billion (depending on the method used to calculate the damage). |
Contingent Liabilities (Deta121
Contingent Liabilities (Details Textual) - 12 months ended Dec. 31, 2017 ₪ in Thousands, $ in Billions | ILS (₪) | USD ($) |
Disclosure of detailed information about business combination [line items] | ||
Claims | ₪ 571 | |
Legally distributed value | 113,000 | |
Bezeq Group Companies [Member] | ||
Disclosure of detailed information about business combination [line items] | ||
Claims | 6,400,000 | |
Additional exposure of claims | 4,000,000 | |
Payment of damages | 2,000,000 | |
Dividend paid with interest | ₪ 2,000,000 | |
Exposure of claims | $ | $ 1.2 | |
Description of plaintiff estimates | Plaintiff estimates at NIS 1.1 billion or NIS 2 billion | |
Bezeq Group Companies [Member] | Claims by enterprises and companies [Member] | ||
Disclosure of detailed information about business combination [line items] | ||
Payment of damages | ₪ 1,110,000 | |
Bezeq and officers of Bezeq [Member] | ||
Disclosure of detailed information about business combination [line items] | ||
Paid taxes | ₪ 462,000 |
Agreements (Details)
Agreements (Details) ₪ in Millions | Dec. 31, 2017ILS (₪) |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | ₪ 1,020 |
Real estate [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 810 |
Vehicles [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 210 |
2018 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 310 |
2018 [Member] | Real estate [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 222 |
2018 [Member] | Vehicles [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 88 |
2019 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 287 |
2019 [Member] | Real estate [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 213 |
2019 [Member] | Vehicles [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 74 |
2020 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 213 |
2020 [Member] | Real estate [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 165 |
2020 [Member] | Vehicles [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 48 |
2021 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 86 |
2021 [Member] | Real estate [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 86 |
2021 [Member] | Vehicles [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | |
2022 [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 50 |
2022 [Member] | Real estate [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 50 |
2022 [Member] | Vehicles [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | |
2023 onwards [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 74 |
2023 onwards [Member] | Real estate [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments | 74 |
2023 onwards [Member] | Vehicles [Member] | |
Disclosure of amounts to be recovered or settled after twelve months for classes of assets and liabilities that contain amounts to be recovered or settled both no more and more than twelve months after reporting date [line items] | |
Future contractual rental payments |
Agreements (Details Textual)
Agreements (Details Textual) $ in Thousands, ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | |
Agreements (Textuals) | |||
Estimated average nominal cost | $ | $ 263,000 | ||
Average annual cost | $ | 21,900 | ||
Business obligation to acquire terminal equipment | ₪ | ₪ 147 | ₪ 71 | |
Business acquisition consumption expense | ₪ | 342 | ||
Monthly discount | $ | $ 80 | ||
January 8, 2018 [Member] | |||
Agreements (Textuals) | |||
Estimated fair value of land cost | ₪ | ₪ 497 | ||
Business agreement, description | The Board of Directors of Bezeq approved Bezeq's agreement for the sale of a real estate asset in the Sakia complex for a total consideration of NIS 497 (plus VAT), which may increase up to NIS 550, if the purchaser, in accordance with its right under the agreement, postpones the date of payment of up to two thirds of the consideration until December 31, 2022. | The Board of Directors of Bezeq approved Bezeq's agreement for the sale of a real estate asset in the Sakia complex for a total consideration of NIS 497 (plus VAT), which may increase up to NIS 550, if the purchaser, in accordance with its right under the agreement, postpones the date of payment of up to two thirds of the consideration until December 31, 2022. |
Securities, Pledges and Guar124
Securities, Pledges and Guarantees (Details) ₪ in Millions | 12 Months Ended |
