v3.8.0.1
Document and Entity Information
 12 Months Ended
Dec. 31, 2017
shares
Document and Entity Information [Abstract]  
Entity Registrant Name INTERNET GOLD GOLDEN LINES LTD
Entity Central Index Key 0001090159
Trading Symbol IGLD
Amendment Flag false
Document Fiscal Period Focus FY
Current Fiscal Year End Date --12-31
Document Type 20-F
Document Period End Date Dec. 31, 2017
Document Fiscal Year Focus 2017
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 19,203,186

v3.8.0.1
Consolidated Statements of Financial Position
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Current assets      
Cash and cash equivalents ₪ 2,408 [1] $ 695 ₪ 810
Investments 769 [1] 222 1,240
Trade receivables, net 1,915 [1] 552 2,000
Other receivables 270 [1] 78 217
Related party 43 [1] 12
Inventory 125 [1] 36 106
Total current assets 5,530 [1] 1,595 4,373
Non-current assets      
Trade and other receivables 493 [1] 142 644
Property, plant and equipment 6,940 [1] 2,002 7,072
Intangible assets 5,840 [1] 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] 4,414 16,154
Total assets 20,834 [1] 6,009 20,527
Current liabilities      
Bank loans and credit and debentures 1,955 [1] 564 2,181
Trade and other payables 1,735 [1] 500 1,661
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 4,224 [1] 1,218 4,407
Non-current liabilities      
Bank loans and debentures 13,149 [1] 3,794 12,241
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 14,154 [1] 4,083 13,383
Total liabilities 18,378 [1] 5,301 17,790
Equity      
Attributable to shareholders of the Company 177 [1] 51 194
Non-controlling interests 2,279 [1] 657 2,543
Total Equity 2,456 708 2,737
Total liabilities and equity ₪ 20,834 [1] $ 6,009 ₪ 20,527
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Consolidated Statements of Income
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
₪ / shares
 [1]
Dec. 31, 2017
USD ($)
$ / shares
Dec. 31, 2016
ILS (₪)
₪ / shares
Dec. 31, 2015
ILS (₪)
₪ / shares
Consolidated Statements of Income [abstract]        
Revenues ₪ 9,789 $ 2,823 ₪ 10,084 ₪ 9,985
Costs and expenses        
Depreciation and amortization 2,117 611 2,161 2,131
Salaries 2,008 579 2,017 1,960
General and operating expenses 3,911 1,128 4,024 3,878
Other operating expenses (income), net 149 43 21 3
Cost of sales 8,185 2,361 8,223 7,972
Operating profit 1,604 462 1,861 2,013
Financing (income) expenses        
Finance expenses 652 188 1,108 759
Finance income (75) (22) (133) (164)
Financing expense, net 577 166 975 595
Profit after financing expenses, net 1,027 296 886 1,418
Share of loss (income) in equity-accounted investees 5 1 5 (12)
Profit before income tax 1,022 295 881 1,430
Income tax 347 100 442 347
Net profit for the year 675 195 439 1,083
Profit (loss) attributable to:        
Shareholders of the Company (15) (4) (202) 87
Non-controlling interests 690 199 641 996
Net profit for the year ₪ 675 $ 195 ₪ 439 ₪ 1,083
Earnings (loss) per share        
Basic | (per share) ₪ (0.82) $ (0.24) ₪ (10.52) ₪ 4.54
Diluted | (per share) ₪ (0.82) $ (0.24) ₪ (10.52) ₪ 4.47
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Consolidated Statements of Comprehensive Income
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
 [1]
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Consolidated Statements of Comprehensive Income [abstract]        
Net profit for the year ₪ 675 $ 195 ₪ 439 ₪ 1,083
Items of comprehensive profit (loss), net of tax (8) (2) (15) 7
Total comprehensive profit for the year 667 193 424 1,090
Attributable to:        
Shareholders of the Company (17) (5) (206) 89
Non-controlling interest 684 198 630 1,001
Total comprehensive profit for the year ₪ 667 $ 193 ₪ 424 ₪ 1,090
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Consolidated Statements of Changes in Equity
₪ in Millions, $ in Millions
ILS (₪)
shares
USD ($)
shares
Share capital
ILS (₪)
shares
Share capital
USD ($)
shares
Share premium
ILS (₪)
Treasury shares
ILS (₪)
Other reserves
ILS (₪)
Accumulated deficit
ILS (₪)
Total
ILS (₪)
Non-controlling interest
ILS (₪)
Balance at Dec. 31, 2014 ₪ 2,766   [1] [1] ₪ 658 ₪ (169) ₪ (59) ₪ (613) ₪ (183) ₪ 2,949
Balance, shares at Dec. 31, 2014 | shares [2]     19,203,186 19,203,186            
Changes during:                    
Exercise of options in subsidiary 19     1 1 18
Dividends to non-controlling interests (1,274)     (1,274)
Other comprehensive profit (loss), net of tax 7     2 2 5
Net profit (loss) for the year 1,083     87 87 996
Comprehensive profit (loss) for the year 1,090     2 87 89 1,001
Balance at Dec. 31, 2015 2,601   [1]   658 (169) (56) (526) (93) 2,694
Balance, shares at Dec. 31, 2015 | shares [2]     19,203,186 19,203,186            
Changes during:                    
Exercise of options in subsidiary 5     1 1 4
Transactions with non-controlling interest interest, net of tax 894       492 492 402
Dividends to non-controlling interests (1,187)     (1,187)
Other comprehensive profit (loss), net of tax (15)     3 (7) (4) (11)
Net profit (loss) for the year 439     (202) (202) 641
Comprehensive profit (loss) for the year 424     3 (209) (206) 630
Balance at Dec. 31, 2016 ₪ 2,737 $ 789 [1] [1] 658 (169) (52) (243) 194 (2,543)
Balance, shares at Dec. 31, 2016 | shares [2] 19,203,186 19,203,186 19,203,186 19,203,186            
Changes during:                    
Dividends to non-controlling interests ₪ (948) $ (274)     (948)
Other comprehensive profit (loss), net of tax (8) [3] (2)     1 (3) (2) (6)
Net profit (loss) for the year 675 [3] 195       (15) (15) 690
Comprehensive profit (loss) for the year 667 [3] 193     1 (18) (17) 684
Balance at Dec. 31, 2017 ₪ 2,456 $ 708 [1] [1] ₪ 658 ₪ (169) ₪ (51) ₪ (261) ₪ 177 ₪ 2,279
Balance, shares at Dec. 31, 2017 | shares 19,203,186 [2] 19,203,186 [2] 19,203,186 19,203,186            
[1] Represent 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.

v3.8.0.1
Consolidated Statements of Cash Flows
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Cash flows from operating activities        
Net profit for the year ₪ 675 [1] $ 195 ₪ 439 ₪ 1,083
Adjustments:        
Depreciation and amortization 2,117 [1] 611 2,161 2,131
Profit from gaining control over DBS 5 [1] 1   (12)
Share of loss (profit) of equity accounted investees Loss from impairment of goodwill 129 [1] 37 5 (12)
Finance expenses, net 584 [1] 168 1,025 626
Capital gain, net (27) [1] (8) (86) (136)
Income tax expenses 347 [1] 100 442 347
Change in inventory (35) [1] (10) (20) (20)
Change in trade and other receivables 194 [1] 56 110 323
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, net (473) [1] (136) (534) (534)
Net cash provided by operating activities 3,480 [1] 1,003 3,457 3,644
Cash flows from investing activities        
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     (461)  
Change in investments, net 457 [1] 132 528 1,638
Purchase of property, plant and equipment (1,131) [1] (326) (1,193) (1,324)
Deposits from (to) restricted cash     155 (90)
Cash from gaining control over investee       299
Other 9 [1] 3 20 18
Net cash provided by (used in) investing activities (966) [1] (278) (1,036) 381
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 (1,942) [1] (560) (5,000) (2,358)
Interest paid (583) [1] (168) (967) (826)
Dividends to non-controlling interests (948) [1] (274) (1,187) (1,274)
Transactions with non-controlling interests     1,034  
Payments to Eurocom DBS (61) [1] (17) (256) (680)
Other (17) [1] (5) (38) (10)
Net cash used in financing activities (916) [1] (264) (2,230) (4,138)
Net increase (decrease) in cash and cash equivalents 1,598 [1] 461 191 (113)
Cash and cash equivalents as at the beginning of the year 810 234 619 732
Cash and cash equivalents as at the end of the year ₪ 2,408 [1] $ 695 ₪ 810 ₪ 619
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Reporting Entity
 12 Months Ended
Dec. 31, 2017
Reporting Entity [Abstract]  
Reporting Entity
Note 1 -Reporting Entity

 

Internet Gold–Golden Lines 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, comprise the Company and its subsidiaries (together referred to as the Group). The Company holds the majority of the outstanding shares of B Communications Ltd. (“B Communications”). The Company is a subsidiary of Eurocom Communications Ltd. (“Eurocom” or “the Parent Company”) and its ultimate parent is Eurocom Holdings (1979) Ltd.

  

On April 14, 2010, B Communications 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, B Communications 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. B Communications retained a 26.34% ownership interest in Bezeq, following the closing of the transaction. For more information relating to B Communications’ 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 Israel Securities Authority 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; (3) and 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 action 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.

v3.8.0.1
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: Internet Gold – Golden Lines Ltd.

 

(2)The Group: Internet Gold – Golden Lines Ltd. and its subsidiaries, as listed in Note 12 - Investees.

(3)B Communications: B Communications Ltd. and its subsidiaries, as listed in Note 12 - Investees.

 

(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 the 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

 

Use of estimates and judgments

 

The preparation of financial statements in conformity with IFRS requires the Group’s management 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 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 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, 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.

v3.8.0.1
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  163   14   177 
 Non-controlling interests  2,209   70   2,279 
 Total equity  2,372   84   2,456 

  

Effect on the consolidated statement of the Group income 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  4,042   (131)  3,911 
 Salaries  2,042   (34)  2,008 
 Depreciation and amortization expenses  2,063   54   2,117 
 Operating profit  1,493   111   1,604 
 Profit after financing expenses  916   111   1,027 
 Profit before income tax  911   111   1,022 
 Income tax  320   27   347 
 Net profit for the period  591   84   675 
 Profit (loss) attributable to shareholders of the Company  (29)  14   (15)
 Profit attributable to non-controlling interests  620   70   690 
 Earnings per share (Basic and Diluted)  (1.56)  0.74   (0.82)

 

Effect on the statement of the Group consolidated cash flows 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  3,315   165   3,480 
 Net cash used in investing activities  (801)  (165)  (966)

 

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 interest 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 consists 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 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 and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is carried to share premium.

 

F.Broadcast rights

 

Broadcasting rights are stated at cost, net of rights exercised. The costs of the broadcasting rights acquired for the broadcasting of content include the amounts paid to the rights provider, plus direct costs for adjusting the rights to the broadcast. Broadcast rights are amortized in accordance with the actual broadcasts of the total number of expected broadcasts based on the management’s estimate or broadcasts permitted under the agreement (the part that is unamortized at the end of the agreement term is amortized in full upon its termination), or on a straight-line basis in accordance with the term of the rights agreement or the economic life, whichever is shorter. 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 through other comprehensive income.

 

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.

  

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.

 

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.

  

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.

 

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.

 

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.

 

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.

  

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.

v3.8.0.1
Segment Reporting
 12 Months Ended
Dec. 31, 2017
Segments Reporting [Abstract]  
Segment Reporting
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

v3.8.0.1
Cash and Cash Equivalents
 12 Months Ended
Dec. 31, 2017
Cash and Cash Equivalent [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.

v3.8.0.1
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  685   494 
 Bank deposits  546   275 
 Monetary funds and others  9   - 
    1,240   769 

 

The deposits are repayable until July 2018 and the other investments can be disposed of immediately.

 

*Reclassified

v3.8.0.1
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  72   204 
 Total other receivables  217   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 
    2,861   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 

 

DAging 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)

v3.8.0.1
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.

v3.8.0.1
Intangible Assets
 12 Months Ended
Dec. 31, 2017
Intangible Assets [Abstract]  
Intangible Assets
Note 9 -Intangible Assets

  

           Customer       
     Computer  Right of use  relationships       
     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’ 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.

v3.8.0.1
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.

v3.8.0.1
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.

v3.8.0.1
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 Ltd.  Israel   64.78%
          
 Subsidiaries of B Communications Ltd.        
 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 Communication (SP1) Ltd.

 

2.Details of Group entities

 

 a.B Communications Ltd.

B Communications Ltd., is a majority-owned subsidiary of the Company. B Communications is the sole shareholder of B Communications (SP1) Ltd. which holds B Communications (SP2) Ltd. 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.B Communications (SP1) Ltd. and B Communications (SP2) Ltd.

B Communications (SP1) Ltd. (“SP1”), founded in 2010, is a wholly-owned subsidiary of B Communications. SP1 is the sole shareholder of B Communications (SP2) Ltd. (“SP2”) which directly holds the Bezeq controlling interest.

 

 d.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.

 

 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.

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.

 

 g.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 policy for distribution of a dividend, 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 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 out, 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 amount owed to Eurocom for the First Contingent Consideration was 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 Conditional 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.

   

B.Business combination with DBS Satellite Services (1998) Ltd. (“DBS”)

 

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 fulfilment 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.

 

3.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.

 

  December 31,  Year ended December 31, 
                                                               Cash flow         
  Rate of                                                           from         
   direct                                               Total           financing         
   ownership                                               comprehensive           activities         
   interests                       Carrying                   Profit   Income           without       Total  
   held by                       amount of                   attributable   attributable   Cash flow   Cash flow   dividend
to		   Dividend
paid to		   increase
(decrease)		 
   non-       Non-       Non-   Total    non-           Other   Total   to non-   to non-   from   from   non-   non-   in cash 
   controlling   Current   current   Current   current   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                                                      
                                                       
Bcom Group  35.22   5,334   15,305   4,111   13,442   3,086   2,279   9,789   741   (8)  733   690   684   3,487   (1,128)  213   (948)  1,624 
                                                                         
2016                                                                        
                                                                         
Bcom Group  35.22   3,991   16,154   4,256   12,588   3,301   2,543   10,084   439   (15)  424   641   630   3,462   (948)  (1,271)  (1,062)  181 
                                                                         
2015                                                                        
                                                                         
Bcom Group  33.29   4,730   17,392   5,199   13,532   3,391   2,694   9,985   1,136   7   1,143   996   1,001   3,652   310   (2,820)  (1,274)  (132)

 

  

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.

