Bezeq reports 2Q net profit increase

3 Aug 2010

Israel’s fixed line incumbent Bezeq has revealed an 17.9% year-on-year increase in net profit for the three months ended 30 June 2010, with its mobile unit Pelephone coupled with the growth in high speed internet uptake helping to offset declines in the fixed voice sector. In its second fiscal quarter of 2010 Bezeq posted a net profit of ILS638 million (USD169 million), up from ILS541 million in the same period a year earlier. Consolidated revenue meanwhile stood at ILS2.98 billion for the three-month period, a 3.8% y-o-y increase, with turnover from mobile operations up 6.2% against 2Q 2010, accounting for ILS1.43 billion, or around 47%, of the total. By comparison revenue from Bezeq’s fixed line operations fell 0.8% against 2Q 2009 to ILS1.31 billion, although the operator noted that record turnover from broadband, data communications and transmission services ‘almost completely offset the decrease in voice revenues resulting from fewer lines, lower call traffic, and slightly lower interconnect fees’. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter were ILS1.34 billion compared with ILS1.19 billion a year earlier.

Bezeq launched commercial services over a newly-deployed next generation network (NGN) in June 2009, offering broadband speeds of up to 50Mbps. The telco has said that it hopes to have half of all households in the country by end-2010 able to connect to the new network, and having stressed the financial importance of ensuring its customer base is transitioned to the new infrastructure, at end-June 2010 around 30% of Israeli households had access to the NGN. In addition, Pelephone too is focused on enhanced technologies, with the company aiming to drive uptake of services over its lucrative HSPA network. According to Bezeq, at end-June 2010 around 36% of Pelephone’s total subscriber base utilised its 3.5G network.

Commenting on the results Bezeq chairman Shlomo Rodav noted: ‘Excellent execution across the group allowed Bezeq to post increased revenue, as well as double-digit growth in operating profit, net profit to shareholders, and EBITDA. These performance gains were supported by record Pelephone cellular revenue, increased levels of sales of broadband internet, data communications and transmission services in the fixed line segment, as well as solid growth within Bezeq International and the yes premium pay TV segment.’