Dec. 31, 2017ILS (₪) | |
Securities, Pledges and Guarantees [Abstract] | |
Guarantees Amount | ₪ 152 |
Bank guarantees | ₪ 61 |
Description of exchange rate | The Ministry of Communications to secure the terms of their licenses (of which an amount of NIS 37 is linked to the CPI and NIS 35 to the USD exchange rate). |
Capital and Capital Reserves (D
Capital and Capital Reserves (Details) - Ordinary shares [member] - shares | Dec. 31, 2017 | Dec. 31, 2016 |
Earnings per share [line items] | ||
Number of shares, Authorized | 50,000,000 | |
Number of shares, Registered and paid up | 29,889,045 | 29,889,045 |
Capital and Capital Reserves126
Capital and Capital Reserves (Details Textual) - ILS (₪) ₪ / shares in Units, ₪ in Millions | 1 Months Ended | |||||
May 25, 2016 | Nov. 19, 2015 | Aug. 31, 2015 | May 21, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Capital and Capital Reserves [Abstract] | ||||||
Ordinary shares par value | ₪ 0.1 | ₪ 0.1 | ||||
Dividend declared | ₪ 11.88 | ₪ 1.27 | ₪ 0.73 | ₪ 2.24 | ||
Aggregate dividends | ₪ 355 | ₪ 38 | ₪ 22 | ₪ 67 | ||
Dividend payment date | Jun. 29, 2016 | Dec. 10, 2015 | Sep. 29, 2015 | Jun. 16, 2015 |
Revenues (Details)
Revenues (Details) ₪ in Millions, $ in Millions | 12 Months Ended | ||||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||||
Disclosure of detailed information about revenues [line items] | |||||||
Domestic fixed line communications | ₪ 3,953 | ₪ 4,064 | ₪ 4,125 | ||||
Cellular | 2,500 | 2,588 | 2,832 | ||||
International communications, internet services and NEP | 1,467 | 1,480 | 1,487 | ||||
Multi-channel television | 1,650 | 1,745 | 1,333 | ||||
Others | 219 | 207 | 208 | ||||
Total revenues | 9,789 | [1] | $ 2,823 | 10,084 | 9,985 | ||
Fixed line telephony [Member] | |||||||
Disclosure of detailed information about revenues [line items] | |||||||
Domestic fixed line communications | 1,255 | 1,352 | [2] | 1,456 | [2] | ||
Internet - infrastructure [Member] | |||||||
Disclosure of detailed information about revenues [line items] | |||||||
Domestic fixed line communications | 1,488 | 1,461 | [2] | 1,438 | [2] | ||
Transmission and data communication [Member] | |||||||
Disclosure of detailed information about revenues [line items] | |||||||
Domestic fixed line communications | 775 | 835 | [2] | 835 | [2] | ||
Cellular services and terminal equipment [Member] | |||||||
Disclosure of detailed information about revenues [line items] | |||||||
Cellular | 1,743 | 1,777 | 1,948 | ||||
Sale of terminal equipment [Member] | |||||||
Disclosure of detailed information about revenues [line items] | |||||||
Cellular | 757 | 811 | 884 | ||||
Cloud and digital services [Member] | |||||||
Disclosure of detailed information about revenues [line items] | |||||||
Domestic fixed line communications | 230 | 203 | [2] | 184 | [2] | ||
Other services [Member] | |||||||
Disclosure of detailed information about revenues [line items] | |||||||
Domestic fixed line communications | ₪ 205 | ₪ 213 | ₪ 212 | ||||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. | ||||||
[2] | Cloud and digital services were reclassified and presented separately to reflect the change in the mix of revenues in fixed-line domestic communications. |
Salaries (Details)
Salaries (Details) ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Salaries and incidentals: | |||||
Operating | ₪ 1,931 | ₪ 1,922 | ₪ 1,871 | ||
General and administrative | 647 | 622 | 586 | ||
Total salaries and incidentals | 2,578 | 2,544 | 2,457 | ||
Less - salaries recognized in investments in property, plant and equipment and in intangible assets | 571 | 529 | 499 | ||
Salaries | ₪ 2,007 | [1] | $ 579 | ₪ 2,015 | ₪ 1,958 |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
General and Operating Expens129
General and Operating Expenses (Details) ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
General and operating expenses [line items] | |||||
General and operating expenses | ₪ 3,906 | [1] | $ 1,127 | ₪ 4,021 | ₪ 3,876 |
Terminal equipment and materials [Member] | |||||
General and operating expenses [line items] | |||||
General and operating expenses | 855 | 831 | 880 | ||
Interconnectivity and payments to domestic and international operators [Member] | |||||
General and operating expenses [line items] | |||||
General and operating expenses | 805 | 825 | 909 | ||
Maintenance of buildings and sites [Member] | |||||