 

The Company is deemed to be a “first tier” company, B Communications 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 the Company or B Communications 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, B Communications 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.

 

The Company 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 substitute for the debentures issued to the public, while delisting the Company’s shares from the TASE; merger between B Communications and the Company, etc. There is no certainty that any of the alternatives will be implemented.

  

E.B Communications’ control over Bezeq

 

B Communications 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 B Communications to nominate the majority of the board of directors of Bezeq.

 

 F. Transactions with non-controlling interests

 

(1)On January 14, 2016, the Company sold 575,000 ordinary shares of B Communications, representing approximately 1.92% of its issued and outstanding shares. The total proceeds from the sale amounted to approximately NIS 56. As a result of the sale, the Company’s ownership interest in B Communications declined to 64.78% of its outstanding shares.

v3.8.0.1
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  1,342   1,263 
 Current maturities of bank loans  839   692 
    2,181   1,955 
 Non-current liabilities        
 Debentures  9,157   8,748 
 Bank loans  3,084   4,401 
    12,241   13,149 
    14,422   15,104 

 

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  4,925   5,234   4,695    4, 900  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
    10,164   10,499   9,776   10,011     
 Total interest-bearing liabilities  14,073   14,422   14,849   15,104     

 

(1)Issuance of Series C Debentures

 

On September 28, 2010, the Company issued Series C Debentures at a par value. The Series C Debentures were listed on the TASE.

 

The Series C Debentures are payable in four equal annual installments on March 10 of each of the years 2016 through 2019 and pay interest at a fixed annual rate of 4.45% which is payable semi-annually on March 10 and September 10 of each of the years 2011 through 2019 (the first interest payment was made on March 10, 2011, and the last interest payment is payable on March 10, 2019). The Series C Debentures are NIS denominated and are linked to the Israeli CPI.

 

The Series C Debentures contain standard terms and conditions and are unsecured, non-convertible and do not restrict the Company’s ability to issue any new series of debt instruments or distribute dividends in the future.

 

As of December 31, 2017, the par value of the outstanding Series C Debentures was NIS 41.

 

As at December 31, 2017, and the approval date of the financial statements, the Company was in compliance with the financial covenants of the debentures.

 

(2)Issuance of Series D Debentures and replacement of debentures

 

On March 3, 2014 the Company issued Series D Debentures at a par value. The Series D Debentures were listed on the TASE.

 

The Series D Debentures are repayable in five installments as follows: (i) 10% of the principal amount on September 15, 2018 and 2019; (ii) 30% of the principal amount on September 15, 2020 and 2021; and (iii) the final 20% of the principal amount on September 15, 2022. Series D Debentures bear annual interest of 6% payable on March 15 and September 15 of each of the years 2014-2022, other than the first interest payment which was made on September 15, 2014. Both principal and interest are linked to the Israeli CPI as of January 2014.

 

The Series D Debentures contain standard terms and conditions and are unsecured, non-convertible and do not restrict the Company’s ability to issue any new series of debt instruments. The Series D Debentures contain certain limitation on distribution of dividends by the Company.

 

In October 2017 the Company completed two private placements of NIS 227 par value of Series D Debentures to certain institutional investors in Israel in exchange for NIS 205 par value of the Company’s outstanding Series C Debentures, reflecting an exchange ratio of 1:1.11 (NIS 1.11 principal amount of Series D Debentures for NIS 1 principal amount of Series C Debentures).

 

As of December 31, 2017, the par value of the outstanding Series D Debentures was NIS 757.

 

As at December 31, 2017, and the approval date of the financial statements, the Company was in compliance with the financial covenants of the 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.

 

B Communications debentures

 

(3)On September 21, 2010, B Communications issued, NIS 400 of Series B Debentures, at par value, to the public in Israel. In January 2012 and August 2013, B Communications 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, B Communications 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 par value of the outstanding 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 Series B Debentures principal is payable in four equal installments on March 31 of each year starting from 2016. The Series B Debentures interest is payable on March 31 of each year starting from the date of issuance.

 

According to the financial covenants of the Series B Debentures B Communications 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 holds the controlling interest in B Communications.

 

As at December 31, 2017, and the approval date of the financial statements, B Communications was in compliance with the financial covenants of the Series B debentures.

  

(4)On February 19, 2014, B Communications issued $800 of 7⅜ Senior Secured Notes (“the Notes”). 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 were senior obligations of B Communications 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 institutional trading system of the Tel Aviv Stock Exchange for by known as TACT Institutional.

 

B Communications used the net proceeds from the offering 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”) respectively 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 B Communications’ Board of Directors approved the buyback of up to $50 of the Notes. On January 20, 2016, B Communications 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, B Communications purchased $65 par value of the Notes.

 

On May 26, 2016 B Communications 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 the 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 issuance of Series C Debentures, as detailed below in Note 13B(6).

 

(5)On September 18, 2016, B Communications 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 instalments payable on November 30 of each of the years 2020 through 2023 and one instalment payable on November 30, 2024. 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 will be 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 B Communications were used to fully redeem the outstanding Notes and to deposit the upcoming interest payment due in May 2017 into a trustee account solely for the benefit of the holders of the Series C Debentures.

 

On January 16, 2017, B Communications 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 par value of the outstanding 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:

 

B Communications 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”).

  

B Communications 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, B Communications may sell all or a portion of the Undertaken Shares to any third party, provided that in such instance, B Communications 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 for the Series C Debentures .

 

B Communications 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 B Communications intends to assume does not exceed an aggregate of NIS 2.3 billion.

 

As at December 31, 2017, and the approval date of the financial statements, B Communications was in compliance with the financial covenants of the Series C Debentures.

 

Control of Bezeq

 

B Communications 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 B communications (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

 

B Communications undertook that its equity (capital attributed to B Communications’ 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

 

B Communications 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.B Communications 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.B Communications’ Equity post-distribution is not less than NIS 800.

 

e.Until full repayment of the principal of the Series C Debentures, B Communications shall not distribute a dividend exceeding 75% of the balance of B Communications’ 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, B Communications 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 B Communications’ profits/surpluses which are distributable in accordance with the provisions of the Companies Law, B Communications’ 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: B Communications’ equity shall not be less than 15% of the total balance sheet in accordance with B Communications’ audited or reviewed (unconsolidated) financial statements (or, alternatively, the quarterly financial report figures, as elected by B Communications), as the case may be, for two or more consecutive calendar quarters.

 

B Communications and its Israeli legal advisors’ belief that the publication of its annual financial statements with the accompanying Auditors’ Report with a “qualified opinion” does not constitute an event of default under its outstanding debentures. Nevertheless, it is not possible to predict with certainty that a debenture holder may claim otherwise. B Communications 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 its securities from the United States to elsewhere in a manner that may resolve such possible claim, if raised. A default under its Debentures could have a material adverse effect on its business, financial condition, results of operations and cash flows.

  

(6)Below are details of the terms that Bezeq undertook for the loans that were 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 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 2 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 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  10,577   3,944   14,521 
 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  (1,107)  (835)  (1,942)
 Interest paid  (425)  (158)  (583)
 Net cash generated from (used in) finance activities  (897)  1,007   110 
 Financing expenses recognized in the statement of income  378   163   541 
 Balance as at December 31, 2017  10,058   5,114   15,172 

v3.8.0.1
Trade and Other Payables
 12 Months Ended
Dec. 31, 2017
Trade and Other Payables [Abstract]  
Trade and Other Payables
Note 14 -Trade and Other Payables

 

  December 31 
  * 2016  2017 
  NIS  NIS 
       
Open accounts**  808   1,041 
Checks payable  92   21 
Trade payables  900   1,062 
         
Other payables        
Liabilities to employees and other liabilities for salaries  353   355 
Institutions  98   89 
Accrued expenses  102   - 
Accrued interest  99   66 
Deferred income  82   90 
Options and derivatives  10   54 
Other payables  17   19 
Total other payables  761   673 
Total Trade and Other Payables  1,661   1,735 

 

*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).

v3.8.0.1
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.

v3.8.0.1
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 and B Communications’ 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 currency rates and in 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. B Communications’ management monitors its 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 80% of the funds must be invested in investment-grade securities. The Company’s securities consist of investment grade securities, corporate debts securities and equity investments (stocks). The Company’s and B Communications’ investment policies impose 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 their 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 takes full or partial hedging actions. The Group’s 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 the Bezeq’s cash balances are invested in deposits, monetary funds or ETF’s 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 US$ or 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 the US$.

v3.8.0.1
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           2022 
   amount  cash flow  2017  2018  2019-2021  and later 
   NIS  NIS  NIS  NIS  NIS  NIS 
 Non-derivative financial liabilities                  
 Trade and other payables  1,612   1,612   1,612   -   -   - 
 Bank loans  5,093   5,813   855   776   2,388   1,794 
 Debentures  10,011   11,390   1,511   1,505   4,349   4,025 
                          
 Total  16,716   18,815   3,978   2,281   6,737   5,819 
                          
 Financial liabilities for derivative instruments                        
 Forward contracts on the CPI  200   200   41   47   112   - 

 

The Group’s exposure to linkage and foreign currency risk was as follows based on notional amounts:

              

   December 31, 2016 
         Foreign 
         currency 
      Israeli  linked (mainly 
   Unlinked  CPI-linked  U.S. dollars) 
   NIS  NIS  NIS 
           
 Current assets         
 Cash and cash equivalents  778   -   32 
 Trade receivables  1,954   18   28 
 Other receivables  20   48   - 
 Investments including derivatives  896   76   269 
 Total current assets  3,648   142   329 
              
 Trade and other receivables  429   215   - 
 Total non-current assets  429   215   - 
              
 Total assets  4,077   357   329 
              
 Current liabilities            
 Debentures, loans and borrowings  1,668   513   - 
 Trade and other payables  1,340   77   203 
 Total current liabilities  3,008   590   203 
              
 Non-current liabilities           
 Debentures and bank loans  7,667   4,574   - 
 Other liabilities including derivatives  -   176   9 
 Total non-current liabilities  7,667   4,750   9 
              
 Total liabilities  10,675   5,340   212 
              
 Total exposure in the statement of financial position  (6,598)  (4,983)  117 
             
 Forward transactions  (2,456)  2,184   272 

  

B.Linkage and foreign currency risks

 

   December 31, 2017 
         Foreign 
         currency 
      Israeli  linked (mainly 
   Unlinked  CPI-linked  U.S. dollars) 
   NIS  NIS  NIS 
 Current assets         
 Cash and cash equivalents  2,334   -   74 
 Trade receivables  1,862   36   17 
 Other receivables  

44

   154   - 
 Related party  43   -   - 
 Investments including derivatives  507   57   205 
 Total current assets  4,790   247   296 
              
 Non-current assets            
 Trade and other receivables  423   121   67 
 Total non-current assets  423   121   67 
              
 Total assets  5,213   368   363 
              
 Current liabilities            
 Debentures, loans and borrowings  1,213   742   - 
 Trade and other payables  1,346   70   237 
 Total current liabilities  2,559   812   237 
              
 Non-current liabilities            
 Debentures and bank loans  9,104   4,045   - 
 Other liabilities including derivatives  -   159   10 
 Total non-current liabilities  9,104   4,204   10 
              
 Total liabilities  11,663   5,016   247 
             
 Total exposure in the statement of financial position  (6,450)  (4,648)  116 
              
 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   4.2468   4.044   4.153 
 Israeli CPI in points  (0.9)  (0.3)  0.3   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  2,503   2,164 
 Financial liabilities  (12,711)  (13,697)
    (10,208)  (11,533)
 Variable rate instruments        
 Financial assets  99   47 
 Financial liabilities  (1,712)  (1,407)
    (1,613)  (1,360)

  

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 total equity and net income by NIS 10 (2016 - NIS 12).

 

D.Cash flow hedge accounting

 

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.

 

 
     Number of  Nominal     Capital 
 Hedge item Repayment date Transactions  Value  Fair value  reserve 
        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 (Level 2).

 

 
   December 31, 2016  December 31, 2017 
               Fair value 
               weighted 
               average 
   Carrying     Carrying     discount 
   amount  Fair value  amount  Fair 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)  4,419   4,677   4,911   5,208   0.95 
 Issued to institutional investors (US$ linked)  4,166   4,246   4,097   4,322   2.35 
 Issued to institutional investors (unlinked)  830   879   15   17   2.44 
 Issued to institutional investors (CPI-linked)  403   440   302   326   1.62 
    12,765   13,331  13,761   14,566     

 

(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  655   -   -   655 
 Derivatives not used in hedging                
 Forward contracts on CPI  -   (176)  -   (176)
 Contingent consideration for a business combination  -   -   (84)  (84)
                  
    686   (176)  (84)  426 

 

Total)
   December 31, 2017 
   Level 1  Level 2  Level 3   
   NIS  NIS  NIS  NIS 
              
 Financial assets held for trading            
 Monetary funds and ETFs  14   -   -   14 
 Marketable securities  480   -   -   480 
 Derivatives not used in hedging                
 Forward contracts  -   (212)  -   (212)
 Contingent consideration for a business combination  -   -   43  43
                  
    494   (212  43  325 

 

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:

 

consideration
   December 31, 2016  December 31, 2017 
   Maximum     Maximum    
   additional     additional    
   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  50   44 

v3.8.0.1
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 18C(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 New General Federation of Labor 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 2013-3-1 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, 2016  December 31, 2017 
   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

v3.8.0.1
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  (220)  (33)  (112)
 Total deferred tax expenses  (220)  (33)  (145)
              
 Income tax expense  347   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 
           
 Profit before income tax  1,430   881   1,022 
 Statutory tax rate  26.5%  25%  24%
              
 Income tax at the statutory tax rate  378   220   245 
 Changes in tax rate and others  -   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  (112)  -   - 
 Current year tax losses and benefits for which deferred taxes were not created  97   136   54 
 Taxes in respect of previous years  -   (28)  - 
              
 Income tax expenses  347   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 165 and capital loss carry forwards in the amount of NIS 335. In addition, the Company’s subsidiaries have 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 tax assets were not created on carry-forward losses and on carry-forwards capital losses of the Company as detailed above.

 

On January 14, 2016, The Company sold shares of B Communications (see note 12G2), as a result, the Company recognized deferred taxes due to the basis difference attributed to its investment in B Communications in the amount of NIS 11.

  

On February 1, 2016, B Communications sold shares of Bezeq (see Note 1) and as a result, B Communications recognized deferred taxes 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   195   (839)  561 
 Recognized in profit or loss  74   (26)  (231)  (75)  224   (34)
 Recognized in equity  -   (4)  -   (109)  -   (113)
                          
 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 2012.

