Bezeq reveals net profit increase in 1Q12, despite lower cellular revenues

9 May 2012

Israeli fixed line incumbent Bezeq has revealed a 43% year-on-year increase in net profit for the first three months of 2012, despite recording an almost 6% dip in revenues for the period. In the quarter ended 31 March 2012 the telco saw consolidated turnover fall to ILS2.74 billion (USD720 million), down from ILS2.91 billion in 1Q 2011, with the operator noting that the decline was mostly attributed to reduced revenues from cellular services, which were ‘negatively influenced by regulatory changes enacted in 2011’. Indeed, in the quarter under review the company’s mobile unit, Pelephone, recorded a total turnover of ILS1.24 billion compared with ILS1.45 billion in the year-ago period, with service revenues down from ILS949 million to ILS834 million, a decline which ‘stemmed primarily from tariff erosion as a result of more intense competition and from the transition to multi-minute and SMS packages’. Bezeq, meanwhile, did note that revenues from data, content services and value added services (VAS) in 1Q12 totalled ILS307 million, representing 39.6% of Pelephone’s cellular services revenue, up from ILS283 million a year earlier. Net profit for the three-month period, meanwhile, stood at ILS582 million, up from ILS407 million in the first quarter of 2011, with earnings before interest, tax, depreciation and amortisation (EBITDA) standing at ILS1.21 billion, representing a 20.8% y-o-y increase. Bezeq noted that the improvements in its bottom line for its first fiscal quarter of 2012 had, in part, come from a provision of ILS281.5 million for employee retirement recorded in the first quarter of 2011.

In operational terms, at the end of March 2012 Pelephone’s mobile subscriber base stood at 2.876 million, up just 0.5% against the 2.861 million it had on its books a year earlier, although with the company revealing that it had seen a decline in post-paid subscribers – offset by new pre-paid customer additions – average revenue per user was lower than in 1Q11; in the three months to end-March 2012 ARPU was ILS97, down from ILS110 in the corresponding quarter of 2011. Fixed line voice accesses at the end of March 2012 were up marginally on the year ago figure, with Bezeq recording 2.368 million such connections, up from 2.358 million, while fixed broadband subscriber numbers increased from 1.079 million at end-March 2011 to 1.121 million a year later.