Competition in the mobile sector hits Bezeq’s revenues, net profit in 1Q13

13 May 2013

Israeli fixed line incumbent Bezeq has revealed a 14.6% year-on-year decline in net profit for the first three months of 2013, on revenues that fell by 12.2%. Having published its financial results for the three months ended 31 March 2013, Bezeq reported a total turnover of ILS2.405 billion (USD648 million), down from ILS2.740 billion in the same period of 2012, with the telco noting that the decline was primarily the result of lower revenues in the cellular sector, which were affected by tariff erosions resulting from increased competition. Mobile service revenue in the quarter under review stood at ILS714 million, down 14.4% y-o-y, though Bezeq noted that this decline had been partly offset by increased wholesale revenues derived from mobile virtual network operators (MVNOs) offering services over its network. Turnover from internet services in the first quarter of 2013 stood at ILS310 million, up from ILS296 million, with the increase attributed to higher subscriber numbers.

Meanwhile, operating profit in the first three months of the year totalled ILS761 million, down from ILS850 million in the year-ago period, with EBITDA in 1Q13 standing at ILS1.089 billion compared with ILS1.21 billion in 1Q12. Net profit for the three-month period was ILS497 million.

In operational terms, at the end of March 2013 Bezeq reported a total of 2.741 million mobile subscribers, representing a decline of 4.7% from the 2.876 million it had on its books a year earlier. Fixed voice connections too continued to fall, standing at 2.242 million at the end of the quarter, down from 2.368 million at end-March 2012. By contrast, broadband accesses rose by 5.7% year-on-year to reach 1.185 million.

Commenting on the financial results, Bezeq’s chief financial officer David Mizrahi noted: ‘The principal business results presented today are highlighted by net profit attributable to shareholders of approximately ILS500 million and free cash flow of ILS726 million, which enable us to continue to invest in maintaining and deepening our leadership in products and technology, while creating shareholder value through the distribution of dividends.’