Israeli 1Q09 figures: 012 Smile smiles, not so hot for HOT, Bezeq boosts bottom-line

20 May 2009

Bezeq, Israel’s incumbent telco, along with two of the country’s alternative operators, 012 Smile.Communications and HOT-Telecommunications Systems, have released financial results for the three months ended 31 March 2009.

Bezeq posted a 48% increase in net profit for the three-month period, reporting a record ILS608 million (USD150.5 million), well ahead of forecasts. Earnings before interest, tax, depreciation and amortisation (EBITDA) also rose, up 18% year-on-year to ILS1.29 billion, while revenue increased by 2% to reach ILS3.16 billion. The telco attributed the positive results to strong performance across all of its subsidiaries; Pelephone, the company’s mobile arm reported double-digit growth in quarterly operating profit, net profit and EBITDA, setting new company records for each of the profitability metrics. On the back of the strong performance Bezeq announced it was raising its guidance for the 2009 financial year, revealing it now expects full-year revenue, net profit and EBITDA in line with its FY 2008 results.

Meanwhile, 012 Smile.Communications revealed that its net profit for the first quarter had surged by a massive 763% to ILS49 million, up from ILS6 million in the same period a year earlier. The company also posted revenue of ILS284 million for the three-month period, up 8% y-o-y, with the entire increase attributed to high speed internet services; broadband revenue was up 15% to ILS149 million for the quarter. 012 Smile also reported that an increased cash flow during the quarter had allowed it to reduce its net financial debt to ILS253 million. Commenting on the results Stella Handler, 012 Smile CEO, noted: ‘The growth that we have achieved in our ongoing activities, together with our strong cash flow, are enabling us to carry out a significant expansion of our business, and positioning us to become one of the Israeli communications markets leading players. We are currently evaluating directions for potential expansion, including the field of mobile communications.’

Cableco HOT-Telecommunications Systems however did not fare quite as well. It reported that net profit for the first quarter slumped 58.1% to ILS31 million, despite an increase in revenue. The net profit decline was attributed to the cancellation of an ILS20 million provision for expenses related to a lawsuit against the operator; in the same period a year earlier it cancelled a provision of ILS80 million. Revenue for HOT increased 8% y-o-y to ILS769 million, with revenue from voice services up 26% to ILS221 million.