Profile: 012 Smile.Communications Ltd. (SMLC.O)

012 Smile.Communications Ltd., incorporated in 1999, is a communication services provider in Israel, offering a range of broadband and traditional voice services. The Company operates in two segments: broadband and traditional voice services. The Company’s broadband services include broadband Internet access with a suite of value-added services, specialized data services and server hosting, as well as services, such as local telephony via voice over broadband (VoB) and a wireless fidelity (WiFi) network of hotspots across Israel. Its traditional voice services include outgoing and incoming international telephony, hubbing, roaming and signaling and calling card services. The Company offers its services to residential and business customers, as well as to Israeli cellular operators and international communication services providers, or carriers through its integrated multipurpose network, which allows the Company to provide services to almost all of the homes and businesses in Israel.

As of December 31, 2008, the Company provided services to approximately one million registered household customers and approximately 80,000 registered business customers. The Company offers a range of broadband and traditional voice services. As of December 31, 2008, its customers on average used over three different services, whether as part of a package of services or purchased as a separate service.

Broadband Services

As of December 31, 2008, the Company had over 521,000 active residential, business and carrier customers for its broadband services. The Company offers high-speed access connections employing digital leased lines at various bandwidths to meet customer needs. It offers broadband access at speeds of up to 10 megabits per second. In addition to Internet access, the Company offers a suite of value-added services that are incremental to its core Internet access service. The Company provides its residential Internet access customers a suite of value-added services, including e-mail; unified messaging; global remote access; parental content filtering; wireless and wired home networking; online backup; security services, including firewall and intrusion prevention, attack prevention, anti-virus, anti-spam, and content services.

The Company provides its business Internet access customers a suite of value-added services, including various security services, such as firewall and intrusion prevention, attack prevention, anti-virus, anti-spam, content filtering, secure socket layer communications protocol providing end-point authentication; e-mail, including single, multiple and large mailboxes and domains; virtual private network (VPN) services; enterprise, procurement and integration services; Internet protocol (IP) roaming; unified messaging, networking; wireless and wired links, and online backup. The Company provides specialized data services to bandwidth-intensive organizations and international carriers, allowing them to transmit electronic data from point to point or from point to multi-points. As of December 31, 2008, it had more than 90,000 VoB local telephony lines.

The Company is engaged in offering primary rate interface (PRI) services to business customers. This service, which offers point-to-point PRI integrated services digital network (ISDN) communications lines, over which up to 30 calls can be transferred simultaneously, is primarily used by corporate customers. The Company is engaged in offering IP-TRUNKING services, which provide interconnections between service providers using session initiation protocol (SIP) to business customers. This service, which offers point-to-point IP communications lines, over which up to 60 calls can be transferred simultaneously, is offered to business users.

The Company is engaged in offering business customers an IP-based PBX, or telephone switching system, which connects to the customer through a broadband connection, IP Central Office Exchange Service, or IP Centrex, and offers VoIP and other IP-based services as well as connectivity to the regular telephone system. Among the IP-based services offered are four-digit internal calling, web-administration portal, free calls between different branches world-wide, conference bridging, interactive voice response, call hold, call transfer, last number look-up and redial, call forward and three-way calling. The Company operates three server hosting facilities with approximately 16,000 square feet of space. It operates a network of hotspots covering hotels, hospitals, other public areas and all commercial airports throughout Israel.

Traditional Voice Services

The Company offers traditional voice services to residential and business customers throughout Israel and to international carriers and local cellular operators. As of December 31, 2008, the Company had approximately one million customers registered in its database, of which approximately 366,000 customers used its services and were billed by the Company in 2008. In addition, it bills Israeli carriers for their customers’ use of its services, which in the year ended December 31, 2008, were generated from over 695,000 lines. The Company’s traditional voice services include incoming and outgoing international telephony, hubbing services for international carriers and roaming and signaling services for cellular operators.

The Company’s outgoing international telephony services to its residential and business customers include direct international dialing services, international and domestic pre-paid and post-paid calling cards and call-back services. The Company offers its incoming international telephony services to international carriers, which include termination services for telephone calls originating outside of Israel. It provides hubbing-traffic routing between approximately 90 network operators. The Company provides roaming and signaling services for cellular operators. Signaling messages indicate a mobile user’s location, while roaming within Israel through its signal transfer point (STP) or when traveling abroad. The Company bills the cellular operators based on the number of signaling messages sent and received.

The Company competes with Hot, NetVision 013 Barak, Bezeq, Skype, Partner and eBay Inc.