"Bezeq" the Israel Telecommunication Corp. Limited
Total Page:16
File Type:pdf, Size:1020Kb
"Bezeq" The Israel Telecommunication Corp. Limited Annual Report for 2006* Chapter A – Description of Company Operations Chapter B – Directors' Report on the State of the Company's Affairs Chapter C – Financial Statements Chapter D – Additional Details About the Corporation The information contained in this annual report constitutes a translation of the annual report published by the Company. The Hebrew version was submitted by the Company to the relevant authorities pursuant to Israeli law, and represents the binding version and the only one having legal effect. This translation was prepared for convenience purposes only. * The annual report was prepared in accordance with the Securities Regulations (Periodic and immediate reports), 5730-1970 Table of Contents Page Chapter A – Description of Company Operations 1. Description of General Development of Group Operations ............................ 1 1.1 Group Activity and Description of its Business Development ................................ 1 1.2 Areas of Operation ................................................................................................. 3 1.3 Investments in Equity and Stock Transactions ...................................................... 4 1.4 Payment of dividends............................................................................................. 5 1.5 Financial Information regarding the Group’s Areas of Operations......................... 7 1.6 General Environment and Effect of External Factors on Group Activity ................ 9 2. Fixed-Line Domestic Communications – “Bezeq” – The Israel Telecommunications Corp. Limited ( “the Company”) ..................................... 10 2.1 General Information on Area of Operations ......................................................... 10 2.2 Products and Services ......................................................................................... 13 2.3 Breakdown of Revenues and Profitability of Products and Services ................... 15 2.4 Accounts Receivable............................................................................................ 15 2.5 Marketing, Distribution and Service ..................................................................... 16 2.6 Competition .......................................................................................................... 16 2.7 Property, Plant & Equipment................................................................................ 25 2.8 Intangible assets .................................................................................................. 28 2.9 Human Resources................................................................................................ 29 2.10 Raw Materials and Suppliers, Purchase of Equipment and Suppliers................. 32 2.11 Working capital..................................................................................................... 33 2.12 Investments .......................................................................................................... 33 2.13 Financing.............................................................................................................. 33 2.14 Taxation................................................................................................................ 35 2.15 Environmental matters ......................................................................................... 36 2.16 Restrictions on and regulation of Company operations ....................................... 37 2.17 Substantial agreements........................................................................................ 50 2.18 Legal proceedings................................................................................................ 53 2.19 Goals and Business Strategy............................................................................... 53 2.20 Events or Issues not within the Ordinary Course of Business ............................. 55 2.21 Risk factors........................................................................................................... 56 3. Mobile Radio Telephone – Pelephone Communications Ltd. “Pelephone”)59 3.1 General Information on Area of Operations ......................................................... 59 3.2 Products and Services ......................................................................................... 62 3.3 Segmentation of Revenues and Profitability from Products and Services........... 63 3.4 New Products ....................................................................................................... 63 3.5 Accounts Receivable............................................................................................ 63 3.6 Marketing, Distribution and Service ..................................................................... 63 3.7 Competition .......................................................................................................... 63 3.8 Seasonality........................................................................................................... 66 i 3.9 Property Plant & Equipment................................................................................. 66 3.10 Intangible assets .................................................................................................. 67 3.11 Human Resources................................................................................................ 68 3.12 Products and Suppliers ........................................................................................ 69 3.13 Working capital..................................................................................................... 70 3.14 Investment in Investee Companies and in a Partnership..................................... 70 3.15 Financing.............................................................................................................. 71 3.16 Taxation................................................................................................................ 73 3.17 Environmental matters ......................................................................................... 73 3.18 Restrictions on and Control of Pelephone’s actions ............................................ 73 3.19 Substantial agreements........................................................................................ 82 3.20 Joint venture agreements..................................................................................... 82 3.21 Legal proceedings................................................................................................ 82 3.22 Goals and Business Strategy............................................................................... 82 3.23 Development outlook for the coming year............................................................ 83 3.24 Event or matter deviating from the ordinary course of the corporation’s business83 3.25 Discussion of Risk Factors................................................................................... 84 4. International Communications and Internet Services – Bezeq International Ltd. ( “Bezeq International”)........................................... 87 4.1 General................................................................................................................. 87 4.2 Products and Services ......................................................................................... 90 4.3 Revenues ............................................................................................................. 90 4.4 New Products ....................................................................................................... 90 4.5 Marketing, Distribution and Service ..................................................................... 91 4.6 Competition .......................................................................................................... 92 4.6.1. Solutions for the business sector – Bezeq International business....................... 93 4.7 Seasonality........................................................................................................... 93 4.8 Property Plant & Equipment................................................................................. 93 4.9 Intangible assets .................................................................................................. 94 4.10 Human Resources................................................................................................ 95 4.11 Accounts Payable................................................................................................. 95 4.12 Working capital..................................................................................................... 96 4.13 Credit policies....................................................................................................... 96 4.14 Investments .......................................................................................................... 96 4.15 Financing.............................................................................................................. 97 4.16 Taxation................................................................................................................ 97 4.17 Restrictions on and Superivsion of Bezeq International's Operations ................. 97 4.18 Joint venture agreements..................................................................................... 98 4.19 Legal proceedings...............................................................................................