General and operating expenses [line items] | |||||
General and operating expenses | 584 | 605 | 616 | ||
Marketing and general expenses [Member] | |||||
General and operating expenses [line items] | |||||
General and operating expenses | 610 | 706 | 647 | ||
Services and maintenance by sub-contractors [Member] | |||||
General and operating expenses [line items] | |||||
General and operating expenses | 260 | 261 | 199 | ||
Vehicle maintenance expenses [Member] | |||||
General and operating expenses [line items] | |||||
General and operating expenses | 156 | 164 | 167 | ||
Content services expenses [Member] | |||||
General and operating expenses [line items] | |||||
General and operating expenses | ₪ 636 | ₪ 629 | ₪ 458 | ||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
General and Operating Expens130
General and Operating Expenses (Details Textual) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
General and Operating Expenses [Abstract] | |||
Expenses for investments in property, plant and equipment and intangible assets | ₪ 65 | ₪ 64 | ₪ 63 |
Other Operating Expenses (In131
Other Operating Expenses (Income), Net (Details) ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Other Operating Expenses (Income), Net [Abstract] | |||||
Loss from impairment of goodwill | ₪ 129 | ||||
Provision for severance pay in early retirement | 23 | 96 | 117 | ||
Capital gain from sale of property plant and equipment | (27) | (86) | (136) | ||
Others | 24 | 11 | 22 | ||
Other operating expenses (income), net | ₪ 149 | [1] | $ 43 | ₪ 21 | ₪ 3 |
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Financing Expenses (Income) (De
Financing Expenses (Income) (Details) ₪ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017ILS (₪) | Dec. 31, 2017USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015ILS (₪) | ||
Financing Expenses (Income) [Abstract] | |||||
Income on bank deposits, investments and others | ₪ (2) | ₪ (13) | ₪ (14) | ||
Change in fair value of financial assets measured at fair value through profit or loss | (7) | (29) | (27) | ||
Income in respect of credit in sales, net of discount | (35) | (42) | (52) | ||
Linkage and exchange rate differences, net | (16) | ||||
Interest and linkage differences from loans to an associate | (21) | ||||
Other finance income | (25) | (23) | (40) | ||
Total financing income | (69) | [1] | $ (20) | (123) | (154) |
Interest expenses on financial liabilities | 445 | 871 | 634 | ||
Linkage and exchange rate differences, net | 48 | 38 | 61 | ||
Change in contingent consideration in a business combination | (14) | 55 | |||
Change in fair value of financial assets measured at fair value through profit or loss | 39 | 23 | 4 | ||
Financing expenses for employee benefits, net | 35 | 15 | 16 | ||
Reduction of the provision for assessor interest expenses | (76) | ||||
Other financing expenses | 33 | 52 | 50 | ||
Total financing expenses | 586 | [1] | $ 169 | 1,054 | 689 |
Financing expense, net | ₪ 517 | ₪ 931 | ₪ 535 | ||
[1] | For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a. |
Earnings (Loss) per Share (Deta
Earnings (Loss) per Share (Details) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings (loss) attributable to ordinary Shareholders | |||
Basic earnings (loss) for the year | ₪ 78 | ₪ (236) | ₪ 210 |
Effect of diluted per share loss in a subsidiary | (2) | ||
Diluted earnings (loss) for the year | ₪ 78 | ₪ (236) | ₪ 208 |
Earnings (Loss) per Share (D134
Earnings (Loss) per Share (Details 1) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings (Loss) per Share [Abstract] | |||
Weighted average number of ordinary shares (basic and diluted) | 29,889 | 29,889 | 29,889 |
Transactions with Related Pa135
Transactions with Related Parties (Details) - ILS (₪) ₪ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | |
Transactions with Related Parties [Abstract] | |||
Receivables - associates | ₪ 8 | ₪ 10 | |
Liabilities to related parties, net | [1] | (23) | (12) |
Advanced payment (Liability) to Eurocom DBS (not including interest) for contingent consideration (see Note 12B) | ₪ 99 | ₪ (32) | |
[1] | The amounts are for IGLD, its ultimate parent Eurocom, and their related parties. |
Transactions with Related Pa136
Transactions with Related Parties (Details 1) - ILS (₪) ₪ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |||
Revenues | ||||||
From associates (including interest income in respect of shareholders loans) | [1] | ₪ 8 | ₪ 7 | ₪ 30 | ||