 

(2)B Communications has final tax assessments up to and including 2014.

 

(3)On January 22, 2015, B Communications 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, B Communications will pay the Israeli Tax Authority NIS 148, including interest and CPI linkage differences, in 24 monthly instalments starting in February 2015.

 

(4)On April 27, 2017, B Communications 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, B Communications paid the Israeli Tax Authority NIS 25, including interest and CPI linkage differences.

 

(5)Bezeq has final tax assessments up to and including 2014.

 

(6)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).

 

(7)Pelephone has received final tax assessments up to and including 2014.

 

(8)Bezeq International has received final tax assessments up to and including 2012.

 

(9)DBS has received final tax assessments up to and including 2013.

 

(10)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 the 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.

v3.8.0.1
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 B Communications’ shares between March 18, 2015 and September 6, 2017. The original defendants were B Communications, Doron Turgeman (B Communications and our CEO), Itzik Tadmor (B Communications and our CFO) and Ehud Yahalom (B Communications and 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 B Communications made false and misleading statements and omissions in its SEC filings.

 

On February 20, 2018, B Communications 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. B Communications motion to dismiss asserts, among other things, that plaintiffs failed to allege that B Communications had the required knowledge or scienter about the purported wrongdoing by other defendants and that B Communications 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 B Communications motion to dismiss sometime in June or July, and it is possible that a decision will be issued before the end of October. While B Communications have solid arguments in its 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, B Communications and five members of B Communications 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 B Communications in May 2016 was distributed unlawfully as such amount was not included in B Communications 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 B Communications to file an additional brief response and a supplementary expert opinion, in order to respond to the arguments. B Communications 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 for 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.

v3.8.0.1
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.

v3.8.0.1
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.

v3.8.0.1
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

 

   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  501,000,000   19,203,186 

 

As of December 31, 2017, 5,862,615 ordinary shares of the Company have been purchased pursuant to a share buyback program which was authorized by the Company’s Board of Directors.

v3.8.0.1
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 

 

*Cloud and digital services were reclassified and presented separately to reflect the change in the mix of revenues in fixed-line domestic communications

v3.8.0.1
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  588   624   648 
              
 Total salaries and incidentals  2,459   2,546   2,579 
              
 Less – salaries recognized in investments in property, plant and equipment and in intangible assets  499   529   571 
              
    1,960   2,017   2,008 

v3.8.0.1
General and Operating Expenses
 12 Months Ended
Dec. 31, 2017
General and Operating Expenses [Abstract]  
General and Operating Expenses
Note 26 -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  649   709   615 
 Services and maintenance by sub-contractors  199   261   260 
 Vehicle maintenance expenses  167   164   156 
 Content services expenses  458   629   636 
              
    3,878   4,024   3,911 

 

*For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3A.

 

*Less expenses of NIS 65 recognized in 2017 for investments in property, plant and equipment and intangible assets (in 2016, NIS 64 and in 2015, NIS 63).

v3.8.0.1
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 
           
 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

v3.8.0.1
Financing Expenses (Income)
 12 Months Ended
Dec. 31, 2017
Finance Expenses (Income) [Abstract]  
Financing Expenses (Income)
Note 28 -Financing Expenses (Income)

 

   Year ended December 31 
   2015  2016  2017 
   NIS  NIS  NIS 
           
 Interest and linkage differences from loans to an associate  (21)  -   - 
 Linkage and exchange rate differences, net  (7)  (19)  - 
 Income on bank deposits, investments and others  (17)  (20)  (8)
 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 commission  (52)  (42)  (35)
 Other financing income  (40)  (23)  (25)
 Total financing income  (164)  (133)  (75)
              
 Interest expenses on financial liabilities  695   924   503 
 Linkage and exchange rate differences, net  61   38   49 
 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  13   24   43 
 Financing expenses for employee benefits, net  16   15   35 
 Reduction of the provision for assessor interest expenses  (76)  -   - 
 Other financing expenses  50   52   36 
 Total financing expenses  759   1,108   652 
              
 Financing expenses, net  595   975   577

v3.8.0.1
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  87   (202)  (15)
 Effect of diluted per share loss in a subsidiary  (1)  -   - 
 Diluted earnings (loss) for the year  86   (202)  (15)

 

   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)  19,203   19,203   19,203 

v3.8.0.1
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: parent company - Eurocom, other Eurocom Group companies, related parties of Eurocom, directors and key management personnel in the Company, 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, including, the provision of related 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.

 

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 the parent company, 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 * *     129       ****111       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 the parent company, Eurocom and its 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

 

 

D. 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). 
In addition, in 2017, additional N standard VDSL routers were acquired, but in amounts that do not exceed the negligibility level as described above.

 

 

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 t Bezeq and its subsidiaries, in connection with the investigation conducted by the ISA, the Board of Directors 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.

 

E. Agreements with the Eurocom Group and B Communications

 

The financial value of the transactions described above, which were carried out in 2017 were as follows:

 

      Amounts  
      included in the  
      consolidated  
      financial statements  
      NIS  
         
  Expenses     91  
  Property plant and equipment     11  
  Acquisition of Eurocom DBS holdings in DBS     (70 )
  Adjustment of the fair value of excess advance payments for the acquisition of DBS     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.

 

Relationship with Eurocom Communications and its affiliates

 

Messrs. Shaul Elovitch, the former chairman of the Company’s board of directors, and his brother Yossef Elovitch, a director of the Company, also serve as directors of Eurocom Communications and various of its affiliates, together indirectly hold a majority of the outstanding shares of Eurocom Communications. During the past four years, the Company has entered into transactions with Eurocom Communications and several of their affiliates, referred to as the Eurocom Group. The Company believes that the transactions with Eurocom Communications and its affiliates described below could have been entered into on comparable terms with unrelated parties and on an arm’s length basis. Set forth below are summary descriptions of certain agreements, relationships and transactions between us and members of the Eurocom Group.

 

In June 2017, our 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 15.5 thousand, plus an annual fixed amount of up to NIS 6 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 our company averaged approximately 48 hours per month on an annual basis. The legal services’ portion of the Services Agreement was terminated on March 31, 2018.

 

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. Felix Cohen, Yosef 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 Messrs. Felix Cohen and Yosef Elovitch are effective starting April 1, 2018.

 

Certain Related Party Transactions

 

The Company and B Communications lease the Company’s principal offices from Eurocom Communications for an annual rent of NIS 110 thousand (approximately $32 thousand) for both companies. Eurocom Digital provides us and B Communications 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 the Company and two-thirds to B Communications.

 

In addition, the Company receives various services and products to and from related parties at market rates and in the ordinary course of business. None of these 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 the Company’s shareholders, if required). In addition, the Company will generally 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.

 

Registration Rights Agreement with Eurocom Communications

 

In July 1999, the Company entered into a registration rights agreement with Euronet Communications (which was subsequently assigned to Eurocom Communications) and the Company’s other existing shareholders granting them the right to register their ordinary shares under the U.S. Securities Act (the “Securities Act”). The registration rights include unlimited rights to request that their shares be included in any underwritten public offering of the Company’s ordinary shares (excluding any registration of employees’ shares on Form S-8 or a similar form). Additionally, as of February 4, 2000, the holders of a majority of such shares are entitled to demand, up to three times in the aggregate, that the Company register their shares. As of August 4, 2000, the holders of a majority of these shares are also entitled to request that the Company affect a registration of their shares on a shelf registration statement once in any 12-month period, up to three times in aggregate. All expenses incurred in connection with such registrations, other than underwriters’ and brokers’ discounts and commissions, will be payable to the Company.

 

Pursuant to the 1999 registration rights agreements with Eurocom Communications, on December 9, 2015, the Company filed on behalf of Eurocom Communications, a registration statement on Form F-3 relating to the resale, from time to time, by Eurocom Communications of up to 2,880,000 of the Company’s ordinary shares. The registration statement became effective on December 14, 2015.

 

On January 30, 2017, the Company filed on behalf of Messrs. Shaul and Yossef Elovitch a registration statement on Form F-3 relating to the resale, from time to time, by Messrs. Shaul and Yossef Elovitch up to 925,000 of the Company’s ordinary shares. The registration statement became effective on January 30, 2017.

 

Execution Services Agreement with Eurocom Capital Finance Ltd.

 

In November 2007, we entered into an execution services agreement with Eurocom Capital Finance Ltd., or Eurocom Capital, under which Eurocom Capital handles the execution of our financial investments pursuant to direct instructions from our chief executive officer. The execution services agreement was terminated on November 30, 2017. In consideration for these services, we agreed to pay Eurocom Capital fees which are customary for such agreements and on market terms. Eurocom Capital has agreed to act to preserve our financial resources according to a policy that will be set by our management and approved by the board of directors. The Company paid Eurocom Capital NIS 433 thousand, NIS 338 thousand and NIS 228 thousand (approximately $66 thousand) for the years ended December 31, 2015, 2016 and 2017, respectively.

 

Agreements with B Communications

 

Registration Rights Agreement with B Communications

 

The Company and B Communications have entered into a registration rights agreement under which B Communications has granted us the right to demand registration under the Securities Act of the ordinary shares of B Communications that we hold. The Company is entitled to an aggregate of five demand registrations. B Communications is not required to effect any demand registration unless such demand registration request is for a number of ordinary shares with a market value that is equal to at least $7.5. B Communications is not required to effect more than one demand registration during any 12-month period or within 90 days of any other demand registration. The Company also has “piggyback” registration rights that allow us to include the ordinary shares of B Communications that we own in any public offering of equity securities initiated by B Communications (other than public offerings pursuant to registration statements on Forms F-4, S-8 or any other successor forms). The “piggyback” registration rights are subject to proportional cutbacks based on the manner of the offering and the identity of the party initiating such offering. B Communications has also granted us the right to request a shelf registration on Form F-3, provided that it shall 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 audit committee of B Communications.

 

Under the registration rights agreement, B Communications has agreed to indemnify us against any losses or damages resulting from any untrue statement or omission of material fact in any registration statement or prospectus pursuant to which the Company sell ordinary shares, unless such liability arose in reliance upon and in strict conformity with information that the Company furnished in writing. B Communications will pay all expenses incident to any demand registration, and the Company will pay the Company’s respective portions of all underwriting discounts, commissions and fees attributable to the sale of the ordinary shares of B Communications.

 

Chief Executive Officer Employment Agreement

 

The Company entered into an arrangement with B Communications according to which B Communications’ employees provide services to both companies and B Communications will pay 2/3 and the Company will pay 1/3 of their compensation.

 

F. Key management personnel compensation (including directors)

 

Key management personnel compensation comprised:

 

      Year ended December 31  
      2015     2016     2017  
      NIS     NIS     NIS  
  Employee benefits     2       4       3  


v3.8.0.1
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.

v3.8.0.1
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  163   14   177 
 Non-controlling interests  2,209   70   2,279 
 Total equity  2,372   84   2,456 

  

Effect on the consolidated statement of the Group income 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  4,042   (131)  3,911 
 Salaries  2,042   (34)  2,008 
 Depreciation and amortization expenses  2,063   54   2,117 
 Operating profit  1,493   111   1,604 
 Profit after financing expenses  916   111   1,027 
 Profit before income tax  911   111   1,022 
 Income tax  320   27   347 
 Net profit for the period  591   84   675 
 Profit (loss) attributable to shareholders of the Company  (29)  14   (15)
 Profit attributable to non-controlling interests  620   70   690 
 Earnings per share (Basic and Diluted)  (1.56)  0.74   (0.82)

 

Effect on the statement of the Group consolidated cash flows 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  3,315   165   3,480 
 Net cash used in investing activities  (801)  (165)  (966)

 

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 interest 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 consists 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 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 and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is carried to share premium.
Broadcast rights
F.Broadcast rights

 

Broadcasting rights are stated at cost, net of rights exercised. The costs of the broadcasting rights acquired for the broadcasting of content include the amounts paid to the rights provider, plus direct costs for adjusting the rights to the broadcast. Broadcast rights are amortized in accordance with the actual broadcasts of the total number of expected broadcasts based on the management’s estimate or broadcasts permitted under the agreement (the part that is unamortized at the end of the agreement term is amortized in full upon its termination), or on a straight-line basis in accordance with the term of the rights agreement or the economic life, whichever is shorter. 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 through other comprehensive income.

 

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 expenses (income)
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.

v3.8.0.1
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  163   14   177 
 Non-controlling interests  2,209   70   2,279 
 Total equity  2,372   84   2,456 
Summary of consolidated statement
   Year ended December 31, 2017 
   

In accordance with the previous

policy

  Change  In accordance with IFRS15 
   NIS  NIS  NIS 
 General and operating expenses  4,042   (131)  3,911 
 Salaries  2,042   (34)  2,008 
 Depreciation and amortization expenses  2,063   54   2,117 
 Operating profit  1,493   111   1,604 
 Profit after financing expenses  916   111   1,027 
 Profit before income tax  911   111   1,022 
 Income tax  320   27   347 
 Net profit for the period  591   84   675 
 Profit (loss) attributable to shareholders of the Company  (29)  14   (15)
 Profit attributable to non-controlling interests  620   70   690 
 Earnings per share (Basic and Diluted)  (1.56)  0.74   (0.82)
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  3,315   165   3,480 
 Net cash used in investing activities  (801)  (165)  (966)
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

v3.8.0.1
Segment Reporting (Tables)
 12 Months Ended
Dec. 31, 2017
Segments Reporting [Abstract]  
Schedule of operating segments

 

  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 
Summary 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  (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 

v3.8.0.1
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  685   494 
 Bank deposits  546   275 
 Monetary funds and others  9   - 
    1,240   769 

 

The deposits are repayable until July 2018 and the other investments can be disposed of immediately.

