| Note 4 - | Segment Reporting |
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 fixed–line communications | 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 | ) | (767 | ) | 2,013 | |||||||||||||||||||
| Finance income | 30 | 53 | 7 | 32 | 17 | 25 | 164 | |||||||||||||||||||||
| Finance expenses | (362 | ) | (4 | ) | (15 | ) | (635 | ) | (2 | ) | 259 | (759 | ) | |||||||||||||||
| Total finance income (expense), net | (332 | ) | 49 | (8 | ) | (603 | ) | 15 | 284 | (595 | ) | |||||||||||||||||
| Segment profit (loss) after finance expenses, net | 1,816 | 206 | 232 | (353 | ) | - | (483 | ) | 1,418 | |||||||||||||||||||
| Share in profit (loss) of equity-accounted investee | - | - | - | - | (2 | ) | 14 | 12 | ||||||||||||||||||||
| Segment profit (loss) before income tax | 1,816 | 206 | 232 | (353 | ) | (2 | ) | (469 | ) | 1,430 | ||||||||||||||||||
| Income tax | 492 | 55 | 60 | 1 | - | (261 | ) | 347 | ||||||||||||||||||||
| Segment results - net profit (loss) | 1,324 | 151 | 172 | (354 | ) | (2 | ) | (208 | ) | 1,083 | ||||||||||||||||||
| Additional information: | ||||||||||||||||||||||||||||
| Segment assets | 7,311 | 3,269 | 1,160 | 1,667 | 661 | 5,251 | 19,319 | |||||||||||||||||||||
| 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 | 47 | 19,809 | |||||||||||||||||||||
| Investments in property, plant and equipment and intangible assets | 837 | 419 | 127 | 281 | 33 | (80 | ) | 1,617 | ||||||||||||||||||||
| Year ended December 31, 2016 | ||||||||||||||||||||||||||||
| Domestic fixed–line communications | 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 | ) | (653 | ) | 1,861 | |||||||||||||||||||
| Finance income | 30 | 52 | 5 | 13 | 4 | 29 | 133 | |||||||||||||||||||||
| Finance expenses | (475 | ) | (6 | ) | (15 | ) | (539 | ) | (2 | ) | (71 | ) | (1,108 | ) | ||||||||||||||
| Total finance income (expense), net | (445 | ) | 46 | (10 | ) | (526 | ) | 2 | (42 | ) | (975 | ) | ||||||||||||||||
| Segment profit (loss) after finance expenses, net | 1,631 | 78 | 166 | (262 | ) | (32 | ) | (695 | ) | 886 | ||||||||||||||||||
| Share in profit (loss) of equity-accounted investee | - | - | 1 | - | (5 | ) | (1 | ) | (5 | ) | ||||||||||||||||||
| Segment profit (loss) before income tax | 1,631 | 78 | 167 | (262 | ) | (37 | ) | (696 | ) | 881 | ||||||||||||||||||
| Income tax | 399 | 17 | 42 | (330 | ) | - | 314 | 442 | ||||||||||||||||||||
| Segment results - net profit (loss) | 1,232 | 61 | 125 | 68 | (37 | ) | (1,010 | ) | 439 | |||||||||||||||||||
| Additional information: | ||||||||||||||||||||||||||||
| Segment assets | 7,111 | 3,294 | 1,177 | 2,026 | 193 | 3,642 | 17,443 | |||||||||||||||||||||
| 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 | 3,315 | 17,790 | |||||||||||||||||||||
| Investments in property, plant and equipment and intangible assets | | | 828 | | | | 277 | | | | 126 | | | | 227 | | | | 13 | | | | - | | | | 1,471 | |
| Year ended December 31, 2017 | ||||||||||||||||||||||||||||
| Domestic fixed–line communications | 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 | ) | (756 | ) | 1,604 | |||||||||||||||||||
| Finance income | 36 | 54 | 4 | 10 | 5 | (34 | ) | 75 | ||||||||||||||||||||
| Finance expenses | (439 | ) | (3 | ) | (12 | ) | (81 | ) | - | (117 | ) | (652 | ) | |||||||||||||||
| Total finance income (expense), net | (403 | ) | 51 | (8 | ) | (71 | ) | 5 | (151 | ) | (577 | ) | ||||||||||||||||
| Segment profit (loss) after finance expenses, net | 1,568 | 123 | 166 | 92 | (15 | ) | (907 | ) | 1,027 | |||||||||||||||||||
| Share in profit (loss) of equity-accounted investee | - | - | - | - | (4 | ) | (1 | ) | (5 | ) | ||||||||||||||||||
| Segment profit (loss) before income tax | 1,568 | 123 | 166 | 92 | (19 | ) | (908 | ) | 1,022 | |||||||||||||||||||
| Income tax | 396 | 28 | 39 | 336 | 0 | (452 | ) | 347 | ||||||||||||||||||||
| Segment results - net profit (loss) | 1,172 | 95 | 127 | (244 | ) | (19 | ) | (456 | ) | 675 | ||||||||||||||||||
| Additional information: | ||||||||||||||||||||||||||||
| Segment assets | 9,086 | 3,271 | 1,199 | 1,502 | 174 | 2,655 | 17,887 | |||||||||||||||||||||
| 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 | 2,313 | 18,378 | |||||||||||||||||||||
| 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 | (595 | ) | (975 | ) | (577 | ) | |||||||
| Share in the losses (profit) of equity-accounted investees | 12 | (5 | ) | (5 | ) | ||||||||
| Profit (loss) for 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 | (222 | ) | (211 | ) | (273 | ) | |||||||
| Consolidated profit before income tax | 1,430 | 881 | 1,022 | ||||||||||
| 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 | 820 | 708 | |||||||
| Consolidated assets | 20,527 | 20,834 | |||||||
| 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 resulted from the Bezeq PPA, net | 491 | 386 | |||||||
| Liabilities attributable to a non-reportable segment | 3,554 | 3,287 | |||||||
| Consolidated liabilities | 17,790 | 18,378 | |||||||