From related parties | [2] | 23 | 13 | 10 | ||
Expenses | ||||||
To related parties | [2] | 122 | 110 | [3] | 128 | |
To associates | 5 | 2 | 3 | |||
Investments | ||||||
Related parties | [2] | 28 | 59 | 76 | ||
Acquisition of DBS | (70) | [4] | 55 | [3] | 913 | |
Revised fair value of the excess advance payments for acquisition of DBS | ₪ 56 | [4] | ||||
[1] | Revenues from associates in 2015 include mainly finance income from shareholders loans to DBS, prior to the acquisition of control in DBS. | |||||
[2] | The amounts are for Internet Gold, Eurocom, and their related parties. | |||||
[3] | Reclassified | |||||
[4] | Adjustment of the liability for contingent consideration for a business combination with DBS and adjustment of the fair value estimate of the amount expected to be returned to Bezeq from the excess of the advance payments that it paid was recognized as financing income, net |
Transactions with Related Pa137
Transactions with Related Parties (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | ||
March 23, 2015 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | March 23, 2015 | |
Nature of the transaction | Approval of Bezeq's acquisition agreement with Eurocom DBS Ltd. ("Eurocom DBS") whereby Bezeq will acquire the entire holdings of Eurocom DBS in DBS shares DBS and all the shareholder loans provided by Eurocom DBS to DBS (including acceptance of the terms established by the Antitrust Commissioner's in his approval of the merger on March 26, 2014, both by Bezeq and by DBS, and announcement of the exercise of Bezeq's option for the allotment of 6,221 DBS shares, at no cost, representing 8.6% of the share capital of DBS). | |
Amount of the transaction | The total cost is comprised of: a) total cash of NIS 680; b) total cash of up to NIS 200, subject to certain conditions; c) total cash of up to NIS 170, subject to certain conditions. For additional information about the conditions relating to b and c, see Note 12B above. | |
October 19, 2015 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | October 19, 2015 | |
Nature of the transaction | Approval of Bezeq's vote at the general meeting of shareholders of DBS in favor of DBS's agreement with Eurocom and ADB for the order of yesMaxTotal3 converters, under the existing agreement, until December 31, 2017. | |
Amount of the transaction | Total cost of US$ 14. | |
December 8, 2015 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | December 8, 2015 | |
Nature of the transaction | Amendment to the framework agreement between Pelephone and Eurocom Cellular Communications Ltd., so that it will be extended to other products and brands, including related services for all products and its extension until December 31, 2018 (or three years after the acquisition date of any additional products or brands, whichever is earlier). | |
Amount of the transaction | Annual scope of up to NIS 50 (for all the products). | |
June 30, 2016 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | June 30, 2016 | [1] |
Nature of the transaction | Extension of the amended agreement with Eurocom Communications for ongoing management and consultation services for Bezeq. The agreement is for three years, valid until May 31, 2019, unless one of the parties submits three-month notice of termination of the agreement. | [1] |
Amount of the transaction | NIS 6.4 per year. | [1] |
November 27, 2014 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | November 27, 2014 | |
Nature of the transaction | Bezeq's agreement to bring forward payments with Eurocom, according to which DBS may advance, at the supplier's request, payments that are due, or will be due, to Eurocom for orders of converters. | |
Amount of the transaction | Up to a total cost of US$ 6. this approval was not used in the reporting year. | |
November 3, 2016 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | November 3, 2016 | |
Nature of the transaction | Bezeq's agreement with Eurocom for the additional acquisition of up to 90 thousand VTECH N VDSL routers, valid until June 30, 2017. | |
Amount of the transaction | Approval for acquisition of up to US$ 11.3 (not including VAT). In addition, in 2017, additional N standard VDSL routers were acquired, but in amounts that do not exceed the negligibility level as described above. | |
April 3, 2017 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | April 3, 2017 | |