 

*Reclassified

v3.8.0.1
Trade and Other Receivables (Tables)
 12 Months Ended
Dec. 31, 2017
Trade and Other Receivables [Abstract]  
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  72   204 
 Total other receivables  217   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 
    2,861   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%).
Schedule of long-term trade and other receivables
   December 31, 
   2017 
   NIS 
 2019  345 
 2020  142 
 2021 and thereafter  6 
    493 
Schedule 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
Schedule 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)

v3.8.0.1
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 

v3.8.0.1
Intangible Assets (Tables)
 12 Months Ended
Dec. 31, 2017
Intangible Assets [Abstract]  
Schedule of intangible assets
           Customer       
     Computer  Right of use  relationships       
     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 value 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 

v3.8.0.1
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.

v3.8.0.1
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 

v3.8.0.1
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 Ltd.  Israel   64.78%
          
 Subsidiaries of B Communications Ltd.        
 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 Communication (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   - 
    1,441   1,286 
Summary information of the group's subsidiaries including fair value adjustments
  December 31,  Year ended December 31, 
                                                               Cash flow         
  Rate of                                                           from         
   direct                                               Total           financing         
   ownership                                               comprehensive           activities         
   interests                       Carrying                   Profit   Income           without       Total  
   held by                       amount of                   attributable   attributable   Cash flow   Cash flow   dividend
to		   Dividend
paid to		   increase
(decrease)		 
   non-       Non-       Non-   Total    non-           Other   Total   to non-   to non-   from   from   non-   non-   in cash 
   controlling   Current   current   Current   current   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                                                      
                                                       
Bcom Group  35.22   5,334   15,305   4,111   13,442   3,086   2,279   9,789   741   (8)  733   690   684   3,487   (1,128)  213   (948)  1,624 
                                                                         
2016                                                                        
                                                                         
Bcom Group  35.22   3,991   16,154   4,256   12,588   3,301   2,543   10,084   439   (15)  424   641   630   3,462   (948)  (1,271)  (1,062)  181 
                                                                         
2015                                                                        
                                                                         
Bcom Group  33.29   4,730   17,392   5,199   13,532   3,391   2,694   9,985   1,136   7   1,143   996   1,001   3,652   310   (2,820)  (1,274)  (132)

v3.8.0.1
Debentures, Bank Loans and Credit (Tables)
 12 Months Ended
Dec. 31, 2017
Debentures, Bank Loans And Credit [Abstract]  
Disclosure of composition

   December 31 
   2016  2017 
   NIS  NIS 
 Current liabilities        
 Current maturities of debentures  1,342   1,263 
 Current maturities of bank loans  839   692 
    2,181   1,955 
 Non-current liabilities        
 Debentures  9,157   8,748 
 Bank loans  3,084   4,401 
    12,241   13,149 
    14,422   15,104 
Disclosure 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  4,925   5,234   4,695    4, 900  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
    10,164   10,499   9,776   10,011     
 Total interest-bearing liabilities  14,073   14,422   14,849   15,104     
Disclosure 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  10,577   3,944   14,521 
 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  (1,107)  (835)  (1,942)
 Interest paid  (425)  (158)  (583)
 Net cash generated from (used in) finance activities  (897)  1,007   110 
 Financing expenses recognized in the statement of income  378   163   541 
 Balance as at December 31, 2017  10,058   5,114   15,172

v3.8.0.1
Trade and Other Payables (Tables)
 12 Months Ended
Dec. 31, 2017
Trade and Other Payables [Abstract]  
Summary fo trade and other payables
  December 31 
  * 2016  2017 
  NIS  NIS 
       
Open accounts**  808   1,041 
Checks payable  92   21 
Trade payables  900   1,062 
         
Other payables        
Liabilities to employees and other liabilities for salaries  353   355 
Institutions  98   89 
Accrued expenses  102   - 
Accrued interest  99   66 
Deferred income  82   90 
Options and derivatives  10   54 
Other payables  17   19 
Total other payables  761   673 
Total Trade and Other Payables  1,661   1,735 

 

*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).

v3.8.0.1
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 

v3.8.0.1
Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2017
Financial Instruments [Abstract]  
Schedule of contractual repayment dates of financial liabilities, including estimated interest payments
   December 31, 2017 
   Carrying  Contractual           2022 
   amount  cash flow  2017  2018  2019-2021  and later 
   NIS  NIS  NIS  NIS  NIS  NIS 
 Non-derivative financial liabilities                  
 Trade and other payables  1,612   1,612   1,612   -   -   - 
 Bank loans  5,093   5,813   855   776   2,388   1,794 
 Debentures  10,011   11,390   1,511   1,505   4,349   4,025 
                          
 Total  16,716   18,815   3,978   2,281   6,737   5,819 
                          
 Financial liabilities for derivative instruments                        
 Forward contracts on the CPI  200   200   41   47   112   - 
Schedule of exposure to linkage and foreign currency risk

 		 December 31, 2016 
         Foreign 
         currency 
      Israeli  linked (mainly 
   Unlinked  CPI-linked  U.S. dollars) 
   NIS  NIS  NIS 
           
 Current assets         
 Cash and cash equivalents  778   -   32 
 Trade receivables  1,954   18   28 
 Other receivables  20   48   - 
 Investments including derivatives  896   76   269 
 Total current assets  3,648   142   329 
              
 Non-current assets            
 Trade and other receivables  429   215   - 
 Total non-current assets  429   215   - 
              
 Total assets  4,077   357   329 
              
 Current liabilities            
 Debentures, loans and borrowings  1,668   513   - 
 Trade and other payables  1,340   77   203 
 Total current liabilities  3,008   590   203 
              
 Non-current liabilities            
 Debentures and bank loans  7,667   4,574   - 
 Other liabilities including derivatives  -   176   9 
 Total non-current liabilities  7,667   4,750   9 
              
 Total liabilities  10,675   5,340   212 
              
 Total exposure in the statement of financial position  (6,598)  (4,983)  117 
              
 Forward transactions  (2,456)  2,184   272 

   

   December 31, 2017 
         Foreign 
         currency 
      Israeli  linked (mainly 
   Unlinked  CPI-linked  U.S. dollars) 
   NIS  NIS  NIS 
 Current assets         
 Cash and cash equivalents  2,334   -   74 
 Trade receivables  1,862   36   17 
 Other receivables  

44

   154   - 
 Related party  43   -   - 
 Investments including derivatives  507   57   205 
 Total current assets  4,790   247   296 
              
 Non-current assets            
 Trade and other receivables  423   121   67 
 Total non-current assets  423   121   67 
              
 Total assets  5,213   368   363 
              
 Current liabilities            
 Debentures, loans and borrowings  1,213   742   - 
 Trade and other payables  1,346   70   237 
 Total current liabilities  2,559   812   237 
              
 Non-current liabilities            
 Debentures and bank loans  9,104   4,045   - 
 Other liabilities including derivatives  -   159   10 
 Total non-current liabilities  9,104   4,204   10 
              
 Total liabilities  11,663   5,016   247 
             
 Total exposure in the statement of financial position  (6,450)  (4,648)  116 
              
 Forward transactions  (2,308)  1,994   314 
Schedule of 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   4.2468   4.044   4.153 
 Israeli CPI in points  (0.9)  (0.3)  0.3   140.01   139.59   140.00 
Schedule of interest bearing financial instruments
   December 31 
   2016  2017 
   NIS  NIS 
        
 Fixed rate instruments      
 Financial assets  2,503   2,164 
 Financial liabilities  (12,711)  (13,697)
    (10,208)  (11,533)
 Variable rate instruments        
 Financial assets  99   47 
 Financial liabilities  (1,712)  (1,407)
    (1,613)  (1,360)
Schedule of fair value of observable market-based data (level 2) in fair value hierarchy
     Number of  Nominal     Capital 
 Hedge item Repayment date Transactions  Value  Fair value  reserve 
        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 carrying amount and fair value of groups of financial instruments
   December 31, 2016  December 31, 2017 
               Fair value 
               weighted 
               average 
   Carrying     Carrying     discount 
   amount  Fair value  amount  Fair 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)  4,419   4,677   4,911   5,208   0.95 
 Issued to institutional investors (US$ linked)  4,166   4,246   4,097   4,322   2.35 
 Issued to institutional investors (unlinked)  830   879   15   17   2.44 
 Issued to institutional investors (CPI-linked)  403   440   302   326   1.62 
    12,765   13,331   13,761   14,566     
Schedule of analysis financial instruments carried 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  655   -   -   655 
 Derivatives not used in hedging                
 Forward contracts on CPI  -   (176)  -   (176)
 Contingent consideration for a business combination  -   -   (84)  (84)
                  
    686   (176)  (84)  426 

   

   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  480   -   -   480 
 Derivatives not used in hedging                
 Forward contracts  -   (212)  -   (212)
 Contingent consideration for a business combination  -   -   43  43
                  
    494   (212)  43  325 
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 

v3.8.0.1
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)
    51   57 
Summary of employee benefits 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, 2016  December 31, 2017 
   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 sensitivity analysis for 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 

v3.8.0.1
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  (220)  (33)  (112)
 Total deferred tax expenses  (220)  (33)  (145)
              
 Income tax expense  347   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 
           
 Profit before income tax  1,430   881   1,022 
 Statutory tax rate  26.5%  25%  24%
              
 Income tax at the statutory tax rate  378   220   245 
 Changes in tax rate and others  -   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  (112)  -   - 
 Current year tax losses and benefits for which deferred taxes were not created  97   136   54 
 Taxes in respect of previous years  -   (28)  - 
              
 Income tax expenses  347   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   195   (839)  561 
 Recognized in profit or loss  74   (26)  (231)  (75)  224   (34)
 Recognized in equity  -   (4)  -   (109)  -   (113)
                          
 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

v3.8.0.1
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.

v3.8.0.1
Agreements (Tables)
 12 Months Ended
Dec. 31, 2017
Agreements [Abstract]  
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

v3.8.0.1
Capital and Capital Reserves (Tables)
 12 Months Ended
Dec. 31, 2017
Capital and Capital Reserves [Abstract]  
Schedule of capital and capital reserves
   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  501,000,000   19,203,186 

v3.8.0.1
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

v3.8.0.1
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  588   624   648 
              
 Total salaries and incidentals  2,459   2,546   2,579 
              
 Less – salaries recognized in investments in property, plant and equipment and in intangible assets  499   529   571 
              
    1,960   2,017   2,008 

v3.8.0.1
General and Operating Expenses (Tables)
 12 Months Ended
Dec. 31, 2017
General and Operating Expenses [Abstract]  
Summary 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  649   709   615 
 Services and maintenance by sub-contractors  199   261   260 
 Vehicle maintenance expenses  167   164   156 
 Content services expenses  458   629   636 
              
    3,878   4,024   3,911 

 

*For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see note 3A.

 

*Less expenses of NIS 65 recognized in 2017 for investments in property, plant and equipment and intangible assets (in 2016, NIS 64 and in 2015, NIS 63).

v3.8.0.1
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

v3.8.0.1
Financing Expenses (Income) (Tables)
 12 Months Ended
Dec. 31, 2017
Finance Expenses (Income) [Abstract]  
Summary of financing expenses (income)
   Year ended December 31 
   2015  2016  2017 
   NIS  NIS  NIS 
           
 Interest and linkage differences from loans to an associate  (21)  -   - 
 Linkage and exchange rate differences, net  (7)  (19)  - 
 Income on bank deposits, investments and others  (17)  (20)  (8)
 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 commission  (52)  (42)  (35)
 Other financing income  (40)  (23)  (25)
 Total financing income  (164)  (133)  (75)
              
 Interest expenses on financial liabilities  695   924   503 
 Linkage and exchange rate differences, net  61   38   49 
 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  13   24   43 
 Financing expenses for employee benefits, net  16   15   35 
 Reduction of the provision for assessor interest expenses  (76)  -   - 
 Other financing expenses  50   52   36 
 Total financing expenses  759   1,108   652 
              
 Financing expenses, net  595   975   577

v3.8.0.1
Earnings (Loss) per Share (Tables)
 12 Months Ended
Dec. 31, 2017
Earnings (Loss) per Share [Abstract]  
Summary of 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  87   (202)  (15)
 Effect of diluted per share loss in a subsidiary  (1)  -   - 
 Diluted earnings (loss) for the year  86   (202)  (15)
Summary of weighted average number of ordinary shares outstanding, calculated

   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)  19,203   19,203   19,203 

v3.8.0.1
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 the parent company, 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 * *  129   ****111   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 the parent company, Eurocom and its 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). 
In addition, in 2017, additional N standard VDSL routers were acquired, but in amounts that do not exceed the negligibility level as described above.

  

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     (70 )
  Adjustment of the fair value of excess advance payments for the acquisition of DBS     56  

Schedule of key management personnel compensation

 

   Year ended December 31 
   2015  2016  2017 
   NIS  NIS  NIS 
 Employee benefits  2   4   3 

v3.8.0.1
Reporting Entity (Details) - ILS (₪)
₪ / shares in Units, ₪ in Millions
Nov. 06, 2017
Feb. 01, 2016
Apr. 14, 2010
Reporting Entity (Textual)      
Description of controlling shareholder In accordance with the notice, the Israel Securities Authority 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, a consideration contingent 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. for DBS) to Bezeq's controlling shareholder and associates ; (3) promoting v's Bezeq's interests in the Ministry of Communications in violation of the Penal Law and the Israel Securities Law.    
Bezeq [Member]      
Reporting Entity (Textual)      
Business acquisition of shares   115,500,000  
Percentage of outstanding shares   4.18%  
Share price   ₪ 8.5  
Transaction cost   ₪ 978  
Percentage of ownership interest   26.34%  
Equity interest percentage     30.44%

v3.8.0.1
Basis of Preparation (Details)
 12 Months Ended
Dec. 31, 2017
Basis of Preparation (Textual)  
Foreign exchange rate, description
NIS 3.467 = US$ 1.00

