Bezeq first-quarter results exceed expectations

5 May 2010

Israeli fixed line incumbent Bezeq has reported its financial results for the three months ended 31 March 2010, posting a 4.4% year-on-year rise in revenues to ILS2.92 billion (USD780 million). The telco said that a 1.7% decline in revenue from traditional fixed line voice services, the smallest quarterly decline since Q4 2007, had been offset by a 10.1% increase in turnover generated by its mobile subsidiary Pelephone, coupled with a 5.7% increase in revenue from its Bezeq International unit. Bezeq also noted that the revenue decline at its Fixed Line unit had, in part, been mitigated by the growth of internet and data services. Net profit for the three-month period meanwhile rose 5.4% compared with the same period a year earlier, at ILS642 million, and earnings before interest, tax, depreciation and amortisation (EBITDA) was up 4% y-o-y at ILS1.22 billion.

Commenting on the results, Shlomo Rodav, Bezeq chairman, said: ‘Bezeq’s first quarter performance provides a solid launch to 2010 with our operational and financial achievements led by advancements in technology infrastructure, product and service innovations, a strict focus on operational efficiencies, and most importantly, an enhanced customer experience. Our improved group-level results were driven by year-over-year gains in revenues by Pelephone, Bezeq International and yes, while Bezeq Fixed Line experienced excellent growth of its high speed internet and data services sales, which continued to successfully mitigate the erosion of traditional fixed line telephony revenues.’

The executive added: ‘The strong foundation we have set with our strategic investments in leading edge communications infrastructures is clearly translating through our business in terms of improved revenues and profitability. With just over 30% of Pelephone’s subscribers migrated onto our HSPA cellular network and about 25% of Israeli households connected to the next generation network (NGN), we are optimistic on our ability to generate further performance gains as we execute on these strategic rollouts and deliver our consumer and business customers the highest quality communications experience available.’ At end-March 2010 the operator had a total of 2.458 million fixed line voice subscribers, down from 2.579 million a year earlier, while ADSL lines rose by 34,000 to 1.045 million. Pelephone’s mobile subscriber base at that date stood at 2.789 million, of which 1.619 million were classified as 3G subscribers.