Nature of the transaction | Approval of Bezeq's vote at the general meeting of DBS in favor of the agreement between DBS and Spacecom with an amendment/addendum to the existing agreement between the parties dated November 4, 2013, for the lease of satellite segments in Spacecom's satellites ("the Agreement"), including in favor of implementation of the Agreement. The validity of the Agreement remains the same as the original agreement, namely, until the end of 2028. | |
Amount of the transaction | A total nominal cost of up to US$ 263 for the entire term of the Agreement (until December 31, 2028), reflecting an average annual cost of US$ 21.9. It should be noted that the overall cost of the Agreement may be lower if surplus revenue sharing mechanisms are applied and/or the assumptions set out in the amendment to the Agreement. | |
July 5, 2017 [Member] | ||
Disclosure of transactions between related parties [line items] | ||
Approval date of the general meeting (after approval of Bezeq's audit committee and Board of Directors) | July 5, 2017 | |
Nature of the transaction | The agreement between Bezeq International and Eurocom Digital for the purchase of up to 100,000 TECH VDSL routers | |
Amount of the transaction | Approval of the acquisition in an amount of up to USD 3.2 (not including VAT) | |
[1] | Eurocom will also provide ongoing consultation services in diverse areas, in a monthly scope of at least 60 hours of consulting services, provided by Or Elovitch, Orna Elovitch-Peled, Amikam Shorer, Felix Cohen, Ami Bar-Lev, and any other party set out in the agreement. |
Transactions with Related Pa138
Transactions with Related Parties (Details 3) ₪ in Millions | 12 Months Ended |
Dec. 31, 2017ILS (₪) | |
Transactions with Related Parties [Abstract] | |
Expenses | ₪ 91 |
Property plant and equipment | 11 |
Acquisition of Eurocom DBS holdings in DBS (see Note 12B) | (70) |
Adjustment of the fair value of excess advance payments for the acquisition of DBS (see Note 12B) | ₪ 56 |
Transactions with Related Pa139
Transactions with Related Parties (Details 4) - ILS (₪) ₪ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Transactions with Related Parties [Abstract] | |||
Employee benefits | ₪ 2 | ₪ 2 | ₪ 1 |
Transactions with Related Pa140
Transactions with Related Parties (Details Textual) ₪ / shares in Units, ₪ in Thousands, $ in Thousands | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2017ILS (₪) | Jun. 30, 2017USD ($) | Dec. 31, 2017 | Dec. 31, 2017ILS (₪)Hours₪ / shares | Dec. 31, 2017USD ($)Hours | Dec. 31, 2016ILS (₪) | Dec. 31, 2016USD ($) | Dec. 31, 2015ILS (₪) | Dec. 31, 2015USD ($) | |
Transactions with Related Parties (Textual) | |||||||||
Consulting services hours in a monthly | Hours | 60 | 60 | |||||||
Service and activities per year | ₪ / shares | ₪ 3.5 | ||||||||
Ongoing consultation services | ₪ | ₪ 432,000 | ||||||||
Percentage of amount set out in agreement | 50.00% | ||||||||
Eurocom Group and Internet Gold [Member] | |||||||||
Transactions with Related Parties (Textual) | |||||||||
Aggregate capital fees | 110 | $ 32 | ₪ 288 | $ 32 | ₪ 604 | $ 32 | |||
Lease annual rent | 110 | 32 | |||||||
Computing services | 24 | 7 | |||||||
Legal services annual fee | ₪ 20 | $ 8 | ₪ 96 | $ 24 | |||||
Registration rights agreement with internet gold, description | The Company is not required to affect any demand registration unless such demand registration is for a number of ordinary shares with a market value that is equal to at least US$ 7.5. The Company is also not required to affect more than one demand registration during any 12-month period thereafter or to grant a request for a demand registration within 90 days of any other demand registration. | The Company is not required to affect any demand registration unless such demand registration is for a number of ordinary shares with a market value that is equal to at least US$ 7.5. The Company is also not required to affect more than one demand registration during any 12-month period thereafter or to grant a request for a demand registration within 90 days of any other demand registration. | |||||||
Employees provide services agreements, description | The Company's employees provide services to both companies and the Company will pay 2/3 and Internet Gold will pay 1/3 of their compensation. | The Company's employees provide services to both companies and the Company will pay 2/3 and Internet Gold will pay 1/3 of their compensation. |