v3.8.0.1
Significant Accounting Policies (Details)
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
ILS (₪)
Dec. 31, 2014
ILS (₪)
Significant Accounting Policies [Line Items]            
Equity attributable to shareholders of the Company ₪ 177 [1] $ 51 ₪ 194      
Non-controlling interests 2,279 [1] 657 2,543      
Total equity 2,456 $ 708 ₪ 2,737 $ 789 ₪ 2,601 ₪ 2,766
In accordance with the previous policy [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 163          
Non-controlling interests 2,209          
Total equity 2,060          
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 14          
Non-controlling interests 70          
Total equity 84          
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 177          
Non-controlling interests 2,279          
Total equity ₪ 2,144          
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Significant Accounting Policies (Details 1)
₪ / shares in Units, ₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
₪ / shares
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Significant Accounting Policies [Line Items]        
General and operating expenses ₪ 3,911 [1] $ 1,128 ₪ 4,024 ₪ 3,878
Salaries 2,008 [1] 579 2,017 1,960
Depreciation and amortization expenses 2,117 [1] 611 2,161 2,131
Operating profit 1,604 [1] 462 1,861 2,013
Profit before income tax 1,022 [1] 295 881 1,430
Income tax 347 [1] 100 442 347
Net profit for the period 675 [1] 195 439 1,083
Profit (loss) attributable to shareholders of the Company (15) [1] (4) (202) 87
Profit attributable to non-controlling interests 690 [1] $ 199 ₪ 641 ₪ 996
In accordance with the previous policy [Member]        
Significant Accounting Policies [Line Items]        
General and operating expenses 4,042      
Salaries 2,042      
Depreciation and amortization expenses 2,063      
Operating profit 1,493      
Profit after financing expenses 916      
Profit before income tax 911      
Income tax 320      
Net profit for the period 591      
Profit (loss) attributable to shareholders of the Company (29)      
Profit attributable to non-controlling interests ₪ 620      
Earnings per share (Basic and Diluted) | ₪ / shares ₪ (1.56)      
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 27      
Net profit for the period 84      
Profit (loss) attributable to shareholders of the Company 14      
Profit attributable to non-controlling interests ₪ 70      
Earnings per share (Basic and Diluted) | ₪ / shares ₪ 0.74      
In accordance with IFRS15 [Member]        
Significant Accounting Policies [Line Items]        
General and operating expenses ₪ 3,911      
Salaries 2,008      
Depreciation and amortization expenses 2,117      
Operating profit 1,604      
Profit after financing expenses 1,027      
Profit before income tax 1,022      
Income tax 347      
Net profit for the period 675      
Profit (loss) attributable to shareholders of the Company (15)      
Profit attributable to non-controlling interests ₪ 690      
Earnings per share (Basic and Diluted) | ₪ / shares ₪ (0.82)      
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Significant Accounting Policies (Details 2)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Significant Accounting Policies [Line Items]        
Net cash from operating activities ₪ 3,480 [1] $ 1,003 ₪ 3,457 ₪ 3,644
Net cash used in investing activities (966) [1] $ (278) ₪ (1,036) ₪ 381
In accordance with the previous policy [Member]        
Significant Accounting Policies [Line Items]        
Net cash from operating activities 3,315      
Net cash used in investing activities (801)      
Changes [Member]        
Significant Accounting Policies [Line Items]        
Net cash from operating activities 165      
Net cash used in investing activities (165)      
In accordance with IFRS15 [Member]        
Significant Accounting Policies [Line Items]        
Net cash from operating activities 3,480      
Net cash used in investing activities ₪ (966)      
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
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 4-12
Network [member]  
Significant Accounting Policies [Line Items]  
Property, plant and equipment estimated useful lives 12-33
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)

v3.8.0.1
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

v3.8.0.1
Significant Accounting Policies (Details Textual)
₪ in Billions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
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 1.0
Initial implementation current liabilities 0.4
Decrease in operating expenses 0.4
Increase in cash flows from operating activities 0.4
Decrease in cash flows from financing activities ₪ 0.4
Bottom of range [member]  
Significant Accounting Policies [Line Items]  
Amortized over a period 1 year
Top of range [member]  
Significant Accounting Policies [Line Items]  
Amortized over a period 4 years

v3.8.0.1
Segment Reporting (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Dec. 31, 2017
USD ($)
Disclosure of disaggregation of revenue from contracts with customers [line items]          
Total revenue ₪ 9,789 [1] $ 2,823 ₪ 10,084 ₪ 9,985  
Depreciation and amortization 2,117 [1] 611 2,161 2,131  
Segment results- operating income (149) [1] (43) (21) (3)  
Total finance income (expense), net 75 [1] 22 133 164  
Segment profit (loss) before income tax 1,022 [1] 295 881 1,430  
Income tax 347 [1] 100 442 347  
Segment results - net profit (loss) 675 [1] $ 195 439 1,083  
Additional information:          
Segment assets 20,834 [1]   20,527   $ 6,009
Segment liabilities 18,378 [1]   17,790   $ 5,301
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 728   717 725  
Segment results- operating income 1,971   2,076 2,148  
Finance income 36   30 30  
Finance expenses (439)   (475) (362)  
Total finance 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    
Investments in equity-accounted investees    
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 383   380 419  
Segment results- operating income 72   32 157  
Finance income 54   52 53  
Finance expenses (3)   (6) (4)  
Total finance 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    
Investments in equity-accounted investees    
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 135   137 132  
Segment results- operating income 174   176 240  
Finance income 4   5 7  
Finance expenses (12)   (15) (15)  
Total finance 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  
Investments in equity-accounted investees 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 285   296 322  
Segment results- operating income 163   264 250  
Finance income 10   13 32  
Finance expenses (81)   (539) (635)  
Total finance 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    
Investments in equity-accounted investees    
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 20   16 13  
Segment results- operating income (20)   (34) (15)  
Finance income 5   4 17  
Finance expenses   (2) (2)  
Total finance 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 0    
Segment results - net profit (loss) (19)   (37) (2)  
Additional information:          
Segment assets 174   193 661  
Goodwill 10   10 10  
Investments in equity-accounted investees (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 566   615 520  
Segment results- operating income (756)   (653) (767)  
Finance income (34)   29 25  
Finance expenses (117)   (71) 259  
Total finance income (expense), net (151)   (42) 284  
Segment profit (loss) after finance expenses, net (907)   (695) (483)  
Share in profit (loss) of equity-accounted investee (1)   (1) 14  
Segment profit (loss) before income tax (908)   (696) (469)  
Income tax (452)   314 (261)  
Segment results - net profit (loss) (456)   (1,010) (208)  
Additional information:          
Segment assets 2,655   3,642 5,251  
Goodwill 2,921   3,050 3,050  
Investments in equity-accounted investees 11   12 14  
Segment liabilities 2,313   3,315 47  
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 2,117   2,161 2,131  
Segment results- operating income 1,604   1,861 2,013  
Finance income 75   133 164  
Finance expenses (652)   (1,108) (759)  
Total finance income (expense), net (577)   (975) (595)  
Segment profit (loss) after finance expenses, net 1,027   886 1,418  
Share in profit (loss) of equity-accounted investee (5)   (5) 12  
Segment profit (loss) before income tax 1,022   881 1,430  
Income tax 347   442 347  
Segment results - net profit (loss) 675   439 1,083  
Additional information:          
Segment assets 17,887   17,443 19,319  
Goodwill 2,937   3,066 3,066  
Investments in equity-accounted investees 10   18 25  
Segment liabilities 18,378   17,790 19,809  
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.

v3.8.0.1
Segment Reporting (Details 1)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Dec. 31, 2017
USD ($)
Revenue          
Consolidated revenue ₪ 9,789 [1] $ 2,823 ₪ 10,084 ₪ 9,985  
Profit or loss          
Share in the losses (profit) of equity-accounted investees (5) [1] (1) (5) 12  
Depreciation and amortization of intangible assets resulting from the Bezeq PPA adjustments 2,117 [1] 611 2,161 2,131  
Consolidated profit before income tax 1,022 [1] $ 295 881 1,430  
Assets          
Consolidated assets 20,834 [1]   20,527   $ 6,009
Liabilities          
Consolidated liabilities 18,378 [1]   17,790   $ 5,301
Adjustments for segment reporting of revenue, profit or loss, assets and liabilities [Member]          
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   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 (577)   (975) (595)  
Share in the losses (profit) of equity-accounted investees (5)   (5) 12  
Profit (loss) for operations classified in other Categories (20)   (34) 44  
Depreciation and amortization of intangible assets resulting from the Bezeq PPA adjustments (483)   (442) (545)  
Other adjustments (273)   (211) (222)  
Consolidated profit before income tax 1,022   881 ₪ 1,430  
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   12    
Inter-segment assets 269   703    
Assets resulting from the Bezeq PPA, net 1,678   2,119    
Assets attributable to a non-reportable segment 708   820    
Consolidated assets 20,834   20,527    
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 resulted from the Bezeq PPA, net 386   491    
Liabilities attributable to a non-reportable segment 3,287   3,554    
Consolidated liabilities ₪ 18,378   ₪ 17,790    
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Investments Including Derivatives (Details)
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Current investments      
Financial assets held for trading ₪ 494   ₪ 685 [1]
Bank deposits 275   546 [1]
Monetary funds and others   9 [1]
Investments ₪ 769 [2] $ 222 ₪ 1,240
[1] Reclassified
[2] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Trade and Other Receivables (Details)
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Trade receivables, net      
Related parties ₪ 43 [1] $ 12
Total trade receivables 1,915 [1] 552 2,000
Other receivables and current tax assets      
Other receivables (mainly from real estate sales) and current tax assets 270 [1] $ 78 217
Long-term trade and other receivables      
Total long-term trade and other receivables 493    
Trade and other receivables [Member]      
Trade receivables, net      
Outstanding debts [2] 765   785
Credit cards and checks receivable [2] 428   450
Unbilled receivables [2] 235   241
Current maturities of long-term receivables [2] 472   505
Related parties [2] 15   19
Total trade receivables [2] 1,915   2,000
Other receivables and current tax assets      
Prepaid expenses [2] 66   145
Other receivables (mainly from real estate sales) and current tax assets [2] 204   72
Total other receivables [2] 270   217
Long-term trade and other receivables      
Trade receivables- open debts [2],[3] 387   445
Long term receivables (from real estate sales) [2] 106   199
Total long-term trade and other receivables [2] 493   644
Total [2] ₪ 2,678   ₪ 2,861
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.
[2] The amount of trade receivables is stated net of the provision for doubtful debts
[3] 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%).

v3.8.0.1
Trade and Other Receivables (Details 1)
₪ in Millions
Dec. 31, 2017
ILS (₪)
Trade and Other Receivables [Abstract]  
2019 ₪ 345
2020 142
2021 and thereafter 6
Total long-term trade and other receivables ₪ 493

v3.8.0.1
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

v3.8.0.1
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)

v3.8.0.1
Trade and Other Receivables (Details Textual) - Bezeq [Member]
Dec. 31, 2017
Dec. 31, 2016
Lowest range [Member]    
Disclosure of detailed information about business combination [line items]    
Discounted interest rates 3.40% 3.30%
Highest range [Member]    
Disclosure of detailed information about business combination [line items]    
Discounted interest rates 3.50% 3.50%

v3.8.0.1
Property, Plant and Equipment (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2015
ILS (₪)
Cost        
Balance ₪ 15,751 ₪ 14,577    
Additions 1,188 1,249    
Disposals (88) (75)    
Balance 16,851 15,751    
Depreciation and impairment losses        
Balance 8,679 7,364    
Depreciation for the year 1,232 1,337    
Disposals   (22)    
Balance 9,911 8,679    
Carrying amounts        
Property, plant and equipment 6,940 [1] 7,072 $ 2,002 ₪ 7,213
Land and buildings [Member]        
Cost        
Balance 1,051 1,061    
Additions 34 27    
Disposals (81) (37)    
Balance 1,004 1,051    
Depreciation and impairment losses        
Balance 402 350    
Depreciation for the year 53 64    
Disposals   (12)    
Balance 455 402    
Carrying amounts        
Property, plant and equipment 549 649   711
Switching Transmission, power, Cellular, And satellite equipment [Member]        
Cost        
Balance 5,457 5,000    
Additions 408 457    
Disposals    
Balance 5,865 5,457    
Depreciation and impairment losses        
Balance 3,472 2,951    
Depreciation for the year 481 521    
Disposals      
Balance 3,953 3,472    
Carrying amounts        
Property, plant and equipment 1,912 1,985   2,049
Network equipment [member]        
Cost        
Balance 5,740 5,505    
Additions 228 247    
Disposals (12)    
Balance 5,968 5,740    
Depreciation and impairment losses        
Balance 2,736 2,486    
Depreciation for the year 204 250    
Disposals      
Balance 2,940 2,736    
Carrying amounts        
Property, plant and equipment 3,028 3,004   3,019
Multi-channel equipment and infrastructure [Member]        
Cost        
Balance 1,036 867    
Additions 165 180    
Disposals (1) (11)    
Balance 1,200 1,036    
Depreciation and impairment losses        
Balance 369 143    
Depreciation for the year 222 236    
Disposals   (10)    
Balance 591 369    
Carrying amounts        
Property, plant and equipment 609 667   724
Subscriber equipment [Member]        
Cost        
Balance 1,464 1,203    
Additions 278 265    
Disposals (4) (4)    
Balance 1,738 1,464    
Depreciation and impairment losses        
Balance 953 770    
Depreciation for the year 187 183    
Disposals      
Balance 1,140 953    
Carrying amounts        
Property, plant and equipment 598 511   433
Office equipment, computers and vehicles [Member]        
Cost        
Balance 1,003 941    
Additions 75 73    
Disposals (2) (11)    
Balance 1,076 1,003    
Depreciation and impairment losses        
Balance 747 664    
Depreciation for the year 85 83    
Disposals      
Balance 832 747    
Carrying amounts        
Property, plant and equipment ₪ 244 ₪ 256   ₪ 277
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Property, Plant and Equipment (Details Textual)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Property, Plant and Equipment (Textual)        
Derecognized fully depreciated property at 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    
Bcom Group [Member]        
Property, Plant and Equipment (Textual)        
Derecognized fully depreciated property at cost ₪ 496   894  
Commitments to purchase property, plant and equipment 136   139  
Copper cables [Member] | Bcom Group [Member]        
Property, Plant and Equipment (Textual)        
Residual value ₪ 188   ₪ 154  
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Intangible Assets (Details) - ILS (₪)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Cost    
Beginning balance ₪ 13,073 ₪ 12,886
Acquisitions or additions from independent development 227 198
Disposals (48) (11)
Ending balance 13,252 13,073
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
Impairment losses  
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
Impairment losses  
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
Impairment losses  
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)
Impairment losses  
Ending balance 200 233
Carrying amounts    
Beginning Balance 36 54
Ending Balance ₪ 21 ₪ 36

v3.8.0.1
Intangible Assets (Details 1) - ILS (₪)
₪ in Millions
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Disclosure of detailed information about intangible assets [line items]      
Intangible assets ₪ 2,937 ₪ 3,066 ₪ 3,066
Domestic fixed-line communications [member]      
Disclosure of detailed information about intangible assets [line items]      
Intangible assets 1,548 1,548  
Cellular telephone [member]      
Disclosure of detailed information about intangible assets [line items]      
Intangible assets 1,163 1,205  
Multi-channel television (DBS) [member]      
Disclosure of detailed information about intangible assets [line items]      
Intangible assets 33 120  
International communications and internet services [member]      
Disclosure of detailed information about intangible assets [line items]      
Intangible assets 181 181  
others [member]      
Disclosure of detailed information about intangible assets [line items]      
Intangible assets ₪ 12 ₪ 12  

v3.8.0.1
Intangible Assets (Details Textual) - ILS (₪)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Intangible Assets (Textual)      
Carrying amount of multi-channel television sector ₪ 2,937 ₪ 3,066 ₪ 3,066
Goodwill Impairment [Member]      
Intangible Assets (Textual)      
Nominal capital rate 7.50%    
Permanent growth rate 1.00%    
Domestic fixed-line communications [Member]      
Intangible Assets (Textual)      
Nominal capital rate 7.50%    
Permanent growth rate 1.00%    
Carrying amount of multi-channel television sector ₪ 181 181  
Cellular telephone [Member]      
Intangible Assets (Textual)      
Nominal capital rate 10.00%    
Permanent growth rate 2.50%    
Carrying amount of multi-channel television sector ₪ 1,163 1,205  
Recoverable amount 5,561    
Impairment loss ₪ 42    
Multi-channel television [Member]      
Intangible Assets (Textual)      
Nominal capital rate 8.50%    
Permanent growth rate 1.00%    
Carrying amount of multi-channel television sector ₪ 33 ₪ 120  
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%    

v3.8.0.1
Deferred Expenses and Non-Current Investments (Details)
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
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
Investment in equity-accounted investee 11   18
Other investments   5
Total ₪ 558 [4] $ 161 ₪ 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.
[4] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Broadcast Rights, Net of Rights Exercised (Details) - ILS (₪)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Broadcast Rights, Net of Rights Exercised [Abstract]    
Cost ₪ 797 ₪ 800
Less rights exercised (343) (368)
Total ₪ 454 ₪ 432

v3.8.0.1
Broadcast Rights, Net of Rights Exercised (Details Textual)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Broadcast Rights, Net of Rights Exercised (Textual)  
Acquisition of broadcast rights ₪ 248

v3.8.0.1
Investees (Details)
 12 Months Ended
Dec. 31, 2017
B Communications Ltd. [Member] | Israel [Member]  
Disclosure of subsidiaries [line items]  
Ownership interest 64.78%
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 Communication (SP1) Ltd.

