Increased competition leads to slump in revenues, net profit for Bezeq in 3Q12

8 Nov 2012

Israel’s Bezeq saw net profit slump in the third quarter of 2012 by almost 38% year-on-year on revenues that fell by more than 14%, with the telco pointing to heightened competition in all sectors in which it operates as a key factor in the results.

For the three months ended 30 September 2012 Bezeq posted a net income of ILS342 million (USD85 million), down 37.8% compared to the ILS550 million reported in the same quarter of 2011. Total turnover stood at ILS2.494 billion in 3Q 2012, down 14.5% year-on-year, but perhaps more notable was the more than 26% decline in revenues from its mobile unit, Pelephone. In the period under review the wireless operator saw turnover tumble by more than 26% to ILS1.05 billion, with mobile service revenues falling 10.7%, primarily, Bezeq said, as a result of tariff erosion and increased competition. Increased wholesale mobile revenues offset the declines slightly, thanks to new mobile operators offering services over the Pelephone network. By comparison, fixed line turnover totalled ILS1.15 billion, down from ILS1.19 billion in 3Q11, with the fall primarily accounted for by a 9% drop in fixed voice revenues, partially offset by growth in internet and data revenues.

Operating profit in the third quarter of 2012 amounted to ILS667 million, down from ILS944 million a year earlier, while earnings before interest, tax, depreciation and amortisation (EBITDA) stood at ILS1.03 billion, a 21.1% y-o-y decline.

In operational terms, at the end of September 2012 Bezeq’s mobile subscriber arm had a total of 2.839 million subscribers on its books, down from 2.842 million a year earlier, with average revenue per user (ARPU) standing at ILS95 per month. Fixed broadband customer numbers, meanwhile, stood at 1.153 million, representing a 4.8% y-o-y- increase, with fixed voice accesses continuing to decline, falling 2.7% against end-September 2011 to 2.299 million.

Bezeq chairman Shaul Elovitch said of the results: ‘Our third quarter 2012 financial results reflect the profound changes in the Israeli communications market and the increased competition in all sectors of our operations. I am confident that we remain well positioned to succeed in these challenging times, with leading companies in all key segments of the communications market, strong cash flow and the most advanced infrastructures.’