v3.8.0.1
Investees (Details 1) - Bezeq [Member] - ILS (₪)
₪ / shares in Units, ₪ in Millions
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Disclosure of subsidiaries [line items]    
Total dividend payables ₪ 1,286 ₪ 1,441
2017 (NIS 0.47 per share) [Member]    
Disclosure of subsidiaries [line items]    
Total dividend payables ₪ 1,286
Dividend per share ₪ 0.47  
2016 (NIS 0.52 per share) [Member]    
Disclosure of subsidiaries [line items]    
Total dividend payables ₪ 1,441
Dividend per share   ₪ 0.52

v3.8.0.1
Investees (Details 2)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Dec. 31, 2017
USD ($)
Disclosure of subsidiaries [line items]          
Current assets ₪ 5,530 [1]   ₪ 4,373   $ 1,595
Non-current assets 15,304 [1]   16,154   4,414
Current liabilities 4,224 [1]   4,407   1,218
Non-current liabilities 14,154 [1]   13,383   4,083
Total net assets 20,834 [1]   20,527   6,009
Carrying amount of non-controlling interests 2,279 [1]   2,543   $ 657
Revenues 9,789 [1] $ 2,823 10,084 ₪ 9,985  
Profit 675 [1] 195 439 1,083  
Other comprehensive income 667 [1] 193 424 1,090  
Total comprehensive income 667 [1] 193 424 1,090  
Profit attributable to non-controlling interests 690 [1] 199 641 996  
Total comprehensive Income attributable to non-controlling interests 684 [1] 198 630 1,001  
Cash flows from operating activities 3,480 [1] 1,003 3,457 3,644  
Cash flows from investing activities (966) [1] (278) (1,036) 381  
Cash flow from financing activities without dividend to non-controlling interests (916) [1] (264) (2,230) (4,138)  
Dividend paid to non-controlling interests 948 [1] 274 1,187 1,274  
Total increase (decrease) in cash equivalents ₪ 1,598 [1] $ 461 ₪ 191 ₪ (113)  
Bcom Group [Member]          
Disclosure of subsidiaries [line items]          
Rate of direct ownership interests held by non-controlling interests 35.22% 35.22% 35.22% 33.29%  
Current assets ₪ 5,334   ₪ 3,991 ₪ 4,730  
Non-current assets 15,305   16,154 17,392  
Current liabilities 4,111   4,256 5,199  
Non-current liabilities 13,442   12,588 13,532  
Total net assets 3,086   3,301 3,391  
Carrying amount of non-controlling interests 2,279   2,543 2,694  
Revenues 9,789   10,084 9,985  
Profit 741   439 1,136  
Other comprehensive income (8)   (15) 7  
Total comprehensive income 733   424 1,143  
Profit attributable to non-controlling interests 690   641 996  
Total comprehensive Income attributable to non-controlling interests 684   630 1,001  
Cash flows from operating activities 3,487   3,462 3,652  
Cash flows from investing activities (1,128)   (948) 310  
Cash flow from financing activities without dividend to non-controlling interests 213   (1,271) (2,820)  
Dividend paid to non-controlling interests (948)   (1,062) (1,274)  
Total increase (decrease) in cash equivalents ₪ 1,624   ₪ 181 ₪ (132)  
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Investees (Details Textual) - ILS (₪)
₪ in Millions
 1 Months Ended 12 Months Ended
Aug. 04, 2009
Sep. 30, 2016
Mar. 25, 2015
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Jan. 14, 2016
Investees (Textual)              
Payments of contingent consideration       ₪ 10      
Second contingent consideration liability       ₪ 14 ₪ 84    
Number of ordinary shares sold             575,000
Aggregate share sale percentage             1.92%
Sale of ordinary shares value             ₪ 56
Ownership percentage             64.78%
Interest rate       4.00%      
Payments of debt estimated value       ₪ 43      
Bezeq [Member]              
Investees (Textual)              
Outstanding shares, percentage       25.82%      
Outstanding shares held percentage       0.52%      
Dividend paid by Bezeq to non-controlling interests       ₪ 948 ₪ 1,062 ₪ 1,274  
Distribute percentage of semi-annual profit 100.00%            
Ownership interest       35.22% 35.22% 33.29%  
Payments of contingent consideration       ₪ 94      
Bezeq [Member] | March 6, 2018 [Member]              
Investees (Textual)              
Outstanding shares held percentage       70.00%      
Description of Eurocom DBS payments       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.      
Bezeq [Member] | March 28, 2018 [Member]              
Investees (Textual)              
Distribution of cash dividend       ₪ 368      
DBS [Member]              
Investees (Textual)              
Description of DBS share capital     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.        
Share capital, percentage     49.78%        
Percentage of acquired     8.60%        
Ownership interest       100.00%      
Cash consideration       ₪ 680      
Payments of contingent consideration       57 ₪ 57    
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          
Increased second contingent consideration liability       14      
Principal and accrued interest       10      
Equity of DBS amounted to NIS       348 ₪ 592    
Working capital deficit of DBS       ₪ 535      
Aggregate share sale percentage       4.00%      
DBS [Member] | First Contingent Consideration [Member]              
Investees (Textual)              
Cash consideration       ₪ 200      
Payments of contingent consideration       6      
DBS [Member] | Second Contingent Consideration [Member]              
Investees (Textual)              
Cash consideration       170      
Payments of debt estimated value       ₪ 14      

v3.8.0.1
Debentures, Bank Loans and Credit (Details)
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Current liabilities      
Current maturities of debentures ₪ 1,263   ₪ 1,342
Current maturities of bank loans 692   839
Total current liabilities 1,955 [1] $ 564 2,181
Non-current liabilities      
Debentures 8,748   9,157
Bank loans 4,401   3,084
Total non-current liabilities 13,149 [1] $ 3,794 12,241
Total ₪ 15,104   ₪ 14,422
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Debentures, Bank Loans and Credit (Details 2) - ILS (₪)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Disclosure of detailed information about financial instruments [line items]    
Loans from banks and others: Par value ₪ 5,073 ₪ 3,909
Loans from banks and others: Carrying amount 5,093 3,923
Debentures: Par value 9,776 10,164
Debentures: Carrying amount 10,011 10,499
Total interest-bearing liabilities, Par value 14,849 14,073
Total interest-bearing liabilities, Carrying amount 15,104 14,422
Loans from banks and others: Unlinked - Variable interest [Member]    
Disclosure of detailed information about financial instruments [line items]    
Loans from banks and others: Par value 675 978
Loans from banks and others: Carrying amount ₪ 675 978
Nominal interest rate P-0.33 to P+0.2  
Loans from banks and others: Unlinked - Fixed interest [Member]    
Disclosure of detailed information about financial instruments [line items]    
Loans from banks and others: Par value ₪ 4,398 2,931
Loans from banks and others: Carrying amount ₪ 4,418 2,945
Nominal interest rate 2.40 to 6.85  
Debentures: Linked to the Israeli CPI - fixed interest [Member]    
Disclosure of detailed information about financial instruments [line items]    
Debentures: Par value ₪ 4,695 4,925
Debentures: Carrying amount ₪ 4,900 5,234
Nominal interest rate 2.20 to 8.40  
Debentures: Unlinked - variable interest [Member]    
Disclosure of detailed information about financial instruments [line items]    
Debentures: Par value ₪ 734 734
Debentures: Carrying amount ₪ 732 734
Nominal interest rate Makam + 1.4  
Debentures: Unlinked - fixed interest [Member]    
Disclosure of detailed information about financial instruments [line items]    
Debentures: Par value ₪ 4,347 4,505
Debentures: Carrying amount ₪ 4,379 ₪ 4,531
Nominal interest rate 3.60 to 6.65  

v3.8.0.1
Debentures, Bank Loans and Credit (Details 3)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Disclosure of reconciliation of liabilities arising from financing activities [line items]        
Balance as at January 1, 2017 ₪ 14,521      
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 (1,942)      
Interest paid (583) [1] $ (168) ₪ (967) ₪ (826)
Net cash generated from (used in) finance activities 110      
Financing expenses recognized in the statement of income 652 [1] $ 188 1,108 ₪ 759
Balance as at December 31, 2017 15,172   14,521  
Debentures (including accrued interest) [Member]        
Disclosure of reconciliation of liabilities arising from financing activities [line items]        
Balance as at January 1, 2017 10,577      
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 (1,107)      
Interest paid (425)      
Net cash generated from (used in) finance activities (897)      
Financing expenses recognized in the statement of income 378      
Balance as at December 31, 2017 10,058   10,577  
Loans (including accrued interest) [Member]        
Disclosure of reconciliation of liabilities arising from financing activities [line items]        
Balance as at January 1, 2017 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 as at December 31, 2017 ₪ 5,114   ₪ 3,944  
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Debentures, Bank Loans and Credit (Details Textual)
₪ / shares in Units, ₪ in Millions, $ in Millions
 1 Months Ended 12 Months Ended
Mar. 03, 2014
Oct. 31, 2017
ILS (₪)
₪ / shares
Sep. 18, 2016
USD ($)
May 26, 2016
USD ($)
Apr. 01, 2016
ILS (₪)
Aug. 10, 2014
USD ($)
Feb. 19, 2014
Sep. 28, 2010
Sep. 21, 2010
ILS (₪)
Dec. 31, 2017
ILS (₪)
₪ / shares
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Dec. 31, 2017
USD ($)
Jun. 30, 2017
ILS (₪)
₪ / shares
Jan. 16, 2017
ILS (₪)
Dec. 31, 2016
USD ($)
Jan. 20, 2016
USD ($)
Dec. 31, 2015
USD ($)
Oct. 22, 2014
ILS (₪)
Aug. 01, 2013
ILS (₪)
Jan. 31, 2012
ILS (₪)
Disclosure of detailed information about financial instruments [line items]                                            
Notes and debentures issued                   ₪ 8,748   ₪ 9,157                    
Description of debentures                   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. 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.                      
Senior secured notes description            
B Communications issued $800 of 7⅜ Senior Secured Notes.
                              
Description of purchase price range       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 the Notes.                                    
Repurchase of notes       $ 18.6               33 ₪ 33                  
Equity shareholder without non controlling interest                   ₪ 177 [1]   ₪ 194   $ 51.0                
Equity post distribution                   ₪ 800                        
Repayment of dividend                   75.00% 75.00%                      
Equity, description                   The restrictions set forth in this subsection shall not apply with respect to the balance of B Communications' profits/surpluses which are distributable in accordance with the provisions of the Companies Law, B Communications' 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). The restrictions set forth in this subsection shall not apply with respect to the balance of B Communications' profits/surpluses which are distributable in accordance with the provisions of the Companies Law, B Communications' 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                        
Average fixed interest rate                       4.30%                    
Board of Directors [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Notes and debentures issued | $                                   $ 50.0        
Consideration paid (received) | $           $ 50.0                                
Increased program additional | $                                   $ 50.0        
Purchase notes, par value | $                                 $ 65.0   $ 65.0      
Bezeq [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Loans from financial institutions                   ₪ 1,700                        
Series D Debentures [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Outstanding par value | ₪ / shares                   ₪ 757                        
Description of debentures
(i) 10% of the principal amount on September 15, 2018 and 2019; (ii) 30% of the principal amount on September 15, 2020 and 2021; and (iii) the final 20% of the principal amount on September 15, 2022. Series D Debentures bear annual interest of 6% payable on March 15 and September 15 of each of the years 2014-2022, other than the first interest payment which was made on September 15, 2014. Both principal and interest are linked to the Israeli CPI as of January 2014.
                                          
Par value of debenture                   ₪ 350                        
Series B Debentures [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Additional debentures of private placement                                         ₪ 180 ₪ 126
Par value of debenture                   ₪ 452                        
Issuance amount                 ₪ 400                          
Private placement par value         ₪ 148                                  
Aggregate consideration amount         ₪ 162                                  
Interest at fixed annual rate description                   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 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).                      
Series C Debentures One [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Principal amount                                       ₪ 1    
Series C Debentures [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Outstanding par value | ₪ / shares   ₪ 205               ₪ 41                        
Description of debentures   Company's outstanding Series C Debentures, reflecting an exchange ratio of 1:1.11 (NIS 1.11 principal amount of Series D Debentures for NIS 1 principal amount of Series C Debentures).
The principal of the Series C Debentures will be payable in four equal instalments payable on November 30 of each of the years 2020 through 2023 and one instalment payable on November 30, 2024. 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 will be 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 Series C Debentures are payable in four equal annual installments on March 10 of each of the years 2016 through 2019 and pay interest at a fixed annual rate of 4.45% which is payable semi-annually on March 10 and September 10 of each of the years 2011 through 2019 (the first interest payment was made on March 10, 2011, and the last interest payment is payable on March 10, 2019). The Series C Debentures are NIS denominated and are linked to the Israeli CPI.                            
Principal amount   ₪ 1                                        
Private placement par value   ₪ 227                           ₪ 118            
Debentures par value     $ 1,900.0             ₪ 2,000                        
Description of transactions with related party                  
B Communications 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”).
B Communications 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                   0.25% 0.25%                      
Equity shareholder without non controlling interest                   ₪ 650                        
Telecommunication [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Loans from financial institutions                   ₪ 1,700                        
Series 6 [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Par value per share | ₪ / shares                   ₪ 125.75                        
DBS Debentures [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Notes and debentures issued                   ₪ 435                        
Par value per share | ₪ / shares                   ₪ 125         ₪ 17.40              
Debentures balance                             ₪ 20              
Recognized financing expenses                   ₪ 13                        
Debentures amounted immaterial amount                   15                        
DBS Debentures [Member] | Bezeq [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Notes and debentures issued                   ₪ 419                        
Par value per share | ₪ / shares                   ₪ 436.31                        
Series 10 [Member] | Bezeq [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Par value per share | ₪ / shares                   ₪ 481.68                        
Series 9 and 10 [Member] | Bezeq [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Loans from financial institutions                   ₪ 1,000                        
January 23, 2018 [Member] | Private placement [Member]                                            
Disclosure of detailed information about financial instruments [line items]                                            
Consideration paid (received) | $                     $ 249.0                      
Debenture Private Placement | $                           $ 240.0                
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Trade and Other Payables (Details) - ILS (₪)
₪ in Millions
Dec. 31, 2017
Dec. 31, 2016
 [2]
Trade and Other Payables [Abstract]    
Open accounts [1] ₪ 1,041 ₪ 808
Checks payable 21 92
Trade payables 1,062 900
Other payables    
Liabilities to employees and other liabilities for salaries 355 353
Institutions 89 98
Accrued expenses 102
Accrued interest 66 99
Deferred income 90 82
Options and derivatives 54 10
Other payables 19 17
Total other payables 673 761
Total Trade and Other Payables ₪ 1,735 ₪ 1,661
[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

v3.8.0.1
Trade and Other Payables (Details Textual) - ILS (₪)
₪ in Millions
Dec. 31, 2017
Dec. 31, 2016
Trade and Other Payables [Textual]    
Payables to related parties ₪ 31 ₪ 21

v3.8.0.1
Provisions (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
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.

v3.8.0.1
Financial Risk Management (Details)
 12 Months Ended
Dec. 31, 2017
Financial Risk Management (Textual)  
Percentage of investment policy funds 80.00%

v3.8.0.1
Financial Instruments (Details) - ILS (₪)
₪ in Millions
Dec. 31, 2017
Dec. 31, 2016
Non-derivative financial liabilities    
Trade and other payables ₪ 44 ₪ 50
Debentures 8,748 ₪ 9,157
2017 [Member]    
Non-derivative financial liabilities    
Trade and other payables 1,612  
Bank loans 855  
Debentures 1,511  
Total 3,978  
Financial liabilities for derivative instruments    
Forward contracts on the CPI 41  
2018 [Member]    
Non-derivative financial liabilities    
Trade and other payables  
Bank loans 776  
Debentures 1,505  
Total 2,281  
Financial liabilities for derivative instruments    
Forward contracts on the CPI 47  
2019-2021 [Member]    
Non-derivative financial liabilities    
Trade and other payables  
Bank loans 2,388  
Debentures 4,349  
Total 6,737  
Financial liabilities for derivative instruments    
Forward contracts on the CPI 112  
2022 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 CPI  
Carrying amount [Member]    
Non-derivative financial liabilities    
Trade and other payables 1,612  
Bank loans 5,093  
Debentures 10,011  
Total 16,716  
Financial liabilities for derivative instruments    
Forward contracts on the CPI 200  
Contractual cash flow [Member]    
Non-derivative financial liabilities    
Trade and other payables 1,612  
Bank loans 5,813  
Debentures 11,390  
Total 18,815  
Financial liabilities for derivative instruments    
Forward contracts on the CPI ₪ 200  

v3.8.0.1
Financial Instruments (Details 1)
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
ILS (₪)
Dec. 31, 2014
ILS (₪)
Current assets            
Cash and cash equivalents ₪ 2,408 [1] $ 695 ₪ 810 $ 234 ₪ 619 ₪ 732
Trade receivables 493 [1] 142 644      
Other receivables 270 [1] 78 217      
Investments including derivatives 769 [1] 222 1,240      
Total current assets 5,530 [1] 1,595 4,373      
Non-current assets            
Total non-current assets 15,304 [1] 4,414 16,154      
Total assets 20,834 [1] 6,009 20,527      
Current liabilities            
Trade and other payables 1,735 [1] 500 1,661      
Total current liabilities 4,224 [1] 1,218 4,407      
Non-current liabilities            
Total non-current liabilities 14,154 [1] 4,083 13,383      
Total liabilities 18,378 [1] $ 5,301 17,790      
Unlinked [Member]            
Current assets            
Cash and cash equivalents 2,334   778      
Trade receivables 1,862   1,954      
Other receivables 44   20      
Related party 43          
Investments including derivatives 507   896      
Total current assets 4,790   3,648      
Non-current assets            
Trade and other receivables 423   429      
Total non-current assets 423   429      
Total assets 5,213   4,077      
Current liabilities            
Debentures, loans and borrowings 1,213   1,668      
Trade and other payables 1,346   1,340      
Total current liabilities 2,559   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 11,663   10,675      
Total exposure in the statementof financial position (6,450)   (6,598)      
Forward transactions (2,308)   (2,456)      
Israeli CPI-linked [Member]            
Current assets            
Cash and cash equivalents        
Trade receivables 36   18      
Other receivables 154   48      
Related party          
Investments including derivatives 57   76      
Total current assets 247   142      
Non-current assets            
Trade and other receivables 121   215      
Total non-current assets 121   215      
Total assets 368   357      
Current liabilities            
Debentures, loans and borrowings 742   513      
Trade and other payables 70   77      
Total current liabilities 812   590      
Non-current liabilities            
Debentures and bank loans 4,045   4,574      
Other liabilities including derivatives 159   176      
Total non-current liabilities 4,204   4,750      
Total liabilities 5,016   5,340      
Total exposure in the statementof financial position (4,648)   (4,983)      
Forward transactions 1,994   2,184      
Foreign currency linked (mainly U.S. dollars) [Member]            
Current assets            
Cash and cash equivalents 74   32      
Trade receivables 17   28      
Other receivables        
Related party          
Investments including derivatives 205   269      
Total current assets 296   329      
Non-current assets            
Trade and other receivables 67        
Total non-current assets 67        
Total assets 363   329      
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 statementof financial position 116   117      
Forward transactions ₪ 314   ₪ 272      
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Financial Instruments (Details 2) - ₪ / shares
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
1 US dollar [Member]      
Financial Instruments [Line Items]      
Rate of change % (9.80%) (1.50%) 0.30%
Reporting date spot rate ₪ 3.467 ₪ 3.845 ₪ 3.902
1 euro      
Financial Instruments [Line Items]      
Rate of change % 2.70% (4.80%) (10.10%)
Reporting date spot rate ₪ 4.153 ₪ 4.044 ₪ 4.2468
Israeli CPI in points      
Financial Instruments [Line Items]      
Rate of change % 0.30% (0.30%) (0.90%)
Reporting date spot rate ₪ 140 ₪ 139.59 ₪ 140.01

v3.8.0.1
Financial Instruments (Details 3) - ILS (₪)
₪ in Millions
Dec. 31, 2017
Dec. 31, 2016
Fixed interest rate [member]    
Disclosure of financial instruments by type of interest rate [line items]    
Financial assets ₪ 2,164 ₪ 2,503
Financial liabilities (13,697) (12,711)
Assets (liabilities) (11,533) (10,208)
Floating interest rate [member]    
Disclosure of financial instruments by type of interest rate [line items]    
Financial assets 47 99
Financial liabilities (1,407) (1,712)
Assets (liabilities) ₪ (1,360) ₪ (1,613)

v3.8.0.1
Financial Instruments (Details 4)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
NumberofTransactions
Dec. 31, 2016
ILS (₪)
NumberofTransactions
Disclosure of information about terms and conditions of hedging instruments and how they affect future cash flows [line items]    
Nominal Value ₪ 1,994 ₪ 1,994
Fair Value (200) (176)
Capital reserve ₪ 48 ₪ 54
Debentures (Series 6)    
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 | NumberofTransactions 9 9
Nominal Value ₪ 1,994 ₪ 1,994
Fair Value (200) (176)
Capital reserve ₪ 48 ₪ 54

v3.8.0.1
Financial Instruments (Details 5) - ILS (₪)
₪ in Millions
Dec. 31, 2017
Dec. 31, 2016
Fair Value Debentures [Abstract]    
Debentures, Carrying amount ₪ 10,011 ₪ 10,499
Financial Instruments, Carrying amount 13,761 12,765
Financial Instruments, Fair value 14,566 13,331
Unlinked [Member]    
Secured Loans From Banksand Others [Abstract]    
Secured loans from banks and others, Carrying amount 4,436 2,947
Secured loans from banks and others, Fair value ₪ 4,693 3,089
Secured loans from banks and others, Fair value weighted average discount rate 2.63%  
Issued to the public (CPI-linked) [Member]    
Fair Value Debentures [Abstract]    
Debentures, Carrying amount ₪ 4,911 4,419
Debentures, Fair value ₪ 5,208 4,677
Debentures, Fair value weighted average discount rate 0.95%  
Issued to institutional investors (US$ linked) [Member]    
Fair Value Debentures [Abstract]    
Debentures, Carrying amount ₪ 4,097 4,166
Debentures, Fair value ₪ 4,322 4,246
Debentures, Fair value weighted average discount rate 2.35%  
Issued to institutional investors (unlinked) [Member]    
Fair Value Debentures [Abstract]    
Debentures, Carrying amount ₪ 15 830
Debentures, Fair value ₪ 17 879
Debentures, Fair value weighted average discount rate 2.44%  
Issued to institutional investors (CPI-linked) [Member]    
Fair Value Debentures [Abstract]    
Debentures, Carrying amount ₪ 302 403
Debentures, Fair value ₪ 326 ₪ 440
Debentures, Fair value weighted average discount rate 1.62%  

v3.8.0.1
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 480 655
Derivatives not used in hedging    
Forward contracts (212) (176)
Available-for-sale financial assets    
Contingent consideration for a business combination 43 84
Total Financial Assets Held For Trading 325 426
Level 1 [member]    
Financial assets held for trading    
Monetary funds and ETFs 14 31
Marketable securities 480 655
Derivatives not used in hedging    
Forward contracts
Available-for-sale financial assets    
Contingent consideration for a business combination
Total Financial Assets Held For Trading 494 686
Level 2 [member]    
Financial assets held for trading    
Monetary funds and ETFs
Marketable securities
Derivatives not used in hedging    
Forward contracts (212) (176)
Available-for-sale financial assets    
Contingent consideration for a business combination
Total Financial Assets Held For Trading (212) (176)
Level 3 [member]    
Financial assets held for trading    
Monetary funds and ETFs
Marketable securities
Derivatives not used in hedging    
Forward contracts
Available-for-sale financial assets    
Contingent consideration for a business combination (43) (84)
Total Financial Assets Held For Trading ₪ (43) ₪ (84)

v3.8.0.1
Financial Instruments (Details 7) - ILS (₪)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Maximum additional consideration under the agreement [Member]    
Disclosure of fair value measurement of assets [line items]    
Additional consideration for the business results of DBS (second additional consideration) ₪ 170 ₪ 170
Fair value [Member]    
Disclosure of fair value measurement of assets [line items]    
Additional consideration for the business results of DBS (second additional consideration) ₪ 43 ₪ 84

v3.8.0.1
Financial Instruments (Details 8)
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Disclosure of detailed information about financial instruments [line items]      
Trade and other receivables presented in the statement of financial position ₪ 493 [1] $ 142 ₪ 644
Trade payables, gross 1,735   1,661 [2]
Trade and other payables presented in the statement of financial position 44   50
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] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.
[2] Reclassified

v3.8.0.1
Financial Instruments (Details Textual) - ILS (₪)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Financial Instruments (Textual)    
Interest rate, description An increase of 100 basis points in the interest rates at the reporting date would have decreased total equity and net income by NIS 10 (2016 - NIS 12).  
Net fair value ₪ 12 ₪ 6
Consumer price index, description 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.  

v3.8.0.1
Employee Benefits (Details)
₪ in Millions, $ in Millions
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
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 78 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 ₪ 57   ₪ 51
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
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

v3.8.0.1
Employee Benefits (Details 2) - Average capitalization rate [Member]
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Disclosure Of Capitalization [Line Items]    
Severance compensation 3.30% 4.20%
Retirement benefits 3.60% 4.30%

v3.8.0.1
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%

v3.8.0.1
Employee Benefits (Details 4)
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Employee Benefits [Abstract]    
Discount rate - addition of 0.5% 29 years 28 years
Rate of future salary increases - addition of 0.5% 40 years 36 years
Rate of employees leaving - addition of 5.0% 17 years 10 years

v3.8.0.1
Employee Benefits (Details 5)
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Severance Compensation [Member]    
Disclosure Of Capitalization [Line Items]    
Retirement benefits 10 years 4 months 24 days 10 years
Retirement Benefits [Member]    
Disclosure Of Capitalization [Line Items]    
Retirement benefits 14 years 8 months 12 days 14 years 1 month 6 days

v3.8.0.1
Employee Benefits (Details Textual)
 12 Months Ended
Dec. 31, 2017
Employee Benefits [Abstract]  
Description of any retirement benefit plan termination terms Terminate the employment of 163 permanent employees in each of the years 2015-2021
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%

v3.8.0.1
Income Tax (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
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) (220)
Total deferred tax expenses (145)   (33) (220)
Income tax expense ₪ 347 [1] $ 100 ₪ 442 ₪ 347
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Income Tax (Details 1)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Income Tax [Abstract]        
Profit before income tax ₪ 1,022 [1] $ 295 ₪ 881 ₪ 1,430
Statutory tax rate 24.00% 24.00% 25.00% 26.50%
Income tax at the statutory tax rate ₪ 245   ₪ 220 ₪ 378
Changes in tax rate and others     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     (112)
Current year tax losses and benefits for which deferred taxes were not created 54   136 97
Taxes in respect of previous years   (28)
Income tax expenses ₪ 347 [1] $ 100 ₪ 442 ₪ 347
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Income Tax (Details 2) - ILS (₪)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Income Tax [Line Items]    
Balance of deferred tax asset (liability) ₪ 414 ₪ 561
Recognized in profit or loss 145 (34)
Recognized in equity 1 (113)
Balance of deferred tax assets (liability) 560 414
Brand Names and Customers relationship [Member]    
Income Tax [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)
Others [Member]    
Income Tax [Line Items]    
Balance of deferred tax asset (liability) [1] 11 195
Recognized in profit or loss [1] 28 (75)
Recognized in equity [1] 1 (109)
Balance of deferred tax assets (liability) [1] 40 11
Carry forward losses for DBS [Member]    
Income Tax [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
Employee benefits Plan [Member]    
Income Tax [Line Items]    
Balance of deferred tax asset (liability) [1] 178 208
Recognized in profit or loss [1] (13) (26)
Recognized in equity [1] (4)
Balance of deferred tax assets (liability) [1] 165 178
Property plant equipment, and intangible assets [Member]    
Income Tax [Line Items]    
Balance of deferred tax asset (liability) [1] (348) (422)
Recognized in profit or loss [1] 25 74
Recognized in equity [1]
Balance of deferred tax assets (liability) [1] ₪ (323) ₪ (348)
[1] Reclassified

v3.8.0.1
Income Tax (Details Textual)
₪ in Millions, $ in Millions
 1 Months Ended 12 Months Ended
Jan. 14, 2016
ILS (₪)
Jan. 04, 2016
Jan. 22, 2015
ILS (₪)
Dec. 26, 2017
Apr. 27, 2017
ILS (₪)
Dec. 22, 2016
Dec. 31, 2017
ILS (₪)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Dec. 31, 2017
USD ($)
Income Tax (Textual)                    
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.       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-forwards             ₪ 165      
Capital loss carry forwards             335      
Recognized deferred tax assets ₪ 11               ₪ 101  
Final tax assessments, description     (i) tax years 2007-2009; and (ii) the sale of its legacy communications business that was completed on January 31, 2010              
Deferred tax assets             1,019 [1] ₪ 1,007   $ 294
Deferred tax liabilities             459 [1] ₪ 593   $ 132
Additional payment             ₪ 19      
Tax authority granted approval for tax purposes for the merger             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.      
Deferred tax asset carryforward tax losses             ₪ 1,166      
Israel Tax Authorities [Member]                    
Income Tax (Textual)                    
Final tax assessments, description         B Communications 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.          
Pay Israeli tax including interest and CPI linkage differences     ₪ 148   ₪ 25          
Bezeq [Member]                    
Income Tax (Textual)                    
Final tax assessments, description      
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.
            
DBS [Member]                    
Income Tax (Textual)                    
Final tax assessments, description            
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.
      
Tax losses             ₪ 5,000      
Subsidiaries [Member]                    
Income Tax (Textual)                    
Tax loss carry-forwards             72      
Capital loss carry forwards             ₪ 42      
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Contingent Liabilities (Details)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Customer claims [Member]  
Disclosure of contingent liabilities in business combination [line items]  
Nature of the claims Mainly motions for certification of class actions concerning contentions of unlawful collection of payment and deterioration in service provided by the Group companies.
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]  
Nature of the claims Claims alleging liability of the Group companies in respect of their activities and/or the investments made in various projects.
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]  
Nature of the claims 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.
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]  
Nature of the claims 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).
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]  
Nature of the claims Legal claims for compensation for alleged damage as a result of the supply of the service and/or the product.
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]  
Nature of the claims 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.
Balance of provisions
Amount of additional exposure 66
Amount of exposure for claims for which the amount of exposure cannot be assessed
Total legal claims against Bezeq Group companies [Member]  
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
[1] 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).
[2] 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.

v3.8.0.1
Contingent Liabilities (Details Textual)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Contingent Liabilities (Textual)  
Subsequent customer claims ₪ 571
Legally distributed value 113
DBS [Member]  
Contingent Liabilities (Textual)  
Paid taxes 462,000
Bezeq Group Companies [Member]  
Contingent Liabilities (Textual)  
Contingent liabilities including exposure 4,000
Subsequent customer claims 6,400
Bezeq Group Companies [Member] | Customer claims [Member]  
Contingent Liabilities (Textual)  
Contingent liabilities including exposure 2,000
Payment of damages ₪ 2,000
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]  
Contingent Liabilities (Textual)  
Contingent liabilities including exposure ₪ 1,110
Bezeq Group Companies One [Member]  
Contingent Liabilities (Textual)  
Exposure of claims ₪ 1,200

v3.8.0.1
Agreements (Details)
₪ in Millions
Dec. 31, 2017
ILS (₪)
Agreements [Line Items]  
Minimum future contractual rental payments ₪ 1,020
Real estate [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 810
Vehicles [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 210
2018 [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 310
2018 [Member] | Real estate [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 222
2018 [Member] | Vehicles [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 88
2019 [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 287
2019 [Member] | Real estate [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 213
2019 [Member] | Vehicles [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 74
2020 [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 213
2020 [Member] | Real estate [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 165
2020 [Member] | Vehicles [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 48
2021 [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 86
2021 [Member] | Real estate [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 86
2021 [Member] | Vehicles [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments
2022 [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 50
2022 [Member] | Real estate [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 50
2022 [Member] | Vehicles [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments
2023 onwards [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 74
2023 onwards [Member] | Real estate [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments 74
2023 onwards [Member] | Vehicles [Member]  
Agreements [Line Items]  
Minimum future contractual rental payments

v3.8.0.1
Agreements (Details Textual)
$ in Thousands, ₪ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Agreements (Textual) [Abstract]      
Estimated nominal cost | $   $ 263,000  
Average annual cost | $   21,900  
DBS is entitled to a monthly discount | $   $ 80  
Business obligation to acquire terminal equipment | ₪ ₪ 147   ₪ 71
Broadcast rights | ₪ 342    
January 21, 2018 [Member]      
Agreements (Textual) [Abstract]      
Total consideration | ₪ ₪ 497    
Business agreement, description 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. 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.  

v3.8.0.1
Securities, Pledges and Guarantees (Details)
₪ in Millions
Dec. 31, 2017
ILS (₪)
Securities, Pledges And Guarantees (Textual) [Abstract]  
Guarantees amount ₪ 152
Bank guarantees amount favor of third parties 61
CPI [Member]  
Securities, Pledges And Guarantees (Textual) [Abstract]  
Guarantees amount 37
US$ exchange rate [Member]  
Securities, Pledges And Guarantees (Textual) [Abstract]  
Guarantees amount ₪ 35

v3.8.0.1
Capital and Capital Reserves (Details) - shares
Dec. 31, 2017
Dec. 31, 2016
Capital Reserves [Line Items]    
Number of shares, Authorized 501,000,000 501,000,000
Number of shares, Registered and paid up [1] 19,203,186 19,203,186
[1] Net of treasury shares.

v3.8.0.1
Capital and Capital Reserves (Details Textual) - ₪ / shares
Dec. 31, 2017
Dec. 31, 2016
Capital and Capital Reserves (Textual)    
Purchased ordinary shares 5,862,615  
Capital and Capital Reserves [Member]    
Capital and Capital Reserves (Textual)    
Ordinary shares, par value ₪ 0.1 ₪ 0.1

v3.8.0.1
Revenues (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Disclosure of detailed information about property, plant and equipment [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
Revenues 9,789 [1] $ 2,823 10,084 9,985
Fixed line telephony [Member]        
Disclosure of detailed information about property, plant and equipment [line items]        
Domestic fixed line communications 1,255   1,352 [2] 1,456 [2]
Internet - infrastructure [Member]        
Disclosure of detailed information about property, plant and equipment [line items]        
Domestic fixed line communications 1,488   1,461 [2] 1,438 [2]
Transmission and data communication [Member]        
Disclosure of detailed information about property, plant and equipment [line items]        
Domestic fixed line communications 775   835 [2] 835 [2]
Cloud and digital services [Member]        
Disclosure of detailed information about property, plant and equipment [line items]        
Domestic fixed line communications 230   203 [2] 184 [2]
Other services [Member]        
Disclosure of detailed information about property, plant and equipment [line items]        
Domestic fixed line communications 205   213 212
Cellular services and terminal equipment [Member]        
Disclosure of detailed information about property, plant and equipment [line items]        
Cellular 1,743   1,777 1,948
Sale of terminal equipment [Member]        
Disclosure of detailed information about property, plant and equipment [line items]        
Cellular ₪ 757   ₪ 811 ₪ 884
[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

v3.8.0.1
Salaries (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Salaries and incidentals:        
Operating ₪ 1,931   ₪ 1,922 ₪ 1,871
General and administrative 648   624 588
Total salaries and incidentals 2,579   2,546 2,459
Less - salaries recognized in investments in property, plant and equipment and in intangible assets 571   529 499
Salaries ₪ 2,008 [1] $ 579 ₪ 2,017 ₪ 1,960
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
General and Operating Expenses (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
General and Operating Expenses [Line Items]        
General and operating expenses ₪ 3,911 [1] $ 1,128 ₪ 4,024 ₪ 3,878
Terminal equipment and materials [Member]        
General and Operating Expenses [Line Items]        
General and operating expenses [2],[3] 855   831 880
Interconnectivity and payments to domestic and international operators [Member]        
General and Operating Expenses [Line Items]        
General and operating expenses [2],[3] 805   825 909
Maintenance of buildings and sites [Member]        
General and Operating Expenses [Line Items]        
General and operating expenses [2],[3] 584   605 616
Marketing and general expenses [Member]        
General and Operating Expenses [Line Items]        
General and operating expenses [2],[3] 615   709 649
Services and maintenance by sub-contractors [Member]        
General and Operating Expenses [Line Items]        
General and operating expenses [2],[3] 260   261 199
Vehicle maintenance expenses [Member]        
General and Operating Expenses [Line Items]        
General and operating expenses [2],[3] 156   164 167
Content services expenses [Member]        
General and Operating Expenses [Line Items]        
General and operating expenses [2],[3] ₪ 636   ₪ 629 ₪ 458
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.
[2] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3A.
[3] Less expenses of NIS 65 recognized in 2017 for investments in property, plant and equipment and intangible assets (in 2016, NIS 64 and in 2015, NIS 63).

v3.8.0.1
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 (Textual)      
Expenses recognized investments ₪ 65 ₪ 64 ₪ 63

v3.8.0.1
Other Operating Expenses (Income), Net (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
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.

v3.8.0.1
Financing Expenses (Income) (Details)
₪ in Millions, $ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2015
ILS (₪)
Finance Income Expense [Line Items]        
Interest and linkage differences from loans to an associate   ₪ (21)
Linkage and exchange rate differences, net   (19) (7)
Income on bank deposits, investments and others (8)   (20) (17)
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 commission (35)   (42) (52)
Other financing income (25)   (23) (40)
Total financing income (75) [1] $ (22) (133) (164)
Interest expenses on financial liabilities 503   924 695
Linkage and exchange rate differences, net 49   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 43   24 13
Financing expenses for employee benefits, net 35   15 16
Reduction of the provision for assessor interest expenses   (76)
Other financing expenses 36   52 50
Total financing expenses 652 [1] $ 188 1,108 759
Financing expenses, net ₪ 577   ₪ 975 ₪ 595
[1] For information regarding early adoption of IFRS 15, Revenue from Contracts with Customers, see Note 3a.

v3.8.0.1
Earnings (Loss) per Share (Details) - NIS [Member] - USD ($)
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Earnings (loss) attributable to ordinary shareholders      
Basic earnings (loss) for the year $ (15) $ (202) $ 87
Effect of diluted per share loss in a subsidiary (1)
Diluted earnings (loss) for the year $ (15) $ (202) $ 86

v3.8.0.1
Earnings (Loss) per Share (Details 1) - shares
 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) 19,203 19,203 19,203

v3.8.0.1
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 the parent company, Eurocom, and their related parties.

v3.8.0.1
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] 122 111 [3] 129
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 the parent company, Eurocom and its 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.

v3.8.0.1
Transactions with Related Parties (Details 2)
 12 Months Ended
Dec. 31, 2017
March 23, 2015 [Member]  
Transactions With 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]  
Transactions With 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]  
Transactions With 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]  
Transactions With 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]  
Transactions With 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]  
Transactions With 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]  
Transactions With 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]  
Transactions With 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 US$ 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.

v3.8.0.1
Transactions with Related Parties (Details 3)
₪ in Millions
 12 Months Ended
Dec. 31, 2017
ILS (₪)
Transactions with Related Parties [Abstract]  
Expenses ₪ 91
Property plant and equipment 11
Acquisition of Eurocom DBS holdings in DBS (70)
Adjustment of the fair value of excess advance payments for the acquisition of DBS ₪ 56

v3.8.0.1
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 ₪ 3 ₪ 4 ₪ 2

v3.8.0.1
Transactions with Related Parties (Details Textual)
$ in Thousands
 1 Months Ended 12 Months Ended
Jun. 30, 2017
ILS (₪)
Dec. 31, 2017
ILS (₪)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
ILS (₪)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
ILS (₪)
Dec. 31, 2015
USD ($)
Jan. 30, 2017
shares
Dec. 09, 2015
shares
Transactions with Related Parties (Textual)                  
Lease annual rent   ₪ 110,000 $ 32            
Computing services   24,000 7            
Capital fees paid, amount   ₪ 228,000 $ 66 ₪ 338,000 $ 66 ₪ 433,000 $ 66    
Registration statements of ordinary shares | shares               925,000 288,000
Registration rights agreement with B communications, description   B Communications is not required to effect any demand registration unless such demand registration request is for a number of ordinary shares with a market value that is equal to at least $7.5. B Communications is not required to effect more than one demand registration during any 12-month period or within 90 days of any other demand registration. B Communications is not required to effect any demand registration unless such demand registration request is for a number of ordinary shares with a market value that is equal to at least $7.5. B Communications is not required to effect more than one demand registration during any 12-month period or within 90 days of any other demand registration.            
Chief executive officer employment agreement, description   B Communications will pay 2/3 and the Company will pay 1/3 of their compensation. B Communications will pay 2/3 and the Company will pay 1/3 of their compensation.            
Monthly fee ₪ 15,500                
Annual fixed amount ₪ 6,000                
Services consideration, description   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. 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.            


The rendering log information